PFA or SRL: Choosing a Business Form in Romania

How a lawyer in Cluj helps you choose a business form

PFA or SRL is usually the first question I get from someone starting a business. A PFA is an authorised individual (persoană fizică autorizată). If you’re wondering which activities you can list, I’ve written a guide to the object of activity updated under CAEN Rev. 3 (in Romanian). I help you choose, then I take care of setting up the form you’ve chosen.

To give you the full picture, under art. 2 of Law no. 31/1990 on companies (Legea nr. 31/1990) the companies with legal personality are the general partnership (societate în nume colectiv), the limited partnership (societate în comandită simplă), the joint-stock company (societate pe acțiuni), the partnership limited by shares (societate în comandită pe acțiuni) and the limited liability company (societate cu răspundere limitată). Alongside them are the forms without legal personality governed by Government Emergency Ordinance no. 44/2008 (OUG 44/2008): the PFA, the individual enterprise (întreprindere individuală, II) and the family enterprise (întreprindere familială, IF). The liberal professions have their own forms of organisation, set by their own laws.

PFA or SRL: what’s the difference?

For me, liability is the difference that matters most. With a PFA, if the business assets (patrimoniu de afectațiune) aren’t enough, creditors can also go after your other property (art. 20(1) of OUG 44/2008). With an SRL, shareholders are liable only up to their subscribed capital (art. 3(3) of Law no. 31/1990), except for a shareholder who abuses limited liability to defraud creditors (art. 237^1(3)).

On tax, I tell you which regime applies to each form. A PFA’s income is income from independent activities (art. 67 of the Fiscal Code), taxed under the actual-income system (sistem real, art. 68) or on the basis of an income norm (normă de venit, art. 69), with social contributions on top. An SRL pays profit tax or, if it meets the conditions in art. 47 et seq., micro-enterprise income tax, and the money reaches you as dividends, taxed separately. Rates and thresholds change often, so work out the exact figures with your accountant.

Who is a PFA for, and who is an SRL for?

• Doctors and other regulated professions. The form of practice depends first of all on the profession’s own laws, which set out their own forms of organisation. A PFA or an SRL is an option only where the profession’s law allows it, so I look at each case individually.
• IT and freelance services. If you work alone and in only a few activities, a PFA is simple. When clients want to contract with a company, or you want shareholders or more than 3 employees, you’ll need an SRL.
• Construction. Teams quickly outgrow the PFA’s limit of 3 employees (art. 17(1)); the individual enterprise allows 8 employees (art. 24(2)), and the SRL has no limit. Given the risk of accidents and disputes with clients, limited liability protects you better.
• Ridesharing and alternative transport. The platforms require a business registered with the Trade Register. A single driver usually works as a PFA; a fleet with several drivers needs an SRL. Transport authorisation has its own rules, which we check first.

SRL, SA or SRL-D?

Most entrepreneurs choose the limited liability company, which is simple to run and to keep accounts for. It can have one shareholder or up to 50 (art. 12 and art. 13 of Law no. 31/1990). The minimum capital is 500 lei on formation and 5,000 lei once net turnover exceeds 400,000 lei (art. VI of Law no. 239/2025). I set out the steps on the page about setting up an SRL.

The joint-stock company (SA) needs at least 2 shareholders and share capital of at least 90,000 lei (art. 10(1) and (3)) and has a more complex management structure. It suits businesses that bring in investors.

The SRL-D, a limited liability company for first-time entrepreneurs (societate cu răspundere limitată-debutant), is governed by Government Emergency Ordinance no. 6/2011 (OUG 6/2011) and is meant for people starting their first business, under the Programme to stimulate the setting up and development of micro-enterprises by first-time entrepreneurs. The ordinance is in force and the Trade Register Office (ONRC) still registers SRL-Ds, but before you choose this form it’s worth checking whether the incentive programme is still running, and I check that for you. The conditions are strict: an SRL set up by no more than 5 first-time shareholders, managed by its shareholders, with no more than 5 groups of activities (art. 3(1)). The company loses its first-time status on 31 December of the year in which it reaches 3 years from registration (art. 6(1)(a)).

The individual enterprise and the family enterprise

The individual enterprise (II) is a business without legal personality organised by an individual entrepreneur (art. 2(g) of OUG 44/2008). It can have no more than 10 CAEN activity classes and no more than 8 employees (art. 24), and the holder is liable in the same way as with a PFA, first with the business assets and then with their other property (art. 26). A PFA can ask to change its status to an individual enterprise (art. 19(2)).

The family enterprise (IF) is made up of 2 or more members of a family (art. 28(1)), can’t employ third parties under an employment contract (art. 28(4)), has no assets of its own and doesn’t acquire legal personality (art. 30(1)). The members are jointly and indivisibly liable for the debts taken on by their representative, according to their participation shares (art. 31).

How do I choose the right form for my business?

I compare the options against your real situation, starting from:

1. the type of activity and the CAEN codes you need, including any special authorisations;
2. where the capital comes from and whether you’ll contribute assets;
3. the number and type of shareholders, including whether you want someone to join later;
4. the employees you’ll have in the first year and in the three after that;
5. the liability you take on personally and the administration you can keep up over time.

The law doesn’t provide for converting a PFA into an SRL, so switching means striking off the PFA and setting up a new company. It’s worth choosing well from the start.

How I can help you

We look together at your object of activity, the number of shareholders and how you want the business to grow, then I tell you honestly which business form I think suits you. Once we’ve settled the structure, I take care of setting up the company and, later on, of amending the articles of association. It’s no problem if you don’t have a plan set in stone yet; we often work it out in the first conversation. My other services for companies are on the business law page. If you’d like to talk about your situation, write to me.