You're about to launch your new business as a’auto-entrepreneur In Portugal, however, before you can bill your clients for your services, there is a mandatory step you must take to ensure compliance with the law and tax authorities.

Self-employed in Portugal, how to start your business

Gone are the days when professionals used a pad of detachable receipts to bill their clients. With the digitization of public services, all you need to bill a client is a computer or even a tablet with an Internet connection. However, there are a number of steps you must follow.

Before you start billing your clients, you must first register your self-employed business with the Portuguese tax authorities.

Declaration of Business Activity to the Department of the Treasury

The first step is to apply to start a sole proprietorship.

IMPORTANT: You must register your business before you even start operating.

The declaration of business commencement can be filed directly with a public finance office or, more simply, directly through the Finance Portal.

Office of Public Finance:

You will need to bring your ID card (CI), your taxpayer ID number, and your IBAN (please note that you must have a bank account with a Portuguese bank).

Next, you will need to specify the type of business you operate, your approximate monthly revenue, and your VAT status.

Note: Simplified System or organized accounting

From the Finance Portal

Log in to your portal using your taxpayer ID number and password. Once you're logged in, simply follow these steps:

1. Check out the following sections: “”Citizens or Businesses“ | ”Submit“ | ”Declarations“ | ”Activity“ | ”Declaration of Commencement of Activity" (via taxpayer)
   
2. In the event that you choose the organized accounting, you will need to follow these steps: ”Certified Accountant“ | ”Submit“ | ”Filings“ | ”Activity“ | "Declaration of Commencement of Activity"
   
3. You will need to review and complete the information that has already been pre-filled. Then, confirm and submit the declaration.

Differences Between the Simplified Tax System and Organized Accounting

You will need to determine which tax system is best suited to your income and the nature of your business, keeping in mind that the larger the scale of your business, the more it fits into a structured accounting system.

As a self-employed individual or freelancer in Portugal, you can choose to use the formal accounting system even if your annual income does not exceed 200,000 euros.

Be sure to check out our article: Freelance in Portugal how to issue your invoices