Are you thinking of setting up a Limited liability business (S.r.l.) and wondering where to start? In this guide, we provide an overview of different S.r.l. types found in Italy, specific advantages of the S.r.l. legal form, steps required to set up an S.r.l., and costs and taxes you will incur once you start your business. Learn why many entrepreneurs choose S.r.l.s over other corporate forms and how you can set up an S.r.l. in compliance with regulatory requirements.

What’s in this article?

• What is an S.r.l.?
  
• What types of S.r.l. are there?
  
• Advantages of an S.r.l. over other corporate forms
  
• How to set up an S.r.l.
  
• Digital solutions for payment management
  
• How much does it cost to set up an S.r.l.?
  
• How much tax does an S.r.l. pay?
  
• Starting a business in Italy from abroad: Benefits of an S.r.l.
  

What is an S.r.l.?

A Limited liability business (S.r.l.) is a legal form governed by Articles 2462–2472-bis of the Italian Civil Code. Its main characteristic is limited asset liability, meaning the partners are liable for the company’s debts and liabilities only with the capital contributed. This safeguards their personal assets.

The minimum capital required by law for setting up an S.r.l. is €1. The S.r.l. is currently the most chosen solution for those wishing to set up a company that combines management flexibility and risk protection. This form is suitable for both innovative startups and traditional family businesses.

What types of S.r.l. are there?

In Italy, the S.r.l. comes in different variants. Each is designed to meet various needs in terms of corporate structure, initial capital, and operational flexibility:

• Ordinary S.r.l.
  
• Simplified limited liability business (S.r.l.s.)
  
• Single-member private S.r.l.
  

Before setting up an S.r.l., it’s important to know the main types. This can help you select the most suitable one for your business.

Ordinary S.r.l.

The ordinary S.r.l. offers full flexibility in the drafting of bylaws, corporate management, and transferral of shares. Setting up an ordinary S.r.l. is ideal if you want to start a business with substantial capital assets and long-term plans. It is the most common form of S.r.l.

Previously, a minimum capital of €10,000 was required to open one. However, as of 2013, it is possible to open an ordinary S.r.l. with lower capital, starting from just €1. This is provided the amount is paid in full at the time of incorporation. The reduction of the minimum capital from €10,000 to €1 was sanctioned in Legislative Decree No. 76/2013, which was converted into Law No. 99/2013 under Article 9 (15‑ter), amending Article 2463 of the Italian Civil Code.

S.r.l.s.

The S.r.l.s. is designed to encourage young entrepreneurship and to provide access to the corporate form with reduced costs. It requires share capital between €1–€9,999. This legal form can only be set up by individuals and must follow standard bylaws established by law. There are no notary fees for the articles of incorporation, which makes it especially fitting if you want to start a company with limited financial resources.

Single-member private S.r.l.

This form involves opening an S.r.l. set up by a single shareholder. This is a frequent choice for professionals or sole entrepreneurs who wish to limit their asset liability. The only constraint is, in the case of single-member management, full payment of the share capital is required from the time of incorporation.

Innovative startup S.r.l.

This is another type of S.r.l. that is not a legal form. It is designed for those who intend to work in technological or innovative fields. Innovative startups have many benefits, including exemption from certain taxes, fiscal advantages for investors, simplified management, and easier access to crowdfunding. To be registered in the Special Section of the Business Register, this type of S.r.l. must meet certain requirements, such as investment in research and development, highly qualified staff, or ownership of patents.

Who can set up an S.r.l.?

Anyone with full legal capacity can become an S.r.l. shareholder:

• Natural persons of legal age
  
• Other companies—Italian or foreign—as long as they have an Italian tax code and a valid document to be provided to the notary
  

However, three groups of subjects mostly remain excluded:

• Interdicted persons: These individuals have been deemed by judges to be totally incapable of managing their own affairs (e.g., due to severe mental infirmity). Instead, guardians act on their behalf, and they cannot acquire corporate shares.
  
• Incapacitated persons: This group retains capacity for day-to-day business acts but must be assisted by curators for extraordinary decisions, including the subscription of shares. This can be due to limiting conditions, such as habitual alcohol abuse or less serious illnesses.
  
• Bankrupt persons: Entrepreneurs still undergoing bankruptcy proceedings cannot start or administer new businesses until they obtain rehabilitation from the court.
  

