Let’s see together everything you need to know to understand the difference between SRL and SRLS and the most suitable company for your case.
What are ordinary SRLs and SRLS
SRLs and SRLS are two different types of limited liability companies. These are companies with separate assets from that of the shareholders. This means that only the company is liable for the debts of the business and not the shareholders personally. SRL and SRLS have some differences that distinguish them from each other.
- The Limited Liability Company (or ordinary SRL) is the most flexible and used type of company in Italy.
- The Simplified Limited Liability Company (or SRLS), on the other hand, is a particular type of SRL that provides for lower establishment costs. However, the savings are only initial as the subsequent costs are identical to those of an ordinary company. In view of this saving, moreover, there are major limitations. For these reasons, it is generally not recommended.
Differences between SRL and simplified SRL
The main differences between SRL and SRLS concern the share capital, the statute and the presence of some limitations for the shareholders.
The ordinary SRL can have a share capital without limits. The capital can be as low as € 1 and there is no cap. On the contrary, simplified SRLs have a share capital that cannot, in any case, exceed € 9,999.99.
For SRLS the capital must be fully paid up at the time of incorporation. For a normal SRL, however, only 25% of the capital can be paid at the time of incorporation if the initial capital exceeds € 10,000. Furthermore, if after the establishment the shareholders of an SRLS choose to make a capital increase beyond the limit of € 9,999, it will be necessary to transform the company into an ordinary SRL (with additional costs).
To establish an SRL or an SRLS, the statute and deed of incorporation must be drawn up. These are documents necessary to regulate the functioning of the company. Creating an ordinary SRL allows you to modify the statute and write it to measure. The simplified SRL, on the other hand, provides for the use of a non-modifiable and very limited ministerial statute. For example, it is not possible to establish any rules on the transfer of shares, such as the right of first refusal or the approval clause.
Restrictions for Members
The shareholders of an SRL can be both natural persons (e.g. consultants and professionals) and legal persons (e.g. other companies). On the contrary, the members of an SRLS can only be natural persons. Furthermore, in an ordinary SRL, members can participate by paying both money and works and services. In a simplified company, on the other hand, the shareholders participate only by paying money.
Comparison of set up and management costs
The costs for an ordinary SRL are initially higher. In particular, the notary’s fees and taxes must be paid. Normally the costs depend on the notary you rely on to create the company and on average they are € 1,500 + VAT + € 600 of initial taxes.
The costs for a simplified SRL, on the other hand, are initially lower. In fact, in this case you do not have to pay the notary’s fee and you do not pay stamp duty and secretarial fees. However, it is still necessary to bear the initial taxes of approximately € 320 and it is not easy to complete all the initial formalities and find a notary for the constitution.
It is important to consider that for SRLS the savings are only initial. Regarding the annual management costs, there is no difference between ordinary and simplified SRL. In both cases, in fact, after the establishment it will be necessary to bear the costs for the initial formalities (eg opening VAT number, SCIA, endorsement of company books) and those for the management of the accounting by the accountant. The average cost for the first year is € 2,500 + VAT + approximately € 700 of initial taxes. The cost of the accountant for the SRL varies according to the city and the reference professional.
With our online constitution and accounting service you can save up to € 2,000 in the first year for an SRL and up to € 1,400 for an SRLS. See all the details at the end of the article.
Furthermore, it must be considered that if you decide to convert the Simplified SRL into an ordinary SRL at a later time, costs similar to those for the establishment will have to be paid again. The cost will be higher than what would have been paid by immediately setting up a normal SRL. Given the limitations of SRLS, conversion is a very common operation and one of the main reasons why SRLS is generally not recommended.
Simplified SRL: limits and disadvantages
Before setting up an SRLS, a number of limitations and disadvantages must be taken into consideration:
1) Simplified companies have a limited share capital (maximum € 9,999.99). Furthermore, the initial capital must be fully paid up by the shareholders at the time of incorporation. If after the constitution the shareholders intend to increase the capital beyond the limit, they will have to transform the company into an ordinary SRL.
2) The obligation of such a reduced share capital entails some difficulties in financing. In fact, lacking the guarantee of a large capital, in order to obtain money from banks, shareholders are often forced to grant personal guarantees.
3) The rigidity of the statute prevents the rules on the functioning of the company and on the relations between the shareholders from being freely established.
4) The concessions are only initial and involve a reduction in costs only in the phase of incorporation of the company. In case of transition from a simplified to an ordinary company, the costs of the notary and the taxes saved initially will have to be paid.
For these reasons the simplified SRL is generally less convenient and therefore not recommended.
Our customers can also request the online accounting service at the price of € 299 + VAT for the first 4 months, in addition to the initial taxes.
In addition, the service includes 1 year of 100% online legal support to create tailor-made contracts and request consultations with professionals on any legal issue. If in doubt, you can speak to an experienced professional to understand what the difference between ordinary and simplified SRL is and which company is best for you.