For foreign investors, choosing to incorporate a business in Puerto Rico offers many of the benefits of operating in Latin America, while also retaining some of the advantages enjoyed doing business at home.
That is because while Puerto Rico is a Spanish speaking territory with a distinctly Latin American and Caribbean culture, it is also a US terrority, which retains strong links to the United States, including similar administrative processes.
For anyone planning a short-term or limited-scale engagement with the Puerto Rican market, hiring local staff via a professional employer organization (PEO) could be a good alternative.
Because when you hire through a PEO in Puerto Rico, you avoid the need to establish and later liquidate a local entity, and are able to get to work in only the time it takes to find those staff.
However, for those who are committed to entering the market on a more permanent basis, company incorporation in Puerto Rico entails five key steps, which are highlighted after some insight is given into what makes the territory an enticing destination for investment.
Contact us today to find out how we can support you doing business in Puerto Rico.
Puerto Rico popular among investors
Located in the Caribbean Sea between the Dominican Republic and the US VIrgin Islands, Puerto Rico has a population of around 3.2 million people and registered a gross domestic product (GDP) of $103.1 billion in 2020.
That represented a slight GDP decline compared to the previous year, owing to the turmoil caused by the COVID-19 pandemic, however the Puerto Rican economy suffered relatively little compared to others in the region.
As such, Puerto Rico remains one of the most prosperous territories in Latin America and the Caribbean, registering a gross national income (GNI) $21,740 per capita in 2020 — a figure only exceeded in the region by the Bahamas.
Once a major producer of sugar, Puerto Rico now has a dynamic and diverse economy, with the well-developed manufacturing industry contributing more than 50% of total GDP and being a major draw for investors. Among the manufactured products that represent key export goods to Puerto Rico are pharmaceuticals, medical equipment, garments, and computers.
Call centers are also a growing business activity, given the high level of English proficiency on the island, while Puerto Rico is also home to an increasing pool of tech talent and startup scene.
For investors looking to incorporate a business in Puerto Rico to engage in any of these endeavors, the island has three free trade zones (FTZs) — known as foreign trade zones in the United States and its territories — offering lucrative financial incentives to businesses located in them. Beyond those, the island has a huge tourism sector which also draws significant overseas investment.
Being a US territory, Puerto Rico uses the US dollar, which offers stability to locally-based businesses, and also boasts considerably better infrastructure than many other nations in Latin America and the Caribbean.
Although a great deal of Puerto Rico’s trade is with the mainland United States, local businesses also benefit from preferential access to a wide range of major global and regional markets, via US participation in a wide range of free trade agreements (FTAs).
5 steps to incorporate a business in Puerto Rico
You will need to follow these five key steps when you incorporate a business in Puerto Rico:
1. Reserve the name of the business you wish to incorporate in Puerto Rico
The first thing you must do when you incorporate a business in Puerto Rico is to reserve your company name. This entails entering potential names into official databases to ensure that they are not in use or too similar to companies already active in the market.
2. Appoint a legal representative
If you will be overseeing your Puerto Rican business interests from elsewhere, or otherwise will be away from the territory for long stretches, you will need to appoint a legal representative. They will be able to act on your behalf, including signing important official documents, and must be appointed via a power of attorney.
3. Establish the company bylaws
Once you have completed these two steps, you will next need to draw up the company bylaws, which describe the activities, structure, objectives, and shareholders of the company.
4. Register the company
With the bylaws drawn up, you or your legal representative will be able to register the company before local authorities, including the Puerto Rico Chamber of Commerce.
5. Open a corporate bank account
The final step to incorporate a business in Puerto Rico is to open a corporate bank account, through which all transactions related to the company will pass through. Your legal representative will be able to offer you advice on the best providers based on your location and commercial activity.
Biz Latin Hub can help you incorporate a business in Puerto Rico
At Biz Latin Hub, our local team of corporate support professionals is on hand to assist you when you incorporate a business in Puerto Rico.
We offer a comprehensive portfolio of services, including company formation, accounting & taxation, legal services, visa processing, and hiring & PEO, meaning that we are able to assist with market entry and ongoing operations, and offer tailored packages of back-office support to suit every need.
With offices in 16 markets around Latin America and the Caribbean and trusted partners taking our coverage to almost every corner of the region, we also specialize in multi-jurisdiction market entry and ongoing support.
Contact us now to find out more about how we can support you doing business in Puerto Rico.
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