Understand the Jurisdictions Setup Requirement Before Proceed Your Register Company in Colombia
Why Register a Company in Columbia?
Columbia is a county located in South Carolina, bordering Brazil, Ecuador, Panama, Peru, and Venezuela. Strategically located between North and South America, Colombia is well positioned to connect the markets of Central, South and North America. Colombia has long been listed as having one of the fastest growing economies in Latin America due to the monumental economic growth based on its resources, vibrant business environment and diversified investment opportunities.
Many view Columbia as one of the investment hotspots in Latin America where they can gain a foothold before venturing into nearby markets. Colombia possesses the state-of-art infrastructure: nine ports with seven of them in the Caribbean Coast and two in the Pacific and also 11 airports that allow easier access to international markets. On top of that, the Free Trade Zones of Colombia has been the most competitive in Latin America with its attractive incentives such as 15% tax exemption from custom duties. In light of the many advantages of doing business in Columbia, many foreign investors have chosen the country to expand their companies overseas.
How to Register a Company in Columbia?
Columbia is in fact an ideal place for foreign investors to setup their overseas companies if they were to tap into the nearby markets of Latin America. However, registering a company in a foreign country could be a daunting task without professional help. Below are guided steps to help you to understand the procedures of company registration in Columbia.
- Decide the business types:
- Simplified Shares Corporation- An SAS is an attempt by the Colombian government to simplify company formation. A company may be incorporated with only one shareholder and its equity is entirely independent of the shareholder’s equity. With an SAS, it is not required to execute a public deed before a public notary. Company formation may be accomplished through a “document of formation” which must include the following information:
- Limited Partnership (Sociedad en Comandita)- The general, managing partners in this partnership there are jointly and severally liable. There can be one or more limited partners (who are liable for their own capital contributions) in the partnership.
- Limited liability Company (Ltda.) – This type of business is one of the preferred business types in Columbia where it provides many protections to a corporation without much legal requirements and laws to follow. A minimum of two partners and a maximum of twenty-five partners are required for the company registration.
- Corporation (S.A.)- A minimum of five shareholders are required for the company registration and everyone is liable for their amount of contribution.
- Name the business:Do a name search for the proposed business name and decide which one is better. The legal name (razón social) and the commercial name or trademark (marca) could be the same or otherwise. The next step is to check the availability of the name through the online databases the Cámara de Comercio.
- Incorporate the company:
- Register with the Registry of Commerce and obtain a pre-taxpayer ID (pre RUT)Online registration is available at the portal: www.crearempresa.com.co where the portal provides access to information and speeds up the process of starting a business. According to the World Bank, the cost incurred include 0.7% of capital registration tax , COP 36,000 fixed fee, COP 4,800 for the registration form, COP 4,800 for the certificate of existence and legal representative, COL 5,500 per book (Libro de Actas de Asamblea and Libro de Registro de Accionistas), COP 24,000 (COP 12,000 cost of registration per book).
- Open a bank account with a “pre-taxpayer ID” (pre RUT) and deposit the nominal capitalThe next step is to open a business bank account with a “pre-taxpayer ID” (pre RUT). The documents needed include the form, the legal representative’s copy of ID, and a letter explaining who will be managing the bank account. Submit the bank account certificate along with a copy of the ID of the legal representative( the pre-tax ID) at the DIAN office. A NIT (Tax ID number), which is essential for all aspects of payment, will be given to the applicants. (Please note that the legal representative that will open the bank account must be a Colombian national)
- Register company with
- the Family Compensation Fund (Caja de Compensación Familiar)
- the Governmental Learning Service (Servicio Nacional de Aprendizaje, SENA)
- the Colombian Family Institute (Instituto Colombiano de Bienestar Familiar, ICBF)
- the Administrator of Professional Risks (ARL) – Every company must affiliate itself and its employees with an Administrator of Professional Risks (ARL). In Columbia, the public ARL is the Instituto de Seguros Sociales (ISS) and there are private ARLs as well where these institutions cover workplace injury and professional illness.
- If company is hiring employees, the following steps are needed:
- Registration for health plan for employees.
- Register employer and employees for pension.
- Register employees with a severance fund.
On a final note, doing business in Columbia is a sure-fire deal for business growth due to the booming economy and the vibrant business environment in Columbia.
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