Why the SRL Is the Best Company Form for Startups in Romania

Introduction: Why the Legal Structure Is a Startup’s First Strategic Decision

A startup begins with an idea, a market opportunity, and a founder’s conviction that the two can meet. But the moment that idea moves from a notebook to the real world — the moment you need a bank account, an invoice, a contract with a client, an employment agreement, or a conversation with an investor — it needs a legal container. In Romania, the form of that container determines your personal liability, your tax rate, your ability to raise capital, your credibility with banks and clients, and the administrative overhead you carry from day one. It is not a formality; it is a decision with consequences that compound over the life of the company.

Romania offers several legal forms for business: the SRL (societate cu răspundere limitată — limited liability company), the SA (societate pe acțiuni — joint-stock company), the PFA (persoană fizică autorizată — authorised natural person), and the II (întreprindere individuală — individual enterprise). For startups — and especially for technology, SaaS, fintech, AI, and e-commerce startups — one of these forms dominates overwhelmingly: the SRL. This guide explains why, compares the SRL honestly against every alternative, and walks founders through the practical steps of incorporating, funding, hiring, banking, and scaling a Romanian startup.

Why Choosing the Right Legal Structure Is Critical for a Startup

• Liability. A startup, by definition, operates under uncertainty. Products may fail, contracts may go wrong, clients may not pay. If the founder’s personal assets — savings, apartment, car — are exposed to business debts, a single bad quarter can be personally devastating. The SRL creates a wall between the company’s obligations and the founder’s personal patrimony. A PFA does not.
• Investment. Venture capital, angel investors, and accelerators invest in companies, not in self-employed individuals. The investment process — term sheets, share issuance, shareholders’ agreements, anti-dilution provisions — requires a corporate entity with a defined share structure. The SRL provides this. A PFA or II cannot accommodate outside investment at all.
• Taxation. Romania’s micro-enterprise regime allows qualifying SRLs to pay 1% or 3% of turnover instead of the standard 16% corporate income tax. For a startup with modest revenue and thin margins, this is a significant advantage — and it is available only to the SRL, not to the SA, PFA, or II in the same form.
• Credibility. B2B clients, payment processors, partner companies, and banks treat a registered SRL differently from a self-employed individual. An SRL has a legal identity, a trade-registry number, a VAT number, a registered office, and a corporate bank account. For a startup selling to enterprises or operating internationally, this credibility is not optional.
• Scalability. A startup that succeeds will hire employees, open new markets, bring in co-founders, and potentially merge or be acquired. The SRL supports all of these transitions within a single structure. Converting from a PFA to an SRL mid-growth — while possible — wastes time, costs money, and disrupts operations.

What Is an SRL in Romania?

The SRL (Societate cu Răspundere Limitată) is Romania’s limited liability company — the legal equivalent of the German GmbH, the French SARL, the British Ltd, or the American LLC. It is a separate legal entity, distinct from its founders, with its own name, its own assets, its own contracts, and its own tax obligations. The shareholders’ liability is limited to the capital they contribute; personal assets are protected.

The Key Advantages of an SRL for Startups

• Limited Liability Protection. This is the foundational advantage. When a startup is formed as an SRL, the company’s debts are the company’s debts — not the founder’s. If the business fails, creditors can claim against the SRL’s assets, but not against the founder’s personal savings, real estate, or other property (unless the founder has given personal guarantees or engaged in fraud).
• Easy and Fast Company Registration. Registering an SRL in Romania typically takes five to ten business days. The process requires drafting articles of incorporation (act constitutiv), obtaining a registered office, preparing identification documents for all shareholders and directors, filing a UBO declaration, and submitting the application to the Trade Registry.
• Low Start-Up Costs. The minimum share capital of an SRL is 1 RON — approximately €0.20. While a slightly higher capital (200 RON, or ≈€40) is recommended for practical credibility, Romania’s SRL capital requirement is among the lowest in the European Union.
• Flexible Ownership Structure. An SRL can have a single founder or up to fifty shareholders. Shareholders can be natural persons or legal entities, from any country. Shares can be distributed in any proportion, and the articles of incorporation can include provisions for share transfer, pre-emption rights, and shareholder decision-making.
• Professional Business Image. An SRL is a registered company with a trade-registry number (CUI), a VAT number (if registered), a corporate bank account, and a legal identity recognised across the EU. For a startup selling B2B services, integrating with payment processors, applying to accelerators, or negotiating with enterprise clients, this corporate identity is essential.

