Colombia has one of the most agile legal systems in South America when it comes to starting a business. With an emphatic government agenda to encourage foreign investors and entrepreneurs into the country, institutional support to start a business in Colombia is strong.
Being within the top three of the index of ease of doing business in Latin America in international rankings, the effort of the Colombian government to encourage foreign investment to boost the economy has yielded positive results.
In this article, our experts outline the local legal procedures that you must follow if you are interested in starting a business in Colombia.
Key steps to start a business in Colombia
There are several formal legal steps to starting your business in Colombia. Make sure to get assistance and advice from a local legal expert in the country, to ensure you comply with all corporate law and accounting requirements.
1. Draft and sign Power of Attorney
The first step to start your business in Colombia is to draft and sign the Power of Attorney (POA) document for your legal representative.
In the event that the shareholders and the legal representative are not in Colombia, a power of attorney must be drafted in order to sign the bylaws, and submit them to the Chamber of Commerce.
If the shareholders are foreign persons or companies, the Colombian government will request additional documents from abroad. Both the additional documents and the POA must be legalized before a Public Notary, apostilled and sent in physical form to Colombia.
2. Choose the name of your company
Through the government’s public database, in the Single Business Register or RUE, you must confirm that the desired name for your business is available. It is important to keep in mind that the legal name of your company may be different from your brand.
3. Choose the legal structure
You must choose the type of social structure that fits the needs and economic activity of your business. Please note that depending on the structure, specific documentation or additional legal and accounting processes may be required.
The 3 most common legal structures when creating a company in Colombia are:
- Simplified Shares Company (Sociedad por Acciones Simplificadas, or SAS): unlimited number of shareholders, and corporate documents don’t need to be made publicly available
- Corporation (Sociedad Anónima, or SA): capital is divided into shares of equal value and are represented by a negotiable title.
- Foreign Company Branch: extension of a foreign parent company.
4. Write the company bylaws
You’ll need to draft the bylaws for your company. This is the constitution of the company.
In this document you must provide all the information related to the company, how it will work, economic activities the company will carry out, capital of the company, number of shares, shareholders and legal representative(s).
5. Register with the Chamber of Commerce
Colombia’s Chamber of Commerce is responsible for regulating the creation of companies in Colombia. For this registration, you must provide a set of documents outlining your company’s activities, the bylaws and Power of Attorney, and shareholder information.
The Chamber of Commerce will review this documentation to confirm that it adheres to the legal requirements and company creation policies in the country.
Registration approval will take only 24 hours, after which time your company can start operations.
6. Obtain tax identification (NIT)
The National Directorate of Taxes and Customs, DIAN, is the entity responsible for assigning a tax identification number or ‘NIT’ to your company. This is a unique number with which the Colombian authorities will identify your company for all relevant tax and accounting activities, in addition to the monthly and annual tax returns that your company must submit.
In some cases, once the Chamber of Commerce has approved your registration, the NIT will be generated automatically. On other occasions, the legal representative of the company must approach the DIAN offices to carry out this process.
7. Open your corporate bank account
Finally, you must open a corporate bank account to finish the process and start your business in Colombia. There are many different banks in Colombia, and each one offers different benefits and agreements for corporate accounts.
To open a corporate bank account in Colombia you must present the certificate from the Chamber of Commerce certifying the existence of your company in Colombia, your tax certificate (NIT), the identification number of the legal representative and the opening balance of the company’s account. Each bank may request additional information for this step.
Once you’ve completed this step, your company will be ready to start operations in the country.
The Colombian government strives to promote foreign investment and facilitate administrative processes. For this reason, many of these company incorporation processes can be done online.
Ready to start a business in Colombia? Contact us
Colombia takes third place in the region for ease of doing business. Colombia has varied opportunities for foreign investors interested in doing starting their next commercial venture in Latin America.
If you are interested in starting a business in Colombia and want support to carry out this process without complications or setbacks, our team of legal experts in Colombia can help. Get in touch through here to find out how we can advise you to start a company in Colombia.
Our customized market entry services and back-office solutions will guide your throughout the entire company startup process, and ensure your business expansion starts off on the right foot and in full compliance with local law.
Learn more about our team and expert authors, and check out our short presentation below for more information on starting a business in Colombia.