Advantages of an S.r.l. over other corporate forms

Setting up an S.r.l. as a legal form for your business can offer several benefits. This is especially true compared to simpler structures, such as a limited partnership (S.a.s.) or general partnership (S.n.c.). The benefits relate to risk management and fiscal and operational factors that are important for those intending to do business in a structured way that encourages growth.

Below, we outline some reasons why opening an S.r.l. could be the best choice:

Protection of personal assets

In an S.r.l., shareholders are liable for corporate obligations only to the extent of their subscribed capital. This means—in the event of bankruptcy or company debt—you do not risk losing personal assets, such as your home, car, or bank accounts. However, in a partnership or sole proprietorship, creditors can claim directly against your private assets. This is a key guarantee, especially in high-risk or high initial investment areas.

Increased credibility to banks and investors

An S.r.l. must prepare and file annual financial statements, lending transparency to its economic and asset management. This can boost the trust of banks, investment funds, and business partners. In addition, due to its more solid legal nature, founding an S.r.l. gives you a better chance of obtaining bank credit, accessing European funding, and attracting foreign capital.

Statutory and organizational flexibility

One of the strengths of the S.r.l. is the ability to customize the bylaws according to the needs of the shareholders. You are free to decide how to divide the shares, whether some shareholders should have more weight in decisions, or whether certain shareholders have only economic rights but no voting rights. Special clauses—such as the right of first refusal when selling shares or rules on how to make major decisions—can also be included. You can also freely choose how to organize the administration: with a single director, several directors with separate powers, or a board of directors. In this way, the S.r.l. accommodates both small family projects and more structured entities with investors and operating partners.

Guaranteed business continuity

Unlike partnerships—which dissolve if a shareholder leaves, unless otherwise stipulated—setting up an S.r.l. provides greater continuity over time. Shares can be transferred without interrupting the existence of the company, and the entry of new shareholders does not require a substantial change in the legal structure. This makes the S.r.l. more stable and more suitable for long-term growth plans.

Access to specific tax schemes and incentives

Forming an S.r.l. gives you access to preferential tax schemes and tax credits reserved for corporations:

• Patent Box: This includes a preferential tax regime that allows companies to deduct part of their income from the use of intangible assets (e.g., patents, copyrighted software, designs, and models).
  
• Transition 4.0: This includes tax credits for investments in capital goods.
  
• Optional taxation transparency scheme: If certain requirements are met, this scheme allows profit to be attributed to partners while avoiding double taxation.
  

These benefits are often excluded for sole proprietorships and partnerships.

Ease in attracting investments and new resources

An S.r.l. is better suited to accommodate new members or investors, as it allows partial or total transfer of shares in a simple and regulated manner. It can also issue special shares with specific property or administrative rights, facilitating the entry of angel investors, venture capital funds, or strategic partners. This is particularly useful if you are launching an S.r.l. as an innovative startup or scalable project.

How many employees can an S.r.l. have?

The law does not impose a cap on the number of employees. You can hire from zero to hundreds of people, as long as you comply with collective bargaining agreements and social security obligations.

For instance, for the ecommerce sector in Italy, the most common contract is the National Collective Labor Agreement, but there is nothing to prevent the application of other collective bargaining agreements. Please note that once the number of employees exceeds 15, specific regulations are activated. These include the appointment of a Workers’ Safety Representative (RLS) and the obligation to draw up the Risk Assessment Document (DVR) annually. Therefore, it is important to plan for organic growth with a labor consultant from your first hires.

How to set up an S.r.l.

Setting up an S.r.l. in Italy requires compliance with a series of formal and bureaucratic procedures. They involve professionals—such as notaries and accountants—as well as the relevant public bodies (e.g., Chamber of Commerce, Italian Revenue Agency, Italian National Social Security Institute [INPS], Italian National Institute for Insurance against Accidents at Work [INAIL]).

Following each step correctly can help avoid delays in business start-up, errors in documents, or problems with the tax authorities. Below is a detailed overview of how to set up an S.r.l.—from selecting a corporate model to registration in the Business Register and beyond:

Conduct a preliminary analysis and select the S.r.l. type

At this stage, it’s important to study the business model, assess financial requirements, and identify the S.r.l. type (e.g., ordinary, single-member, or simplified). Evaluate whether you need flexible bylaws or can accept the standard template for an S.r.l.s.

Draft bylaws and articles of incorporation

A customized document is required to set up an ordinary or single-member S.r.l. On this document, you should define the following:

• Corporate name
  
• Registered office
  
• Purpose
  
• Subscribed and paid-up capital
  
• Duration
  
• Administration
  
• Profit distribution
  
• Preemption or approval clauses
  

For an S.r.l.s., you can use the ministerial template.