Why the SRL Is Ideal for Foreign Entrepreneurs

• Full foreign ownership. A non-EU citizen can be the sole shareholder and sole director. There is no requirement for a Romanian partner, a Romanian director, or a Romanian resident on the cap table. The founder retains complete control.
• No residency or citizenship requirement. Unlike the PFA and II, which require the holder to have a domicile or residence in Romania, the SRL imposes no such condition. A founder living in Berlin, Dubai, São Paulo, or San Francisco can own and direct a Romanian SRL.
• Remote formation. The entire registration process can be completed without the founder visiting Romania, through a power of attorney granted to a Romanian lawyer. This is particularly valuable for founders who are still based abroad and testing the Romanian market.
• EU single-market access. A Romanian SRL is an EU-registered company. It can sell goods and services across the single market, issue EU-compliant invoices, register for the EU OSS (One-Stop Shop) VAT scheme for cross-border e-commerce, and hold SEPA-compatible bank accounts.
• International banking. Romanian corporate bank accounts operate within the SEPA framework and support SWIFT transfers. Multi-currency accounts (RON, EUR, USD) are available at major banks. Combined with fintech platforms (Wise, Revolut Business), the SRL provides a complete international payment infrastructure.

Tax Advantages for Romanian Startups

Romania’s tax regime is one of the most frequently cited reasons for incorporating a startup in the country, and the micro-enterprise regime is at the centre of the appeal.

*Micro-enterprise eligibility thresholds, tax rates, and VAT thresholds are subject to frequent legislative change. The figures above reflect mid-2026 legislation. Verify current rules before planning.

SRL vs PFA: Which Is Better for a Startup?

SRL vs II (Individual Enterprise)

SRL vs SA (Joint-Stock Company)

Can an SRL Raise Investment?

Yes — and this is one of the most important practical questions for startup founders. The SRL is fully capable of accommodating angel investment, venture capital, and private equity, subject to Romanian company law.

• New shareholders. An investor joins the SRL by acquiring newly issued shares (a capital increase) or by purchasing existing shares from a founder (a share transfer). Both require a shareholders’ resolution amending the articles of incorporation and registration with the Trade Registry.
• Shareholders’ agreements. While the articles of incorporation govern the company’s internal rules, a separate shareholders’ agreement (SHA) is standard practice for investment rounds. The SHA typically covers: vesting schedules for founder shares, anti-dilution protection, tag-along and drag-along rights, board composition, reserved matters requiring investor consent, liquidation preferences, and exit mechanisms.
• Convertible instruments. Convertible loans (SAFE-style or traditional convertible notes) are used in Romanian startup financing, particularly for pre-seed and seed rounds where a full equity round would be premature.
• Preparation for investment. Investors expect clean corporate records: up-to-date articles of incorporation, a clear cap table, filed annual financial statements, no outstanding tax obligations, properly documented shareholders’ decisions, and — for tech startups — clear IP ownership.

Can an SRL Hire Employees and Contractors?

An SRL can hire an unlimited number of employees under individual employment contracts governed by Romanian labour law. Contracts must be registered in the Revisal electronic system before the employee’s first working day. The standard working week is 40 hours, probation periods are up to 90 days for most roles, and employees are entitled to at least 20 days of paid annual leave. Social contributions total approximately 37–39% of gross salary (split between employer and employee).

For international startups, the SRL can also engage independent contractors (both Romanian and foreign), which is common for early-stage teams before full-time hires are justified. However, Romanian authorities scrutinise contractor relationships for signs of disguised employment.

Remote teams are fully supported. A Romanian SRL can employ people working from home (including from locations outside Romania, subject to the tax and social-security rules of the employee’s country of residence), and can manage distributed teams using standard collaboration tools.

Opening a Business Bank Account for an SRL

A corporate bank account is essential — for receiving revenue, paying salaries, and meeting tax obligations. Romanian banks require the company’s registration certificate, articles of incorporation, a recent trade-registry extract, identification for all directors and shareholders, a UBO declaration, and a written description of the business. The account-opening process typically takes one to four weeks for non-resident founders; in-person presence is usually required at least once.

For startups with international revenue, the recommended setup is a Romanian bank account (for tax compliance, payroll, and domestic credibility) combined with a fintech platform such as Wise Business or Revolut Business (for international collections, multi-currency management, and competitive FX rates). Major Romanian banks that work well with startup SRLs include Raiffeisen, ING, UniCredit, and Banca Transilvania.

Accounting and Compliance Requirements

An SRL is required to maintain double-entry bookkeeping in accordance with Romanian accounting standards (which are largely aligned with IFRS for SMEs). In practice, this means engaging a professional accountant (contabil) — either in-house or through an accounting firm. The accountant handles monthly bookkeeping, VAT returns (if registered), payroll processing and social-contribution filings, and the preparation and submission of annual financial statements to the Ministry of Finance.

