How to Incorporate a Company in Colombia
Colombia is considered one of the most impactful nations in Latin America in terms of economic growth. The country seeks to register multifold growth in the coming years with an increased focus on international cooperation to strengthen sectors like technology, trade, and education. The nation is praised for its trade-friendly environment, robust governance, and unrivaled growth potential. Colombia has outranked every nation in the list of “30 nations preferred for overseas investment” promulgated by UNTAD. Besides, the country has managed to secure its place in CIVETS, a group of new emerging markets. In this article, you will learn about the procedure concerning how to incorporate a company in Colombia.
4 Types of Companies in Colombia
Colombian law offers various business structures to choose from. Before you rush into the process of how to incorporate a company in Colombia, having a brief idea of these structures is vitally important.
Sociedad Anónima (S.A.)
Akin to a public limited company, Sociedad Anónima is suitable for bigger entities as it offers comprehensive legal protection and promotes fair corporate governance with no scope for ambiguity among members and stakeholders. However, it tends to attract overwhelming numbers of operational compliances.
The constitutional legalities include at least 5 shareholders and a minimum capital contribution equivalent to 100 times the monthly legal minimum wage.
Sociedad Limitada (Ltda.):
Sociedad Limitada is equivalent to LLC in other countries when it comes to the constitutional framework.
To be incorporated, this structure requires at least two partners, and a minimum capital contribution equivalent to 100 times of monthly legal minimum wage.
Sociedad por Acciones Simplificada (SAS):
It refers to a simplified stock corporation that is easier to incorporate owing to relaxed constitutional norms, which include zero capital requirement and the presence of only one member.
Empresa Unipersonal:
Constitutionally, Empress unipersonal is equivalent to a sole proprietorship, which requires only one person for the incorporation with no minimum capital requirement. The owner has to address all the business-related liabilities, which in some cases may put his assets at stake.
Checklists for How to incorporate a company in Colombia
Knowing the following checklist will help you to incorporate a company in Colombia with ease:
- Proof of the entity’s legal age.
- At least one shareholder, which can be either a person or an entity
- A minimum of (1) single shareholder, which can be either a natural (i.e. person) or legal person (i.e. entity.)
- Appoint a legal representative within the bylaws of the company.
- Confirm the business activities and corporate purpose of the company.
- A minimum capital of USD 400, should be transferred by the shareholder upon opening the bank account.
- Register a Fiscal Address within the country and use it for official correspondence.
Important Tip: We always recommend having a preferred legal name and two alternatives in case the primary legal name is unavailable.
Steps to how to incorporate a company in Colombia
The section below entails the step-by-step guide that will help you incorporate a company in Colombia:
Step 1: Choose a Company Name
Name selection and reservation is the first and foremost step in the company incorporation process. To confirm whether or not the proposed name is unique, visit RUES to perform a search. RUES refers to a Colombian business register. Attempting this step is vital to keep legal hindrances at bay. Remember that not every entity uses its legal name to pursue business endeavors. Instead, they may use different brand names for such purposes. This is quite uncommon with entities belonging to the FMCG sector.
Step 2: Select a Legal Structure
This step involves selecting a viable legal structure that resonates with your requirements, nature of business, and risk appetite when it comes to addressing compliances. The paperwork required may vary significantly structure-wise.
Nonetheless, you can choose one of the following legal structures before embarking on an entrepreneurial journey.
- Simplified Shares Company (Sociedad por Acciones Simplificadas, or SAS)
- Corporation (Sociedad Anónima, or SA)
- Branch
Among these SAS is considered to be the most productive and viable business structure owing to its robustness and ability to withstand misfortunes. As per the Chambers of Commerce (COC), almost 97% of the companies constituted in Colombia are SAS.
SAS is equivalent to SE (Societas Europea) in Europe and a Limited Liability Company (LLC) in the United States.
Step 3: Draft the Company Bylaws
Company by laws are the indispensable parts of any legally constituted entity. Their drafting is vital from an incorporation standpoint. These documents entail the nature of a principal business, capital details, shareholding details, roles of members, etc.
Step 4: Register the Company with the Chamber of Commerce
The Chamber of Commerce is the sole authority that governs the company incorporation requirements in Colombia. While applying for company registration, make sure to furnish all the documents, including company bylaws, directors’ identity proof, documents reflecting the commercial activities, etc.
The submitted paperwork shall undergo in-depth vetting performed by the authority. Upon completing the inspection, the authority shall determine whether or not to grant the license. In best-case scenarios, such a process would take around 24 hours to complete.
Step 5: Obtain the Tax Identification Number (NIT)
The last step involves securing the tax identification number (NIT) from the National Directorate of Taxes and Customs (DIAN). It helps taxable person or entities to reinforce transparency in their tax and accounting activities so that authorities can track them as and when required. You may need to appoint a legal representative to handle all the formalities relating to NIT.
Conclusion
To how to incorporate a company in Colombia, it is vital to get familiar with the aforementioned legalities. A thorough understanding of legal requirements will ease the blow and won’t let you face any hurdle at any registration step. But, going global isn’t always a piece of cake for everyone. No matter how assured you are about the seamless establishment, confronting intricate regulations is inevitable. That’s why we recommend you avail of Adviso’s top-notch services.
With our professional-grade assistance and definite roadmap, you can achieve your global ambition and fulfill every compliance no matter the complications or the scope of operation.
