We are currently living in times of frenetic (and complex) economic activity, where major decisions and trends are marked by companies at a global level and to a lesser extent at a local level. The classification of companies is a way of ordering and organizing the commercial sector in order to establish a good financial development in modern societies. In the case of Spain, which is the one that interests us, the administrative framework is to some extent complex.

Therefore, it is important to take into account the classification of existing companies in the legal-economic order, which depends on the State Ministry of Finance, which is the competent and public regulatory body of the Spanish economy. This is not a minor issue, as poor management or registration of the type of company we want to set up can determine the future of the company, which can lead to both success and failure.

What is a company?

A company is a productive unit formed by a number of people and/or shareholders with the ultimate objective of exploiting a given economic activity to the full . According to their nature, companies can take different forms, which we will detail in the following points.

1. Classification of companies according to their legal form

We will then make a list of the most common companies, taking into account the legal form.

1.1. Self-employed

This type of company is exclusively individual. It does not have partners, it does not have an organisational structure other than a personal one . The individual decides, manages, organises and determines the capital that he/she can contribute to generate economic activity.

1.2. Public Limited Company (S.A.)

This type of company is probably the most common at the national level. A corporation is composed of a certain share capital, an amount agreed upon by the shareholders who comprise the company. The way the company is managed is through the election of a general director or manager, chosen among the shareholders and renewable on a temporary basis. The minimum capital to be contributed is 60,000 euros gross.

1.3. Limited Liability Company (S.L.)

Within the classification of companies, companies take different forms. The limited company is designed to promote the creation of small and medium sized companies, which is usually another of the most common forms of business incorporation. The minimum capital is 3,000 euros gross, with a maximum of 5 partners.

1.4. Cooperative Society

Cooperative societies are especially common within the primary sector. That is, agriculture, fishing and livestock. Members join the co-operative on a voluntary basis, as well as withdraw from it in the same way. The main objective of this association is to promote the knowledge and resources of different companies to obtain a common objective/benefit . The capital to be contributed will be decided in the company’s articles of association.

1.5. Civil Society

This type of company is one of the ones that has aroused the most interest in recent years. The most interested sector is the technical-legal one. That is, professionals who work in the legal sector, builders, computer engineers and quantity surveyors, among others. In addition, almost 90% of small companies choose this modality as an association between self-employed and professionals of the same sector.

2. According to the size of the company

This point is another fundamental pillar when deciding on the final type of company. Let us look at the different classifications according to size, which is represented mainly by the number of workers.

2.1. Micro enterprises

No more than ten employees including the founder of the company. They can become organizations with potential if they are invested in them, as they are considered innovative ideas with a vision of the future. Here we find entrepreneurs and start-ups .

2.2. Small enterprise

In small businesses we have one of the most common models when it comes to setting up an entity of this type. Of all the classifications, it is the most common. Usually has between 10 and 50 workers , a family business or a business with trusted friends who invest capital from their own resources or savings. Bars, restaurants, fashion shops, etc.

2.3. Medium-sized enterprise

She’s the mother of all the girls on this list. They fall under the label of “SMEs”, small and medium enterprises that make up a large part of the economy of any country. With a minimum of 60 workers and a maximum of between 300 and 400, they are solid structures of great economic success.

2.4. Large companies

It’s clearly the riskiest bet. They usually have no less than 300 employees, a complex and structured organization, and their ultimate goal is to make the product offered international. The luxury sector is a good example of what a large company is : jewellery, watches, automotive sector, restaurant franchise, etc.

3. Classification of companies according to their capital

Finally, the origin of the capital is a usual resource for the classification of the companies, which are basically 3 types. Let’s see.

3.1. Private capital

All the investment and financial resources deposited, come from the effort that each individual at a particular level contributes to the constitution of the company. As is evident, the objective is to achieve maximum benefit from the capital invested .

3.2. Public capital

Contrary to the previous point, public capital companies are subsidised by money (tax rebate) from the State’s coffers to develop economic activities that aim to provide services to the ordinary citizen. In this case, the aim is not to make a profit.

3.3. Mixed capital

This type of enterprise is very common in societies or countries of the so-called Welfare State model. The country in question aims to offer specific services to reach the maximum number of inhabitants possible. However, in some cases public investment is not sufficient and private entities are used to finance the project. The health sector (public hospitals) and the teaching sector (universities) rely heavily on this type of capital.

Bibliographic references:

  • Handy, C. (2005). Understanding Organizations. London: Penguin Books.
  • Morgenstern, J. (1998). Organizing from the Inside Out. Oxford: Owl Books.