The cost of accounting services for a typical startup SRL ranges from approximately €100 to €300 per month, depending on the volume of transactions, the number of employees, and the complexity of the business. This is a non-optional cost and should be budgeted from day one.

Corporate compliance obligations include: maintaining the register of shareholders, documenting shareholders’ decisions in written resolutions, updating the trade registry for any changes (directors, shareholders, registered office, articles of incorporation), filing the annual UBO declaration, and retaining accounting records for a minimum of ten years.

Common Mistakes Startup Founders Make

• Choosing the wrong legal form. Founders who register a PFA to save on accounting costs, only to convert to an SRL when they need to hire or raise investment, waste time and money. If the business has any ambition beyond solo freelancing, start with an SRL.
• No shareholders’ agreement. Co-founders who incorporate an SRL without a shareholders’ agreement are building on a fragile foundation. The SHA defines vesting, exit rights, decision-making, and what happens if a founder leaves. Without it, every disagreement becomes an existential crisis. Draft the SHA before or at the time of incorporation.
• Incorrect share distribution. Splitting equity 50/50 between two co-founders without vesting is the most common structural error in startup formation. If one founder leaves after six months, they retain half the company. Use vesting schedules (typically four years with a one-year cliff) to align equity with contribution over time.
• No long-term planning. Articles of incorporation drafted with only the immediate situation in mind — no provision for new shareholders, no pre-emption rights, no share-transfer restrictions — create problems when the company needs to bring in investors or restructure. Think at least two investment rounds ahead.
• Underestimating tax obligations. The micro-enterprise tax is low, but it is not zero — and it applies to turnover, not profit. A startup that spends all its revenue and then discovers it owes 3% of gross receipts has a cash-flow problem. Set aside the tax liability monthly.
• Mixing personal and corporate finances. Using the company bank account for personal expenses, or paying personal costs through the SRL without proper documentation, creates accounting chaos, tax risk, and potential liability for the director. Keep the separation clean from day one.
• Not assigning IP to the company. Code written by a founder before incorporation, designs created by a freelance contractor, or a brand name registered personally rather than in the company’s name — all of these create IP ownership gaps that investors will identify and that can block a deal. Assign all IP to the SRL formally, in writing, at or before incorporation.

When Should a Startup Consider Converting to an SA?

The SRL serves most startups well through seed, Series A, and often Series B and beyond. Conversion to an SA becomes relevant in specific circumstances.

• IPO. A public listing on the Bucharest Stock Exchange (or any other exchange) requires the SA form. If the startup is on a trajectory toward a public offering, conversion is part of the pre-IPO preparation.
• Institutional investors requiring SA governance. Some large institutional investors (particularly those accustomed to investing in German AGs or French SAs) may require the governance structures that only the SA provides: a formal board, statutory auditors, and freely transferable shares. This is uncommon at the seed or Series A stage but can arise in later rounds.
• Regulated industries. Banking, insurance, investment management, and certain energy-sector activities require the SA form by law. If the startup enters one of these sectors, conversion is mandatory.

In all other cases, the SRL is the more efficient structure. The SA’s higher capital requirement (≈€18,000), mandatory board governance, and statutory-audit obligation represent overhead that an early-stage company should not carry unless there is a specific reason.

Success Factors for Building a Startup in Romania

• Choose the right structure from day one. For 95% of startups, this means an SRL. Avoid the temptation to ‘start simple’ with a PFA and convert later.
• Plan the cap table for the long term. Reserve an option pool for future employees (typically 10–15% of equity), use vesting for all founders, and draft articles of incorporation that anticipate at least two investment rounds.
• Secure IP ownership early. Assign all intellectual property — code, designs, trademarks, domain names — to the SRL before raising any capital. Investors will conduct IP due diligence, and gaps are deal-breakers.
• Engage professional advisers. A competent Romanian lawyer and accountant cost far less than the problems they prevent. Budget for both from incorporation onward.
• Leverage the tax regime. The micro-enterprise tax, the IT salary-tax exemption, and Romania’s network of double tax treaties are genuine advantages — but they require correct structuring. Work with a tax adviser to ensure you qualify and comply.
• Build the corporate record. Clean books, filed statements, documented decisions, and a well-maintained trade-registry file are not bureaucratic overhead — they are the foundation of investor confidence and operational credibility.
• Think EU-wide from the start. A Romanian SRL is an EU company. Price in euros, invoice under EU rules, register for OSS if selling B2C across borders, and position the company as a European business, not a Romanian one.

Frequently Asked Questions