Ordinary accounting
Compulsory for limited companies, whatever their turnover. It is the largest recurring cost.
Companies · Formation
Setting up an SRL in Turin
An SRL (the Italian limited liability company) limits your risk to the capital you put in and sets the rules between shareholders. In return it brings higher running costs and more frequent obligations. The question is not how to set one up, but whether it is the right form for you.
01 · The choice
Setting up an SRL in Turin: when it makes sense and when it does not
Three reasons justify an SRL, and none of them is the prestige of the letters after the name.
The first is limited liability. In a sole proprietorship and in partnerships, whoever runs the business is liable for its debts with all their assets, present and future. In an SRL the risk is confined to the capital contributed. This is the soundest reason, and it becomes decisive when the business carries contractual risk, exposure to suppliers or liability towards third parties.
The second is having more than one shareholder. Articles of association govern entry, exit, majorities, transfer of shares, pre-emption and approval of new members. These clauses cost little at the start and a great deal when relationships break down with nothing in writing.
The third is how profits are handled. In a sole proprietorship, income is taxed in full on the owner at progressive rates, even if it is left in the business. In an SRL the profit bears IRES (corporate income tax) and IRAP (regional tax on productive activities), and further tax is triggered only when it is distributed: if you reinvest, you have a significant financial advantage.
Limited liability has an important practical limit: when the company asks for credit, lenders almost always require personal sureties from the shareholders. In those dealings liability becomes unlimited in practice, even though it is not in law.
When it does not pay
- A one-person business with limited risk and modest revenue: the fixed costs weigh too much
- If you want to take out all the profit every year: double taxation cancels the advantage
- If you fit comfortably in the flat-rate scheme and do not expect to leave it
- If you are only after the image: the legal form is not a sales argument
- Businesses where banks ask for personal sureties anyway: limited liability loses its substance
02 · The variants
Ordinary SRL, simplified SRL and partnerships
Behind the label "setting up a company" lie forms that differ widely in cost, flexibility and liability.
- The SRLS removes notary fees, stamp duty and filing fees at formation, but imposes the standard articles: no tailored clauses on pre-emption, approval of new members, quorums or classes of shares. It works for getting started, less well for a more complex ownership structure.
- An ordinary SRL with capital below €10,000 must set aside one fifth of annual profit in a legal reserve until the reserve plus the capital reaches €10,000.
- Partnerships cost less to run but do not protect personal assets: choosing between an SNC and an SRL is above all a choice about risk.
| Form | Liability | Capital | Articles | Suited to |
|---|---|---|---|---|
| Ordinary SRL | Limited to capital | From €1 (with reserve requirements below €10,000) | Can be tailored | Structured businesses, several shareholders, tailored agreements |
| Simplified SRL (SRLS) | Limited to capital | €1 to €9,999 | Ministerial standard, cannot be changed | Starting on a minimal budget, simple ownership |
| SNC (general partnership) | Unlimited and joint for all partners | Not required | Can be tailored | Small family businesses built on mutual trust |
| SAS (limited partnership) | Unlimited for general partners, limited for limited partners | Not required | Can be tailored | Those who contribute capital without managing |
03 · How it is formed
The steps in company formation
An SRL is formed by public deed before a notary. The practice's role is what comes before and what comes after: setting up the choices and making the company operational.
Preliminary analysis
Legal form, shareholders, capital, corporate purpose, financial projections and funding needs.
Articles and agreements
Drafting the clauses of the articles and any shareholders' agreements, in coordination with the notary.
Deed of incorporation
Signing before the notary, paying in the capital, appointing the directors and the supervisory body where required.
Getting operational
Registration with the Companies Register, partita IVA (Italian VAT number), INPS (social security) and INAIL (workplace injury insurance), PEC (certified email), digital signature, company books, accounting and electronic invoicing.
The clauses that prevent disputes
Nobody thinks about them on the day of signing, and they decide everything on the day a shareholder wants to leave.
- Pre-emption: the other shareholders have the right to buy before a third party
- Approval: a new shareholder can join only with the others' consent
- Criteria for valuing a share on withdrawal or exclusion
- Reinforced quorums for decisions that affect the structure
- Drag-along and tag-along clauses in the event of a sale
- Rules on shareholder loans and their repayment
04 · What it costs
Formation costs and running costs
Costs fall into two blocks that should be assessed separately: the initial one-off block, and the annual one, which is what really drives the choice.