Deposit share capital

Capital can be paid directly to the director by traceable means (e.g., wire transfer or cashier’s check). The director will transfer it to the company’s account after incorporation and the opening of the final bank account.

Complete notarial deed

Choose a notary, and send a draft of the articles of incorporation and the identity documents of the shareholders. On the scheduled date, you must sign the deed. The notary will notarize the signatures, prepare the file for the Business Register, and generate the provisional tax code.

Register in the Business Register

Within 30 days, the notary will electronically file the deed with the appropriate Chamber of Commerce. The date of registration coincides with the legal incorporation of your company. You will receive the Chamber of Commerce certificate with the Economic and Administrative Index (REA) number and value-added tax (VAT) number.

Complete Single Business Communication (ComUnica)

The ComUnica system automatically sends data to the Italian Revenue Agency, INPS, and INAIL. Check the outcome on each portal. The activation for online services (e.g., F24 payment form, tax drawer, Single Document of Regularity of Contributions [DURC]) is often issued within 24–48 hours.

Set up a certified email (PEC) address

As of 2023, a PEC address is mandatory when setting up any company type, including an S.r.l. Activate it prior to notarization or immediately afterwards. The Chamber of Commerce suspends registration if the digital domicile is missing.

Open a checking account for the S.r.l.

After the incorporation of the S.r.l., it is necessary to open a checking account in the business’s name to handle collections, payments, and tax requirements. You can choose from traditional banking solutions or more flexible online business accounts.

Post-incorporation obligations

Once the S.r.l. is incorporated and registered with the Business Register, there are a few more steps. Completing the following steps correctly can help you avoid penalties and launch your business in full compliance:

• Communicate with the One-Stop Business Advisory Center (SUAP): If your business requires permits (e.g., commerce, online sale of food), you must send the Certified Notice of Business Start (SCIA) to the municipality through the SUAP desk.
  
• Register a trademark (optional): If you wish to protect your company name or logo, you can register it with the Italian Patent and Trademark Office (UIBM) or the European Union Intellectual Property Office (EUIPO).
  
• Follow privacy and General Data Protection Regulation (GDPR) guidelines: If you process personal data (e.g., for customers, users, or employees), you must arrange for a privacy policy, keep a data processing log, and, if necessary, appoint a data protection officer (DPO).
  
• Register with INPS and INAIL: Open social security and insurance accounts for yourself and your employees. The director must also be registered with the INPS Separate Fund System if they receive compensation.
  
• Maintain mandatory company records: Prepare and maintain registers of shareholders, resolutions, and accounting records (e.g., journal and inventory ledgers).
  
• Use electronic invoicing: This is mandatory for almost all types of S.r.l.
  
• Make tax choices: Explore your options with your accountant for VAT settlement (e.g., monthly or quarterly).
  
• Follow requirements for hiring staff: You should notify the Job Center, register with INPS and INAIL, and maintain the Single Employment Ledger.
  

Digital solutions for payment management

If you are opening an S.r.l., you should also consider how you will handle payments for your products or services. Using efficient and secure digital tools is important. Stripe’s payment solutions can be of great assistance to you from the beginning of your business.

With Stripe Payments you can accept payments easily and securely, supporting the most common payment methods at the domestic and global levels. Stripe Checkout allows you to easily integrate a conversion-optimized payment form directly into your ecommerce site or redirect customers to a secure payment page hosted on Stripe. This can help make the shopping experience smoother for everyone.

If, on the other hand, you would prefer more granular control over the design and integration of your payment form, Stripe Elements could be an ideal solution. It is a set of highly customizable user interface components you can use to create secure payment forms that are integrated directly into your website, providing more flexibility in design and user experience.

If your business has subscriptions or recurring charges, Stripe Billing allows you to automate the management of these payments in minutes, adapting to any pricing model from flat rate to pay-as-you-go.

How much does it cost to set up an S.r.l.?

Incorporating an S.r.l. involves a number of initial costs that vary depending on the form chosen (e.g., ordinary, single-member, or simplified) and the professionals involved.

How much tax does an S.r.l. pay?

