As a foreigner, opening a business in Colombia is thrilling and requires plenty of planning. However, when it comes to starting a business in Colombia, the government of Colombia encourages foreign investment to boost the economy through ease of doing business when establishing a company there.
This article provides a guide to starting a business in Colombia.
The Essentials of Starting a Business in Colombia
Colombia is the largest country in Latin America, and its economy has been growing steadily over the past decade. The country is rich in natural resources, and with a population of nearly 50 million, there is a massive demand for goods and services.
The Colombian government offers incentives to foreign investors who want to set up businesses in Colombia. These include tax holidays, incentives on capital gains, duty-free importation of machinery and equipment, reduced corporate income tax rates, less daunting legal requirements, and free trade agreements with other countries. Getting a business visa for any global investors or entrepreneurs who wish to conduct business in Colombia is essential.
If you are considering establishing a business in Colombia, here are some steps you must follow:
Sign Power of Attorney
The first stage in establishing your Colombian business is to develop and execute the POA, which authorizes your Colombian legal representative to act on your behalf. A power of attorney must be signed by you and notarized by a Notary Public.
Select Your Business’ Legal Name
The following step is to decide on a name for your company. Check the Single Business Register (RUE), a public database maintained by the government, to see if your proposed company name is available.
Choose the Type of Business Entity
Colombia has three types of business entities: SSC (Simplified Shares Company), Corporation, and FCB (Foreign Company Branch). Your company’s demands and economic activities may determine your chosen legal entity.
Simplified shares company – Commonly known as SAS, don’t necessitate any unusual procedures for incorporation, making them the most accessible to foreign investors. In 2008, a law was passed that made this structure possible. SAS is now widely regarded as a sound financial investment by local and foreign firms.
Corporation – This type of company may be more complex than an SSC because it requires your capital contribution will be divided equally into number of shares with transferable titles.
FCB – A foreign company branch represents a foreign-owned business or subsidiary which operates within Colombia under its name but retains all assets outside of Colombia. Colombian authorities only tax the assets of this branch in Colombia once they are repatriated back into the country through dividends paid out by the parent company.
Alternatively, entrepreneurs can form limited liability companies.
In the United States, a limited liability company (LLC) is a corporate entity whose owners are shielded from personal liability for the firm’s debts and obligations.
Define Company’s Bylaws
After deciding on a legal structure for your business, your Colombian company must define its bylaws. Your bylaws will serve as the “constitution” of your business, outlining the rules and regulations by which daily operations must abide.
Essentially, the bylaws will define everything about the organization, from its operations and economic activities to its capital, share number, legal representatives, and shareholders.
Get your business registered with the Chamber of Commerce
You must register your company with the Chamber of Commerce requires you to provide information about your company’s operations, shareholders, power of attorney, and bylaws.
The COC will check these to ensure they conform to Colombian law and business formation guidelines.
Get A Taxpayer ID Number
The DIAN, or National Directorate of Taxes and Customs, is the organization that issues tax identification numbers (NITs) to businesses after registering your business with the Chamber of Commerce. In addition to the required monthly and annual tax reports, the Colombian government will use this number to identify your business for all tax and accounting purposes.
Sometimes, the NIT can be created mechanically once the Chamber of Commerce has accepted the registration. In other cases, the company’s authorized representative must personally visit a DIAN office to complete this procedure.
Initiate A Corporate Bank Account in Colombia
The final step in establishing your Colombian business is to open a bank account. Your company will operate when you open a corporate bank account. Different banks in Colombia offer business bank accounts, each with perks and business account arrangements.
After this is done, you can start your business in Colombia.
Find a Legal Representative of the company to Help You Incorporate in Colombia.
Legal representatives are required to form a company in Colombia. They are legal expert in the country and need to be different from those who control the business. This individual is in charge of the smooth running of the activities the company carries and must sign any contracts, and legal papers, authorize tax declarations, and manage all other corporate operations.
Start a Company in Colombia Today!
In conclusion, Colombia is a great place to open a business. It has a growing economy, and the opportunities for entrepreneurship are vast. If you’re looking to start your own business, get a business visa and take advantage of these resources.
Trost Compliance can help you start your company in Colombia by providing all the necessary legal documents and registering them with the appropriate authorities. With our help, you’ll be able to take advantage of all that Colombia has to offer and begin building your business empire today!
Contact us to get your personalized quotation today!
