Legal forms of business in Italy: what they are and how to choose

Anyone who decides to start a business goes through a few set steps. You find a market niche, then you study the business you want to offer, and finally you move to the practical side: registering a VAT number and founding the business.

During the launch phase you have to lay the groundwork of the business, that is, decide the company name, set the registered office and open a business account. But before all that, you need to choose your company's legal form with care.

Choosing the right legal form means laying solid foundations for your new business. It is about taking the right entrepreneurial risk, protecting your assets, setting out the rights and duties of partners, and adopting the most beneficial tax regime.

There are many types of company in Italy, some simpler (run by a single person) and others more complex. Let's look at the main types of legal form for a business and which one is worth choosing in each case.

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What is a legal form

In Italy, the legal form is an organisational, administrative, fiscal and accounting model under which you run a business, that is, the production or sale of goods and services (not to be confused with self-employment, or freelancing, for which a VAT number is enough).

Setting a legal form is the first step for an entrepreneur, because a whole set of legal and tax rights and duties depends on this decision.

Examples of legal forms

A few very simple examples to understand it better. Officina Meccanica Rossi di Marco Rossi is the classic case of a ditta individuale (sole proprietorship), with the business name tied to a single owner. Then there are the acronyms, such as SAS or SNC (we will see what they mean): a cleaning business called Bianchi & Puliti SNC is a partnership, and specifically a general partnership.

Small and medium-sized enterprises (SMEs), such as Ferramenta Donna SRL or Biondi Consulting SRL, are examples of capital companies of the limited liability company type. The largest Italian companies, such as Enel SPA, TIM SPA, Prada SPA or Ferrari SPA, have chosen a capital company as their legal form, and specifically the società per azioni (joint-stock company).

Main legal forms of business

Italian law provides for several legal forms, some simpler, others more complex, each with its own features. The system is not entirely clear and uniform: ISTAT, the Chambers of Commerce and the Tax Register, managed by the Italian Revenue Agency, use different schemes and, as the statistics institute admits, reconciling them is not easy.

The three best-known and most common macro groups are:

Each group has several types within it, as we will see shortly.

Other legal forms include cooperatives, consortia and other forms of a public (public bodies, regional agencies), religious (religious institutes, ecclesiastical bodies), non-profit (foundations, associations) or foreign nature.

Sole proprietorships

Sole proprietorships are businesses run by a single person, or by an owner with the help of relatives and family members. They are simple to start, there is no capital to pay in, but they offer no protection to the entrepreneur: if things go badly, it is the owner who is liable without limit, using their personal assets.

Ditta individuale (sole proprietorship)

The ditta individuale (sole proprietorship) is the first and simplest legal type of sole proprietorship. It is built around the entrepreneur: there is a single owner who runs the business. It is often also the most suitable option for VAT numbers that want to start an activity quickly but are not sure how the business will develop.

Setting it up is very simple: you do not need a notarial deed or a statute, there is no initial capital to pay in, and the paperwork is handled within 10 working days.

Bureaucracy is light: a sole proprietorship often meets the requirements for the flat-rate tax regime and simplified accounting, which means lower running costs and fewer obligations. And, of course, with a single owner, it is a legal form that allows for fast decision-making.

In a sole proprietorship, however, there is no separation between the entrepreneur and the business: the owner of the firm is said to be liable without limit for everything that happens to the company. If the business goes so badly that it cannot repay its debts, the entrepreneur must cover them in full, paying with their personal assets and with no maximum threshold.

Family business (impresa familiare)

The family business (impresa familiare) is a sole proprietorship in which the entrepreneur works together with their spouse (partner), relatives (up to the third degree) or in-laws (up to the second degree). The family members are not partners, because the business belongs solely to the owner, and they are neither employees nor casual workers, but they must take an active part in the life of the business and add to its value.

In return, they share in the profits of the business in proportion to the quality and quantity of the work performed. The profit distributed to participants cannot exceed 49%, because the entrepreneur is entitled to 51% by right. Personal liability, however, does not fall on everyone, but only on the owner.

Each family collaborator, with their degree of kinship, must be indicated by public deed or authenticated private agreement before the relationship begins.

From a tax perspective, the family business is subject to transparent taxation, meaning the profit generated by the business is attributed directly within the individual tax returns of the participants. The entrepreneur's return must state the shares of the profits assigned to the others, while the returns of the individual participants must indicate from whom this income is received and their share within the family business.

