A merchant is one who performs, regularly or permanently, business activities.
A trader is primarily engaged in buying and selling products in the market in order to make a profit from this intermediation. In order to be considered as such, traders must comply with a series of requirements specified by the law, among which are: registration, keeping accountsand complying with the rules of free competition , among other obligations.
How a trader makes a profit
Merchants make a profit from their activities by charging a margin for intermediation. That is, add an additional amount to the cost of the products or services you sell. To achieve this, traders usually buy in bulk (large volumes) so they get a reduced price and then sell each unit at a higher price than it cost.
Importance of merchants
Traders have a very important role in society. They facilitate the exchange of goods and services which increases people’s well-being and fosters the growth of the country.
Among its most relevant activities are:
- Bring producers and buyers closer
- Publicize the characteristics of the products or services
- Expand the variety of products and services available to consumers. This includes importing and exporting goods from different countries.
- Serve as a communication channel between producers and consumers
- Facilitate post-sale services such as: claims, breakdown repairs, guarantees, etc.
Requirements to be considered a merchant
In the case of Spain, the merchant activity is open to anyone who wishes to carry it out as long as some basic requirements are met.
Below we describe some of the essential requirements specified in the Commercial Code:
- Carry out the commercial activity as usual
- Registration in the Commercial Registry
- Keep accounting where your activities are recorded in an orderly manner and it is possible to track
- Keep accounting books, correspondence, supporting documents and any other documentation for a period of six years
- Legalize the accounting books before the Commercial Registry
- Apply for registration in the Census of Taxpayers under the Ministry of Economy and Finance
- Get the tax ID or tax identification number
- At the end of the fiscal year,make a balance, the profit and loss account, a statement that reflects the changes in the net worth of the year, a statement of cash flows and the report
- Undergo Audit as required by law