The entrepreneur, profiles and legal framework

Explain in your own words what traits an entrepreneurial person usually has (initiative, risk tolerance, ability to organise and to learn from mistakes) and give a specific example of each trait applied to someone opening a local coffee shop.

The entrepreneur organises the resources, makes the decisions and assumes the risk of the business. Identify these three functions in the case of Omar, who leaves his job, invests his savings in opening a bakery workshop and decides which products to sell, at what price and whom to hire.

Lucas runs a restaurant as a sole trader, having invested €15 000 of his savings. After accumulating operating debts of €90 000 (with suppliers and financial institutions), the business ceases its activity. The liquidation value of the premises' assets is only €20 000. Lucas personally owns a primary residence valued at €130 000 and has €10 000 in his checking account.

1. a) Determine which assets creditors can claim if Lucas operated as a standard sole trader versus if he had previously registered as a Limited Liability Entrepreneur (ERL), specifying the requirements this status demands to protect the primary residence.
2. b) His brother-in-law argues: «If you had created an SL contributing €3,000, you would never risk your personal assets, no matter what happened with the debts». Technically refute this statement by analyzing two cases in which the courts or the law require the administrator or shareholder of an SL to respond with their personal assets (liability for corporate debts and piercing the corporate veil).

Order these legal structures from lowest to highest minimum required share capital for their incorporation: public limited company, sole trader, and private limited company. Furthermore, indicate in which of them the owner is personally liable for the business debts with their personal assets.

The diagram summarises three very common legal structures in Spain and the minimum capital required for each. State which legal structure corresponds to the box marked with "?" and explain two differences between it and a private limited company.

Match each description with the legal structure that fits it best (sole trader, private limited company or public limited company) and justify your choice: a hairdresser who works alone on a self-employed basis; three friends who set up a comic book shop contributing $6.000\ \text{€}$ between them; an electricity company with thousands of shareholders and shares listed on the stock exchange.

Explain what a company's share capital is and who contributes it. Two partners found a private limited company contributing $2.000\ \text{€}$ each: state what the initial share capital is and reason whether it meets the legal minimum required for this type of company.

Three partners found a private limited company for event organisation contributing $3.000\ \text{€}$, $3.000\ \text{€}$ and $6.000\ \text{€}$ respectively. a) Calculate what percentage of the shares corresponds to each of them. b) After a year, one of them wants to sell their part to someone outside the company: explain what limitations there are on the transfer of shares in a private limited company and why they exist.

Four partners establish "EcoRutas SL" with a share capital of 30.000 €: Ana subscribes 40 % (12.000 €), Bruno 20 % (6.000 €), Carla 20 % (6.000 €), and David 20 % (6.000 €). David will take on the management and all operational work full-time, while the others will be exclusively capitalist partners. At the end of the financial year, after obtaining a net accounting profit of 24.000 €, Ana, Bruno, and Carla combine 80 % of the capital and approve in the general meeting to distribute 100 % of the profit as dividends, denying David a prior salary by arguing that he already collects his 20 % dividend.

1. a) Interpret the economic asymmetry suffered by David compared to the other partners and analyze the governance conflict generated between capital and labor in this general meeting.
2. b) Design a comprehensive corporate solution to shield David's situation: define how his work and his compensation should be channeled (deductible expense versus dividend), and propose what voting majorities or ancillary obligations (prestaciones accesorias) should have been established in the bylaws or shareholders' agreements to prevent the abuse of the capitalist majority.

Explain what a worker cooperative is and how it differs from a private limited company in the way important decisions are made (the "one person, one vote" principle). Give an example of a business that could be organised as a cooperative.

Four employees of a bicycle workshop that is about to close decide to buy the business together and keep working in it. Explain what an employee-owned company (sociedad laboral) is and why it can be a good fit in this case, stating in whose hands the majority of the capital remains.

The fifteen workers of a ceramics factory that is closing down want to buy it and run it together. Compare the worker cooperative and the private limited company for this case (who makes the decisions, who contributes the capital, where the profits go) and reason which one is a better fit.

An IT consultant works alone as a sole trader and invoices $45.000\ \text{€}$ a year. A large company offers him an important contract, but prefers to contract with companies. Analyse the advantages and disadvantages of setting up a single-member private limited company instead of remaining a sole trader (liability, image, taxation, paperwork).

Order and explain the legal steps to incorporate a private limited company in Spain: register the company with the Companies Register (Registro Mercantil), choose the name and obtain the company name certificate, draw up the articles of association, sign the public deed before a notary, contribute the share capital and obtain the company's tax identification number (NIF).

Elena has been running a software development studio as a sole trader (autónoma) for four years. Last year she invoiced 190.000 € with deductible expenses of 45.000 €, has six employees on payroll, and plans to apply for an 80.000 € bank loan to purchase servers and licenses. Her business advisor warns her that maintaining ownership as a sole trader is a serious strategic and patrimonial mistake.

1. a) Justify why the growth of the workforce and taking on the bank loan make it inadvisable to maintain the sole proprietorship status, relating it to the liability regime and the creditworthiness assessment performed by the bank.
2. b) Compare Elena's tax bill if she remains a sole trader (taxed under personal income tax, IRPF, at marginal rates of up to 45 %) versus if she operates as a single-member limited liability company, SLU (Corporate Income Tax at 25 %), assuming Elena decides that 50.000 € of the annual net profit remains in the company to amortize the loan.
3. c) Explain what operational implications and transition costs are involved in contributing her ongoing business to a new SL (transfer of employment contracts, tax treatment of the transfer, and notarial formalization).