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Company formation in Nicaragua is the first step to entering this market with immense potential. In these six steps below, we’ll explain what investors need to do to establish their business in Nicaragua. From navigating the legal requirements to understanding the tax implications, our guide provides comprehensive assistance to ensure a smooth and successful incorporation process in Nicaragua.
Whether you are a local entrepreneur looking to expand your business or an international investor seeking new opportunities, Nicaragua offers a welcoming environment for growth and prosperity. It has steady economic growth, security and a strategic location. company formation in Nicaragua, with the right advice, can be a smooth process.
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That’s where Biz Latin Hub steps in. We are experts in Latin America and the Caribbean, so we can help with company formation in Nicaragua or any other interests you may have in the region. Investors can take advantage of the growing middle class, thriving tourism and government incentives that boost various sectors.
Why is company formation in Nicaragua a good idea?
Nicaragua is a country that is looking to the future. It’s true that the country lags behind its neighbors on a number of economic indicators, but that is simply a sign of the wealth that awaits early adopters. After all, it has no fewer natural resources.
The country is ideal for nearshoring as company formation in Nicaragua means easy logistical connection to North America, South America and Asia. With wages remaining competitive as well, it’s clear to see the potential available in the country.
How does company formation in Nicaragua work?
To set up a company in Nicaragua you must follow these 6 steps:
- Step 1 – Draft Act of Incorporation.
- Step 2 – Buy Accounting and Corporate Books.
- Step 3 – Submit Act of Incorporation at VUI.
- Step 4 – Register as a Trader and Register Accounting Books.
- Step 5 – Obtain the Single Registration Document.
- Step 6 – Legal Representation.
Step 1: Draft Act of Incorporation:
The drafting of an Act of Incorporation requires at least two shareholders, either individuals or corporations and a minimum start-up capital of C$10,000 (approximately US$400). A legal representative with a Nicaraguan residency must be appointed. Additionally, the final act must be authorized and certified by a Nicaraguan public notary.
Step 2: Buy Accounting and Corporate Books:
These books are required for the registration of a company and may be acquired at local bookstores.
Step 3: Submit Act of Incorporation at VUI:
These documents are received at the Ventanilla Unica de Inversiones (Investment Service) and processed by the Commercial Registry. They require a payment of 1% of the company’s capital but up to a maximum of C$30,000 (approximately USD$1,200).
Step 4: Register as a Trader and Register Accounting Books:
Once the act of incorporation has been processed, one must register as a trader and also register the accounting books with the Commercial Registry. This procedure is also done at the VUI.
Step 5: Obtain the Single Registration Document:
This procedure may be done simultaneously with the previous one. This document is completed and submitted at the VUI and through it the investor receives the Municipal License, the License of the Nicaraguan Social Security Institute (INSS, for its acronym in Spanish), and the Tax Payer Registration (RUC, for its acronym in Spanish) of the General Revenue Department. The DUR requires a payment of 1% of the company’s capital.
Step 6: Legal Representation
For a corporation, shareholders must appoint a legal representative, who must be a Nicaraguan Resident or Citizen residing in the country. Choosing a trusted individual is crucial. The representative’s powers may be limited by the Board of Directors as deemed reasonable.
Frequently asked questions on company formation in Nicaragua
According to our experience, these are the most common questions and doubts of our clients when considering company formation in Nicaragua.
1. Can a foreigner have a business in Nicaragua?
Yes, foreigners can own and operate businesses in Nicaragua. There are no restrictions on foreign ownership of businesses in Nicaragua.
2. How long does it take to register a company in Nicaragua?
The process of incorporating a company in Nicaragua, once the Articles of Incorporation and Bylaws have been finalized and signed, typically takes 4 to 6 weeks. After this process, you can begin carrying out the various activities for which you established the company and apply for any applicable incentives.
3. What does “S.A.” mean in Nicaragua?
In Nicaragua, S.A. stands for Sociedad Anónima, which tis similar to an LLC. This legal structure separates the company from its shareholders, each of whom owns shares representing their ownership stake. The financial liability of shareholders is limited to the value of their shares.
4. What does “Compañía Colectiva” mean in Nicaragua?
This is is a partnership where there must be a minimum of 2 natural persons as partners. The business name of the Compañía Colectiva is a listing of the names of all the partners or some of them, with the addition of the words y Compañía. This legal entity offers limited liability to its shareholders, similar to S.A. companies, as long as the word limitada is added to the business name.
5. What types of entities offer Limited Liability in Nicaragua?
In Nicaragua, both S.A. (Sociedad Anónima) and Compañía Colectiva (Compañía Colectiva Limitada) are legal entity types that offer limited liability to their shareholders.
What are the Key differences between SA and CCL in Nicaragua?
| CCL | SA | |
|---|---|---|
| Shareholders | Minimum of two shareholders; single-member companies are not allowed in Nicaragua. | |
| Management | Managed by one or more partners. | Requires the election of a board of directors from among the shareholders. |
| Liability | Liable only up to the monetary value of their contributions. | Liable only up to the value of their shares. |
| Company Size | Suitable for smaller companies; partners’ identities are disclosed. | Preferable for larger companies to safeguard shareholder and director anonymity. |
| Regulatory Requirements | Closely tied to the collective partners. | More impersonal, often favoring management. |
Biz Latin Hub Can Support You with Company Formation/Incorporation in Nicaragua
At Biz Latin Hub, we offer a comprehensive range of market entry and back-office solutions in Latin America and the Caribbean.
We have expertise in company formation/incorporation in Nicaragua, with legal services, accounting and taxation, hiring, and visa processing available.
We retain a large presence in LATAM with strong partnerships throughout the region. This far-reaching network gives us lots of tools to help with international projects and entering new markets in different countries.
Contact us today to learn more about our services and how we can help you achieve your business goals in Latin America and the Caribbean.
If this article on company formation/incorporation in Nicaragua grabbed your attention, check out the rest of our coverage of the region. Or read about our team and expert authors.
The information provided here within should not be construed as formal guidance or advice. Please consult a professional for your specific situation. Information provided is for informative purposes only and may not capture all pertinent laws, standards, and best practices. The regulatory landscape is continually evolving; information mentioned may be outdated and/or could undergo changes. The interpretations presented are not official. Some sections are based on the interpretations or views of relevant authorities, but we cannot ensure that these perspectives will be supported in all professional settings.
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