Understand the Jurisdictions of the Company Registration Process In Puerto Rico
There is no better way to expand your business to the Caribbean than picking Puerto Rico as your business destination. Here, companies do not have to pay federal income taxes. If this statement alone has smitten you to register company in Puerto Rico, read on to learn how to do it.
The registration process starts with you choosing among the several business structures in Puerto Rico:
- Sole Proprietorship
- Limited Liability Company
The most common company structure in Puerto Rico is a Limited Liability Company (LLC). An LLC is usually incorporated with more than one shareholder, but in Puerto Rico, there is such a thing as a single-shareholder LLC. The only difference is the taxes of a single-shareholder LLC.
Choosing the Name
Being unique is one thing; whether the name you want is available is another. In Puerto Rico, there are regulations for naming your company. Your company name must have an LLC abbreviation, and you’d want to check the name availability with the Puerto Rico DOS Corporation Search. You can file for a name reservation for 120 days. The name reservation will cost you around $75
Filing Company Formation Paperwork
For an LLC, you will need to file a Puerto Rico Certificate of Formation with the Department of State. In the form, there is a requirement to name a Puerto Rico registered agent. A registered agent is an entity appointed by your business to accept all official correspondence on your behalf. They must have a physical address so all mailings can reach you.
You can enter as a registered agent as long as you live in Puerto Rico throughout your business tenure. But take note that these addresses and names will be on public record. Hence, if you are comfortable with your address and details being on public record, you can put your name as the registered agent. Otherwise, you could engage a local company incorporating experts like 3E Accounting as your registered agent.
Drafting Company Internal Records
To register a company in Puerto Rico, you need to draft an operating agreement. The document includes your annual meeting dates, shares, voting rights, and many more as you consider essential. Usually, you would have an attorney or chartered accountant draft these for you to ensure the utmost professional document.
Anyone doing business in Puerto Rico must have a business license. There are five types of licenses for business in Puerto Rico.
- Merchant Registry Certificate – Free application to the Puerto Rico Treasury Department 30 days before starting a business. You must feature the certificate on the storefront so people know you are legally compliant.
- Permiso Unico (Single Use Permit) – It combines multiple licenses into one. You must have this license before applying for a Patente Municipal.
- Patente Municipal (Municipal Tax license) allows municipalities to tax your business.
- Internal Revenue License: Applicable if you sell specific goods such as cigarettes, gasoline, vehicles and firearms. Must apply 30 days before beginning operations.
- Professional Business License – Applicable to a specific profession such as law, medicine, engineering and accountancy. Apply for a license from the respective governing body for each industry.
Open Business Account
Remember the operating agreement? Here’s where you need to use it. Local banks in Puerto Rico require your formation document, LLC operating document, and employer identification number (EIN). EIN is your business identification number when you file with the Internal Revenue Service (IRS).
All businesses should get business insurance. If your company has to wind up or fail due to unforeseen circumstances such as fire, flood or other natural disasters, it still has to pay up. Hence business insurance will cover these costs.
If you require assistance or consultation, please feel free to get in touch and we will promptly reply to you within 24 hours.