The single-member Simplified limited liability business (S.r.l.s.) is currently one of the most popular options for Italian entrepreneurs. It’s ideal for those who want to start a business with a modest initial investment and maintain the protection offered by limited liability. In this single-member company, the sole member controls the entire capital. They also benefit from simplified incorporation procedures, standard articles of incorporation, and reduced costs. Because of its simple structure and limited administrative burdens, this model is particularly popular with microbusinesses and those taking their first steps into the business world.

In this article, we explain the single-member S.r.l.s., including requirements for incorporation and the setup process. We focus on incorporation costs, annual costs, tax obligations, and taxation of a single-member S.r.l.s. We also evaluate the main advantages and disadvantages, typical risks, and differences between the S.r.l.s. and the Limited liability business (S.r.l.). This can help you decide which company structure is suitable for your business project.

What’s in this article?

• What is a single-member S.r.l.s.?
  
• Setup requirements and procedures for a single-member S.r.l.s.
  
• What are the costs for setting up a single-member S.r.l.s.?
  
• Tax and accounting obligations for a single-member S.r.l.s.
  
• Advantages and disadvantages of a single-member S.r.l.s.
  
• Differences between an S.r.l.s. and an S.r.l.
  
• How Stripe Payments can help
  

What is a single-member S.r.l.s.?

In the Italian legal framework, there are two main categories of companies: partnerships and corporations. Partnerships (e.g., limited partnerships or general partnerships) are based on the unlimited liability of the partners who are personally liable for the business’s debts. On the other hand, corporations enjoy the advantage of limited liability. The company is liable for its own assets, whereas the partners are not directly exposed.

A single-member S.r.l.s. falls between a corporation and a partnership and is designed to facilitate the start of new businesses with reduced costs and asset protection. The purpose of an S.r.l.s. is to offer a corporate entity with reduced minimum capital (e.g., from €1–€9,999) and standard articles of incorporation. This allows many microbusinesses to start up quickly, with lower costs than the traditional S.r.l.

In the single-member model, a single member—who can only be a natural person—wholly controls the company. While maintaining the typical structure of a corporation, an S.r.l.s. offers simplified management and procedures.

A key element concerns the liability of the single-member S.r.l.s. Under normal circumstances, the sole member is not liable with their personal assets because of the principle of limited liability. However, this protection could no longer apply in the event of a failure to comply with formal obligations. Examples include serious management irregularities and failures to indicate single-member status in the Business Register or pay the share capital.

Setup requirements and procedures for a single-member S.r.l.s.

In order to understand how to open a single-member S.r.l.s., it is important to consider the minimum requirements:

• Sole member: Must be a natural person, not a legal entity
  
• Share capital: €1–€9,999 to be paid in full upon incorporation
  
• Standard articles of incorporation: Nonmodifiable, prepared by decree of the Italian Ministry of Justice
  
• Registration with the Business Register: Mandatory for recognition of legal status
  

The incorporation process usually requires 3–10 business days, depending on the timelines of the entities involved. It consists of several key steps, including the following:

• Choice of name and corporate purpose
  The company name must include the following wording in Italian: “Società a responsabilità limitata semplificata” (which translates to “Simplified limited liability company”) or simply “S.r.l.s.” The corporate purpose must accurately describe the activities the company intends to carry out.
  
• Articles of incorporation
  Use the standard articles of incorporation template for the S.r.l.s. As it cannot be modified, it limits the customization of the management framework but allows for reduced costs.
  
• Notarial deed at a reduced cost
  One of the main features of a single-member S.r.l.s. is that the notarial deed does not require payment of the notary’s fee. The professional can only bill for out-of-pocket expenses.
  
• Registration with the Chamber of Commerce
  It is necessary to register an S.r.l.s. in the Business Register via the Single Business Communication (ComUnica).
  
• Registration for value-added tax (VAT)
  This takes place at the same time as or following incorporation of the company.
  
• Registration for social security and insurance: It is mandatory for businesses with employees or occupational hazards to register with the Italian National Social Security Institute (INPS) and the Italian National Institute for Insurance against Accidents at Work (INAIL), if applicable.
  

What are the costs for setting up a single-member S.r.l.s.?

One of the main reasons why many entrepreneurs choose a single-member S.r.l.s. is the startup costs. These are significantly lower than those of an S.r.l. The main cost items include the following:

• Notarial deed: The notary cannot charge fees. Only administrative fees and taxes (e.g., registration tax, stamp duty where applicable) are payable.
  
• Chamber of Commerce administration fees: A fee of €90 is charged for a single-member S.r.l.s.
  
• Stamp duty on the articles of incorporation: The S.r.l.s. is exempt.
  