Partnerships (società di persone)

A partnership (società di persone) is a legal form where several people are involved in the business and have legal capacity. They have rights and duties, but they do not have legal personality.

The assets of the company and of the partners are separated in functional terms (with a dedicated business account), but not in the event of insolvency: in fact, as with sole proprietorships, the partners in a partnership are jointly and unlimitedly liable for all the obligations taken on by the business and cover them in full with their own assets, with some exceptions.

Here too, to set up a partnership no minimum starting capital is required, but an incorporation deed (public or private agreement) and registration with the Registro delle Imprese (business register) may be needed.

Società semplice (simple partnership)

The società semplice (simple partnership) is a type of business that cannot carry out commercial activity, except in rare cases (for example, an agricultural company). It is usually adopted for asset-holding companies, for example to protect a family's real estate.

It has imperfect asset autonomy, so the partners must be liable without limit with their own assets, but it is unlikely to go insolvent since it does not carry out profit-making activity. In addition, if the partners take on debts, their personal creditors cannot go after the partner's share in the simple partnership, because under case law the shares of a società semplice can almost never be seized.

Società in nome collettivo (SNC, general partnership)

The società in nome collettivo (SNC, general partnership) is the most common and widespread among partnerships in Italy. It suits small commercial or craft businesses well, with little investment, few fixed assets and, above all, few risks tied to the type of activity carried out.

SNCs are made up of two or more partners, all of them administrators and often actively involved in the business (working partners). Set-up, management and administrative costs are not high, and in most cases they use simplified accounting.

From a tax perspective, SNCs use transparent taxation: the company's income tax passes directly to the partners in proportion to their share. As for social security, working partners must register with the Artisans and Traders Fund and pay the fixed contribution to INPS.

Like every partnership, the SNC has no legal personality, so the partners all have unlimited and joint liability for the company's debts. When a general partnership goes insolvent, the partners also fail personally, and if the business does not pay, creditors can turn to them to recover the money owed.

Società in accomandita semplice (SAS, limited partnership)

The società in accomandita semplice (SAS, limited partnership) is a type of partnership that has two categories of partner:

The general partners (accomandatari) are identical to the partners in an SNC: they have signing powers, their surname appears in the company name (for example Autoscuola Rossi di Mario Rossi & c. SAS) and, like them, they are liable jointly and without limit for the company's obligations.

The limited partners (accomandanti), on the other hand, are essentially capital partners: they cannot manage the company and have no signing powers, but they can be hired or become working partners. Also, unlike the general partners, they are not unlimitedly liable in the event of insolvency, unless they breach the ban on interference (they must not take an active part in managing the SAS).

In a limited partnership, both types of partner must always coexist; there cannot be an SAS without limited partners. As for social security, the rules are the same as for an SNC.

Capital companies (società di capitali)

A capital company (società di capitali) is a legal form of business where partners and company have distinct personalities and run on two separate tracks. The partners have limited (or perfect) liability for their assets, meaning they are liable for the company's debts only in proportion to the capital they have paid in.

The company has its own legal personality, which is an advantage, but management requires more substantial bureaucracy, both when it is created and as the business runs. To set it up you need a public deed and an incorporation deed containing the company statute, that is, the set of rules the partners must follow to run the business.

Within capital companies there is an administrative body, tasked with running the company's activities, and a decision-making body, called the shareholders' meeting, which is in charge of taking decisions on the company's future.

Società a responsabilità limitata (SRL, limited liability company)

The società a responsabilità limitata (SRL, limited liability company) is the most widespread capital company legal form in Italy. The name points to the key feature: each partner has liability limited to the capital invested in that company.

It has a key feature: while partnerships (SNC, SAS) necessarily need two or more partners, an SRL can also be set up by a single person. In that case, it is a single-member SRL.

To open an SRL, a minimum initial capital is required, usually €10,000. If the company has at least two partners, the law requires a payment of at least 25% of the capital at the time of the incorporation deed. The rest can be paid in later. If the SRL is a single-member company, the owner must instead pay in 100% of the capital at the time of the deed.

SRLs also have the advantage of being flexible businesses: changing the structure or the number of partners is fairly simple. It is also a legal form that produces a well-structured business, perhaps even easy to sell, and where every partner is well protected. On the other hand, set-up, management and administrative costs are fairly high.

For example, at the incorporation stage with the notary, an SRL with more than one partner can pay in just 25% of the initial capital. The single owner of a single-member SRL, however, must pay the money in full at the time of the deed.

