Forming a legal business entity has many steps, but it’s not as hard as you might think. In this guide, we’ll help you learn how to register a company or corporation.
When planning to expand your business operations to Latin America, there’s every reason to consider Colombia.
The country also boasts better investor protection than other countries. As of 2018, it has a ranking of 7.3, which is higher than for most countries, including the US, Germany, and Israel.
So, if you want to know how to register a company or corporation in Colombia, this post is here to guide you through all the critical steps.
Keep on reading to learn more!
Take Care of the Basics
If you’re starting a new company, you need to check if your company’s name is available. Your legal business name and trademark can be different.
Be sure to write and present your business’ bylaws. This agreement will establish all the information relating the company, the way it will function and the activities it will be involved with.
If you’re establishing your company in Bogota, the process of getting a Tax ID will be done in the Chamber of Commerce. However, if you’re going to be located in another city, additional steps will be needed, as you will need to apply for a provisional Tax ID and later on apply for the final Tax ID before DIAN.
Understand the Available Structures
Colombia has three legal structures for setting up a business. You can choose that best suits your needs. They include:
- Limited company
- Joint-stock company
- Simplified stock company
A simplified stock company (SAS) is the simplest option for most foreign investors as it doesn’t require special formalities for its incorporation. The law permitting the establishment of this structure was passed in 2008. To this date, SAS has become a great option for both local and foreign investors.
Institutions You’ll Deal With
There are three primary institutions you’ll deal with to register your company in Colombia. They include:
- The Chamber of Commerce
- Colombian Tax Authority
- Local bank of your choice
The Chamber of Commerce is responsible for regulating the creation of new companies in Colombia. It ensures that your registration adheres to the current legal structures and policies. It will also provide a certificate that demonstrates the existence and status of your company.
This certificate will be requested while you operate the company by the majority of private and public entities existing in Colombia.
The Tax Authority registers your business into the tax system. This registration earns you a unique tax number (NIT), that will identify you for all purposes and will enable you to present the mandatory tax declarations.
You’ll also need to open a company bank account for operating your business and getting money from foreign investment.
Opening a Bank Account
This is a fairly straightforward process, on which you’ll need to present the Existence Certificate from the Chamber of Commerce, the Tax ID certificate (RUT), the ID of the legal representative and the opening balance sheet of the company.
Keep in mind that some banks might have specific requirements for opening an account.
Create an Incorporation Document
You´ll need an incorporation document that highlights the names and personal information of all partners involved in the
business. It should also indicate the name of the company and the activities it will be performing in Colombia.
Other important things the document need to show include:
- Capital structure
- The board of directors
- Partner responsibilities
- Causes of termination
You must have a legal representative, who can be different from the owners of the company. This person is responsible for the good operation of the company and is responsible for signing all contracts, legal documents, authorizing tax declarations, and handling all other company activities.
Understand the Laws Regarding Employees
If you are hiring employees, you need to register your business with the Family Compensation Fund, the Colombian Family Institute, and the Governmental Learning Service. You’ll need to fill a unique form for all of these agencies.
You´ll also need to register your employees for public health coverage. Employees have the right to choose their desired provider, and your company has to submit the respective form to the provider.
Your company must also affiliate itself with a pension system. You can register with the public fund or other private funds. Keep in mind that you can’t choose the pension fund for your employees as they have the right to choose the public or private fund.
Registering your business with the Labor Risks Administrator is also essential. The agency helps in covering professional illness and workplace injury cases. You have to pay monthly contributions to the program, and protection starts 24 hours after submitting your form.
Want More Information On How to Register a Company in Colombia?
Colombia is a great destination if you are looking to expand your business operations or start a new business. However, before you get everything up and running, you need to complete the company registration process.
The Biz Latin Hub Group offers tailored business services including company formation, legal services, accounting/taxation services, and visa processing. Reach out to Craig at [email protected] and see how we can assist you to begin commercial activities in Colombia.
Watch the following video to learn more about the company formation process in Colombia.