• Costs for registering with the Business Register: These vary depending on the local Chamber of Commerce. They typically range between approximately €100–€150.
  
• Annual Chamber of Commerce fees: They are approximately €120 per year for many provinces.
  
• Certified email (PEC) and company books: PEC is mandatory for businesses and has an average annual cost of €5–€30. Paper-based company books—including purchase and initial stamping—have an approximate cost of €50–€100. Alternatively, the digital version often does not require additional costs and is already included in the accountant’s services.
  
• Share capital: The minimum can be as low as €1, but it is advisable to invest a higher minimum amount to strengthen the company’s financial credibility.
  

On average, the startup costs for a single-member S.r.l.s. range from €300–€500, excluding capital.

In terms of management, the annual costs of an S.r.l.s. include the following:

• Accountant, from €1,000–€2,000 per year
  
• Annual Chamber of Commerce fees
  
• Contributions to the INPS, for directors with separate management, craftspeople, and traders
  
• Taxes
  

Tax and accounting obligations for a single-member S.r.l.s.

Similar to other forms of S.r.l.s., the single-member version must also comply with a series of tax, accounting, and administrative obligations. The taxation of a single-member S.r.l.s. is identical to that of an S.r.l. because it is considered a fully developed corporation.

Italian corporate income tax (IRES)

The S.r.l.s. is subject to IRES with a fixed rate of 24%. It is applied to the profit generated by the company after deducting eligible costs. Unlike sole proprietorships, taxation for an S.r.l.s. does not depend on the personal income of the sole member. Instead, it depends on the economic result of the business.

Italian regional tax on productive activities (IRAP)

The company is also required to pay IRAP. The standard rate is 3.9%, but this can vary depending on the region and sector. Regional production tax is calculated on the value of production and, depending on the type of activity, can have a significant impact on overall taxation.

VAT

Similar to all companies, a single-member S.r.l.s. also operates with a VAT number and is required to apply sales tax. This entails issuing e-invoices, keeping VAT records, and submitting periodic communications and annual returns.

Registration tax and other taxes

In addition to recurring taxes (e.g., IRES, IRAP, and VAT), a single-member S.r.l.s. can be required to pay registration tax when performing acts that require formal registration. Examples include lease agreements, transfers or leases of business units, capital increases, or other nonrecurring transactions.

These are nonperiodic taxes, which are paid only when the relevant event occurs. Depending on the specific case, the Italian Revenue Agency or Chamber of Commerce can add stamp duties, substitute taxes, or administrative fees. These costs are not subject to ordinary taxation. Instead, they complete the scope of tax obligations that an S.r.l.s. could encounter during its business activities.

Distribution of profits

When a single-member S.r.l.s. generates profits and decides to distribute them to the sole member, these amounts are taxed directly on the individual receiving them. Taxation applies a substitute tax of 26% on the portion of the dividend that is considered taxable.

Accounting obligations

A single-member S.r.l.s. must comply with ordinary accounting requirements, draw up annual financial statements, and file them with the Business Register. It is also required to keep the mandatory company books and record all financial and business transactions in a timely manner.

Advantages and disadvantages of a single-member S.r.l.s.

Analyzing the advantages of an S.r.l.s. and its potential disadvantages can help you decide if this type of company is suitable for your business.

What are the advantages of a single-member S.r.l.s.?

The main advantages of setting up an S.r.l.s. include the following:

• Limited liability: The sole member is not liable with their personal assets, except in specific cases.
  
• Reduced costs: The costs for setting up an S.r.l.s. are among the lowest for corporations because of the subsidized notarial deed.
  
• Administrative simplicity: The bylaws of a standard S.r.l.s. accelerate the incorporation process and reduce initial complexity.
  
• Access to corporate status: An S.r.l.s. enjoys the credibility typical of corporations, which is useful in banking and commercial relationships.
  
• Operational flexibility: Although it is a simplified entity, the S.r.l.s. allows you to carry out many commercial or professional activities while maintaining the protection of your personal assets.
  

What are the disadvantages of a single-member S.r.l.s.?

Here are the main disadvantages:

• Nonmodifiable bylaws: The standard bylaws limit the customization of governance. For those who need a more complex setup, this can be a constraint.
  
• Limited perception of solvency: Very low share capital can be viewed as a red flag for investors or suppliers.
  
• Unchanged accounting obligations: Despite its simplicity, accounting is the same as for an S.r.l.
  
• Liability risks if obligations are not met: The main risks for an S.r.l.s. arise from failure to publicize its single-member status, which could result in certain debts being transferred to the member.
  

Differences between an S.r.l.s. and an S.r.l.

It can be useful to evaluate the differences between an S.r.l.s. and an S.r.l. before choosing the most suitable company form.

How Stripe Payments can help

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