Società a responsabilità limitata semplificata (SRLS, simplified SRL)

The società a responsabilità limitata semplificata (SRLS, simplified SRL) is a subtype of the SRL. The accounting and administrative rules and the relations with outside parties are essentially the same, but the statute and the way it is set up differ.

Compared with the SRL, the capital to be paid in ranges from a minimum of €1 to a maximum of €9,999. When opening an SRLS, the money must be paid in full at the incorporation deed; there is no 25% rule. The simplified SRL was generally created to suit those who want to start a business with little initial investment but still want the benefits tied to limited liability.

Società per azioni (SPA, joint-stock company)

The società per azioni (SPA, joint-stock company) is the legal form of large companies: very large size, major investments, complex structure and organisation, often listed on the stock exchange.

They are set up with a public deed before a notary, like other capital companies, and become operational and acquire legal personality once registered with the Registro delle Imprese (business register). To start an SPA you need a minimum capital of €50,000 (with exceptions), of which at least 25% must be paid in at the time of the deed (as for SRLs). If the company is opened by a single person (single-member SPA), the capital must be paid in full straight away.

An SPA's share capital is divided into shares, which are the partners' participation units and are freely transferable. Depending on the case, joint-stock companies can be open, if listed on the stock exchange, or closed, if the shares are not distributed to the public.

The shareholders not only share in the profits and have liability limited to the value of the shares they hold, but are also required to take part in the shareholders' meeting and approve the financial statements.

Management can follow different organisational models. Depending on the case, the company can be administered by a Board of Directors or a management board, with the mandate to achieve the corporate purpose, always alongside a supervisory body that oversees the work of the administration.

Società in accomandita per azioni (SAPA, partnership limited by shares)

The società in accomandita per azioni (SAPA, partnership limited by shares) is a combination of a joint-stock company (SPA) and a limited partnership (SAS). In a SAPA, two groups of shareholders coexist:

The general partner (accomandatari) shareholders act as directors by right and are liable jointly and without limit for the company's obligations. The limited partner (accomandanti) shareholders, on the other hand, take part in the capital but not in management and are liable only up to their contribution.

All the partners' participation units are represented by shares, as in an SPA, and the company's administration also largely follows that of the joint-stock company.

How to choose the best legal form

Choosing the right legal form for your business matters a great deal if you want to run things correctly. Consulting a good accountant in the early stage, or before any change, is always a sound rule, because every case is unique and different.

In general terms, though, a sole proprietorship suits people who work on their own, such as a small trader, a plumber, a craftsperson or a marketing consultant.

The SNC is the company form for small local businesses, with few partners and low investment: bakeries, clothing shops, workshops and so on. The SAS, on the other hand, is more convenient when some partners want an active role and others do not, such as a construction business.

Capital companies are legal forms for medium to large businesses, where the entrepreneurial risk is significant and it is therefore worth protecting yourself. An SRL is the most classic of Italian SMEs: a factory, a wholesale trading business, a tech startup, a food-products company and the like. If the initial capital is missing, for example a young entrepreneur founding their e-commerce business, the SRLS is a better-suited choice.

Then there is the società per azioni (SPA), for large listed companies with many investors and complex structures: an oil company, a large clothing distributor, a large parts factory or a supermarket chain. The SAPA, on the other hand, is a little-used legal form, adopted by large family businesses to ensure continuity.

Business account and legal form

In Italy, a business's legal form affects many aspects of management and administration, including opening a business account. For example, capital companies (SRL, SRLS, SPA, SAPA) are required to have a separate account registered in the company's name.

Partnerships (SNC, SAS) are not required to have one if their annual revenue is below €400,000. If the company passes the threshold, the business account becomes mandatory. Sole proprietorships and family businesses, as well as freelancers, do not necessarily have to hold a business account.

That said, every business, whatever its legal form, should keep its accounts in order by clearly separating personal financial movements from those of the business. Separating personal and business accounts also matters in the event of tax checks, because if the Italian Revenue Agency opens an investigation, it is the taxpayer who must provide evidence on the bank movements.

That is why not only capital companies (which are obliged), but also partnerships and sole proprietorships should seriously consider opening a dedicated, separate business account.

Vivid has an online business account designed for every type of business, from the sole proprietorship to partnerships, from small and medium-sized enterprises to large companies.

Information updated as of June 2026. This guide is for general information only and is not legal or tax advice. Rules and amounts can change. Check with a qualified professional or the official source before making decisions.