If you are setting up an S.r.l., it is important to know what taxes and contributions you will have to pay once your company begins operating. Here are the main taxes and contributions:

• Italian corporate income tax (IRES): 24% or 20%
  
• Italian regional tax on productive activities (IRAP): 3.9%
  
• VAT: 22%, 10%, 5%, or 4%
  
• Dividend withholding tax: 26%
  
• INPS social security contributions: A minimum of 24%
  

The taxes and contributions are detailed below:

IRES

IRES is levied at a rate of 24% on the company’s taxable income (i.e., on the profit that remains after removing from income all deductible costs incurred in the business, such as expenses for suppliers, personnel, rent, consulting, depreciation, etc.).

The 2025 Budget Law provides a reduction in the IRES rate from 24% to 20% (i.e., IRES bonus). This is applicable from the tax period after December 31, 2024 only and is exclusively for companies that do the following:

• Allocate at least 80% of 2024 profits to a nondistributable reserve
  
• Use part of this reserve for investments in new capital goods related to the Transition 4.0 and Transition 5.0 programs in an amount equal to at least 30% of the reserve or 24% of 2023 profits, with a minimum of €20,000
  
• Maintain or increase the number of permanent staff
  
• Have not applied for unemployment benefits in 2024 or 2025, except in specific cases
  

IRAP

IRAP was introduced by Legislative Decree No. 446/1997 to provide Italian regions with an autonomous source of financing and promote local economic and social development. Businesses required to pay IRAP are those that regularly exercise an autonomously organized activity aimed at the production or exchange of goods or the provision of services in the regional territory. The base rate for 2024 was 3.9%, but regions can modify it to a maximum of 0.92%, including by sector or taxpayer category.

VAT

VAT affects most business transactions. The standard VAT rate is 22%. For some specific goods and services, there are reduced rates, such as 10%, 5%, or 4%. Every industry must pay VAT on a regular basis—either monthly or quarterly—depending on the best-suited accounting regime for the business.

Dividend withholding tax

If you choose to distribute profits among shareholders, dividends will be subject to a 26% withholding tax. This is an additional tax on top of the IRES already paid by the company. Therefore, many prefer to reinvest profits within the company rather than distribute them immediately.

INPS social security contributions

You should also carefully consider INPS social security contributions. This amount changes based on your role and activities in the S.r.l.

Rates are confirmed or adjusted each year by ministerial decree. Always check the updated amounts before planning your budget.

When considering the contributions to be calculated after setting up an S.r.l., here are some other aspects to keep in mind:

• Cumulative roles: If you are both a director and an operating worker, generally the obligation to register with the Artisans and Traders Fund System prevails (i.e., fixed and percentage contribution). The director’s portion of compensation remains included in this fund system, and it does not go to the Separate Fund System.
  
• Contribution cap: For 2025, it is €119,650 for traders and craftspeople. Above this threshold, no more percentage contributions are paid.
  
• Reductions or exemptions: New hires under the age of 21 and innovative startups can use reduced rates or partial tax relief for limited periods.
  
• Single-member S.r.l.: If performing regular activities, the single shareholder is fully covered by the social security fund system corresponding to the activity (e.g., Artisans and Traders or Separate Fund System).
  

Managing taxes and contributions for an S.r.l. is complex, and you should consider consulting an accountant to ensure that you are operating in full compliance.

Starting a business in Italy from abroad: Benefits of an S.r.l.

If you reside abroad and want to enter the Italian market, setting up an S.r.l. can be a good option. The S.r.l. is a legal form that is also widely used by foreign entrepreneurs because it offers protection of personal assets, flexibility in management, and easier access to the Italian economic and tax systems.

It is possible to incorporate an S.r.l. if you do not reside in Italy. You must obtain a VAT number and Italian tax code and appoint a legal representative residing in Italy.

You might need to legalize and translate your identity documents. Legalization can be done by apostille, which is a stamp that simplifies the process of authenticating public documents for international use. It can help you avoid the need for consular legalization in countries adhering to the Hague Convention. Alternatively, you must contact the Italian embassy or consulate in your home country. Then, you can follow the normal procedure for incorporating an S.r.l.

In fiscal terms, setting up an S.r.l. allows access to several facilitated schemes provided in Italy for corporations. These can include tax credits for investments in capital goods. In addition, an S.r.l. allows you to open a dedicated bank account in Italy, manage payments in euros, and enter into contracts with local customers and suppliers with full transparency.

In brief, if you wish to start a business in Italy from abroad, setting up an S.r.l. can be beneficial for running a stable business. It is a reliable corporate form that can grow over time.