The initial block includes the notary's fee, registration tax, filing fees and stamp duty for registration with the Companies Register, validation of the company books, PEC and digital signatures. For an SRLS no notary fees are due and stamp duty and filing fees are waived, which substantially reduces the initial outlay.
The recurring block matters more over the medium term: the annual Chamber of Commerce fee, the government licence tax on company books for SRLs, compulsory ordinary accounting, annual financial statements with notes and electronic filing, company tax returns, INPS contributions for directors or working shareholders, and a supervisory body if the legal limits are exceeded.
Financial statements and filing
Preparation, notes to the accounts, minutes of approval and XBRL filing with the Companies Register within thirty days of approval.
Chamber of Commerce fee
Due every year to the Chamber of Commerce, with an amount that varies by legal form and turnover.
Directors' contributions
INPS Gestione Separata (the separate social security scheme) on the director's fee, or the artisans' or traders' scheme for shareholders who work in the business.
Supervisory body
Compulsory once the size limits set by the Italian Civil Code are exceeded, at additional cost.
Adequate structures
An organisational duty under Article 2086 of the Civil Code, proportionate to the size of the business.
05 · Taxes
How an SRL is taxed
The SRL's income bears IRES at 24% and IRAP, whose ordinary rate is set by the Region within statutory limits. Taxation is proportional, not progressive: it does not rise as profit grows.
When profit is distributed to shareholders who are individuals not acting as businesses, a final withholding tax of 26% applies to the dividends. This is the second layer of tax which, added to the first, determines the total burden on what leaves the company.
The director's fee follows a different logic: it is deductible for the company and taxed on the recipient as income treated like employment income, at progressive IRPEF (personal income tax) rates and with social security contributions. Balancing fee and dividend is one of the most effective planning levers, and it should be calibrated every year on the real figures.
The comparison with a sole proprietorship is not made on the headline rate but on the total burden for the same amounts taken out, including social security contributions and running costs. Below a certain level of profit the sole proprietorship remains more efficient; above it, the balance tips the other way.
Frequently asked
The questions that keep coming up
How much does it cost to set up an SRL?
It depends on the form you choose. The simplified SRL removes notary fees and is exempt from stamp duty and filing fees at formation: the initial outlay is limited to registration tax, book validation, PEC and digital signatures.
An ordinary SRL involves the notary's fee, which varies with the complexity of the articles. The cost that really matters, though, is not the initial one but the annual running cost, which should be estimated before you decide.
Can I set up an SRL on my own?
Yes, as a single-member SRL. Liability stays limited, provided the capital is fully paid in at formation and the single-member status is stated in company documents and correspondence.
If these conditions are not met, the sole shareholder is liable without limit for obligations arising during the period of non-compliance. It is a formal detail with heavy consequences.
How much capital do I really need?
The legal minimum is €1, but that is a theoretical threshold. Token capital signals fragility to banks and suppliers, and with capital below €10,000 you must set aside one fifth of annual profit in a legal reserve.
The right yardstick is not the legal minimum but the funding needed for the first months: capital should cover the initial investment and working capital until the first receipts come in, otherwise the company starts life already dependent on shareholder loans.
Should I move from a sole proprietorship to an SRL?
It depends on three things: how much profit you make, how much of it you take out and how much risk you run. If profit is substantial and you reinvest a significant part of it, an SRL can be more efficient. If you take everything out each year, the advantage narrows.
Conversion is a routine operation and can take place with continuity, but it has tax effects that must be assessed beforehand: treatment of capital gains, stock, business assets, existing contracts and dealings with suppliers.
Does the director have to pay contributions?
If they receive a fee, yes: contributions to the INPS Gestione Separata apply to it, split between the company and the director according to the statutory percentages.
It is different for shareholders who work in the business on a habitual and predominant basis: they may have to register with the artisans' or traders' scheme, with contributions due even without a fee. This is something to check at formation, not afterwards.
From the blog
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SRL accounting after formation: the first year
After the notary the SRL exists, but the accounting starts from zero. Books, registers, director's pay, the first financial statements and the jump in taxes in year two: what to expect in the first twelve months.
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The company form is chosen beforehand, with the numbers on the table
You can convert later, but it costs. An hour spent analysing expected revenue, business risk and relations between shareholders avoids choices you then pay for over years.