How to open a company in Colombia

How to Open a Company in Colombia: A Step-by-Step Guide

Thinking of tapping into one of Latin America’s fastest-growing markets? Colombia offers a business-friendly environment, strategic location, and a vibrant economy. Below, we outline the key steps, requirements, and best practices for starting a company in Colombia.
 

1. Why Start a Business in Colombia?

• Stable Economy: Colombia has seen steady economic growth, attracting both local and foreign investors.

• Strategic Location: Situated at the crossroads between Central and South America, Colombia offers easy access to regional markets.

• Investor-Friendly Policies: The government actively supports entrepreneurship, providing tax incentives and streamlined processes for company registration.

• Skilled Workforce: Universities and professional training programs produce a competitive, bilingual workforce in many regions.

2. Choose the Right Legal Structure

Colombia offers several legal structures for businesses. The most common for foreign investors include:

1. SAS (Sociedad por Acciones Simplificada)

   • Most flexible and popular structure; allows sole shareholder and minimal capital requirements.

   • Shareholders’ liability is generally limited to their capital contribution.

2. Ltda. (Sociedad de Responsabilidad Limitada)

   • Similar to a limited liability company.

   • Has a limit on the number of partners (typically max 25).

3. SA (Sociedad Anónima)

   • Requires at least five shareholders.

   • Common for larger corporations and more complex shareholder structures.

When deciding, consider factors like ownership structure, future growth plans, liability preferences, and administrative requirements.

3. Verify Your Company Name

1. Check Name Availability

   • Visit the Chamber of Commerce (Cámara de Comercio) website or office in the city where you plan to incorporate.

   • Make sure no other business is already using your desired name.

2. Reserve the Name

   • Although not mandatory in many regions, reserving the name can prevent others from using it during your setup process.

4. Draft the Incorporation Documents

Once you’ve chosen a legal structure and name:

1. Prepare Bylaws (Estatutos)

   • Outline the company’s purpose, share distribution, management roles, and decision-making processes.

2. Public Deed (Escritura Pública)

   • For certain structures (e.g., SA), you’ll need a notary to sign a public deed.

   • SAS can often be registered via a private document, which simplifies the process.

It’s recommended to work with a local attorney experienced in corporate law to ensure compliance with Colombian regulations.

5. Register with the Chamber of Commerce

1. Submit Documents

   • Present your signed bylaws or public deed at the local Cámara de Comercio.

   • Include copies of ID/passports of shareholders, proof of address, and any required translations if documents are in a foreign language.

2. Pay Registration Fees

   • Fees vary depending on company structure, capital, and city.

3. Obtain Certificate of Registration

   • Once processed, you’ll receive a certificate verifying your company’s legal existence.

6. Obtain a Tax Identification Number (RUT)

• Register with DIAN (Dirección de Impuestos y Aduanas Nacionales):

  • The RUT (Registro Único Tributario) is essential for tax filings and invoicing in Colombia.

  • You’ll typically need your Chamber of Commerce certificate, bylaws, and identification documents to complete this step.

7. Open a Corporate Bank Account

• Choose a Local Bank:

  • Colombian banks vary in their offerings for business accounts, especially for foreign shareholders. Popular choices include Bancolombia, Davivienda, and Banco de Bogotá.

• Documentation:

  • Present your company registration certificate, RUT, and identification documents of legal representatives.

• Foreign Investment Registration:

  • If you’re bringing capital from abroad, you may need to register it as foreign investment with Banco de la República to ensure future repatriation rights and compliance with Colombian regulations.

8. Additional Permits and Licenses

Depending on your industry or operations, you may need:

1. Sector-Specific Licenses:

   • For example, health permits, environmental clearances, or tourism registrations.

2. Municipal Permissions:

   • Local regulations, such as commercial use permits or signage permissions.

3. Employment Registrations:

   • If hiring staff, register with social security entities (e.g., ARL for labor risk, EPS for health coverage, and pensions).

9. Hiring Employees

1. Employment Contracts:

   • Draft contracts following Colombian labor law, specifying salary, working hours, and benefits.

2. Social Security Contributions:

   • In Colombia, employers must register employees with pension funds, healthcare providers (EPS), and labor risk administrators (ARL).

3. Payroll Management:

   • Properly calculate monthly deductions and contributions to avoid penalties.

10. Corporate Governance and Compliance

• Bookkeeping and Accounting:

  • Maintain accurate financial records and comply with IFRS standards or local GAAP, depending on your company size.

• Annual Financial Statements:

  • Submit annual statements to the Chamber of Commerce and DIAN as required.

• Board Meetings and Minutes (if applicable):

  • Document important company decisions, especially for SA or large SAS entities.

• Ongoing Compliance:

  • Renew your commercial registration annually, update any changes in shareholding, and stay alert to new regulations.

Frequently Asked Questions (FAQ)

1. Can foreigners own 100% of a Colombian company?

   • Yes. Colombia generally allows 100% foreign ownership, although specific industries may have additional regulations.

2. Do I need a visa or residency to open a company?

   • You can incorporate a company as a foreigner without a specific visa, but if you plan to operate and manage the business in Colombia, you may need a suitable work or investment visa.

3. How long does it take to open a company?

   • Timelines vary but, with proper documentation, you can typically complete the process in 1–2 weeks. Complex structures or additional licenses can extend this period.

4. What is the most common corporate form for startups or SMEs?

   • The SAS (Simplified Joint Stock Company) is popular due to flexible governance, lower administrative burden, and limited liability.

5. How do I handle foreign capital registration?

   • Register foreign investments with Banco de la República to streamline dividend repatriation, capital returns, and keep the investment legally recognized.

Conclusion: Start Your Colombian Business With Confidence

Establishing a company in Colombia can open doors to a thriving market and numerous growth opportunities. By selecting the correct legal structure, fulfilling registration requirements, and maintaining solid governance, you’ll lay the groundwork for long-term success.

Ready to open your company in Colombia?
Contact our corporate law experts at LawyerColombia.co for personalized advice, end-to-end registration support, and ongoing legal guidance. Let us simplify the process so you can focus on launching and growing your business in this dynamic market.