From unipersonal to company (SRL/SAS): when and why to switch

Starting as a unipersonal (sole trader) is the simplest path. But as you grow, the question eventually appears: should I move to a company, an SRL or a SAS? Here's an honest guide to when it makes sense and when it's overkill.

What changes when you become a company

The biggest difference is limited liability: in a company, your personal assets are separate from the business's, so a business problem doesn't reach your personal belongings. You can also bring in partners or investors and project more scale and credibility. In return, there's more cost and more accounting formality. It's a trade-off, not a free upgrade.

The tax reason: the software exemption

For people in tech there's a concrete reason. The IRAE exemption for software development does not apply to sole proprietorships — only to certain companies. The DGI puts it bluntly:

On the exemption for sole traders, the DGI replies:

«la exoneración establecida en el literal S) del artículo 52° del Título 4 del T.O. 1996 no es aplicable a empresas unipersonales»

In English: the exemption established in literal S) of article 52 of Title 4 of the T.O. 1996 is not applicable to sole proprietorships.

And on companies, in the same consultation:

«si se tratara de una SAS, la citada exoneración resultaría aplicable»

In English: if it were a SAS, the cited exemption would be applicable.

In other words: if you're an independent developer and want access to that exemption, you need to set up a company (typically a SAS). For many in IT, this is the main trigger for the switch.

SRL or SAS, in brief

The SRL is the classic company: partners and share capital, with limited liability. The SAS is more modern and flexible: it can have one or several owners, is set up more nimbly, and is today's favourite among entrepreneurs. Both give you limited liability; the choice depends on your case and your accountant.

The cost — let's be honest

A company costs more than a unipersonal: there are incorporation expenses, mandatory accounting with an accountant, and more formalities through the year. The company also pays IRAE on real profit (with the software exemption where it applies). That's why it pays off at scale; if your activity is small, the unipersonal is usually still the sensible choice.

Signs you've outgrown the unipersonal

See if several of these ring true:

• Your activity carries risk and you want to protect your personal assets.
• You want to bring in partners or take investment.
• Your clients (or tenders) require you to invoice as a company.
• You develop software and want the IRAE exemption.
• Your income outgrew the simple regimes (monotributo, certain fictos).

Unipersonal vs SRL/SAS

In short: moving to an SRL or SAS gives you limited liability, partners and, in IT, the door to the software exemption — in exchange for more cost and accounting. It makes sense when you grow or when the tax reason justifies it. Before the leap, run the numbers with an accountant and see our legal-forms post.