A Guide to Starting a Business in Colombia
If you are eyeing South America for your new business, Colombia’s flexible legal system certainly makes the country an excellent entrepreneurial choice. The Colombian government is driving an emphatic agenda to make the country more welcoming for foreign entrepreneurs and investors.
Colombia is one of the easiest Latin American countries to start a business in, according to the World Bank’s ‘ease of doing business’ index. This has been a result of the government’s tireless efforts for promoting foreign investments by providing robust institutional support.
In this blog, we will be covering the key steps that you need to take to start a business in Colombia.
Starting a Colombian Business:
Step 1 – Drafting and signing the POA (Power of Attorney):
The initial step towards starting your Colombian business is drafting and signing the POA, which will allow your Colombian legal representative to operate on your behalf.
If your company shareholders are foreign companies or individuals, you will have to submit additional documents to the government. These additional documents, along with the POA, need to be legalized through any Public Notary before they are sent over to Colombia.
Step 2 – Choosing the company name:
Before proceeding with a company name, you need to ensure that it is vacant and available to you. For this reason, you can access the public database, the RUE, or the Single Business Register. At this point, we must point out that your company’s legal name need not be the same as your brand name.
Step 3 – Choosing your company’s legal structure:
While choosing the company’s legal structure, make sure that you go with the structure that is best aligned with the business’ economic activities and other needs. Based on the structure you select, you will have to provide specific documentation as well as go through additional accounting and legal processes.
Below are the three most popular structures chosen by entrepreneurs starting a Colombian company:
With this company structure, there is no limit on the shareholder number, and you will also not be required to make your corporate documents available to the public.
Your share capital will be converted into shares, with all shares possessing the same value and having a flexible title.
This is an extension of a parent company based outside of Colombia.
Step 4 – Writing Your company bylaws:
After you have chosen a legal structure for your company, it is time for you to start drafting its bylaws. Your bylaws will be the company’s constitution, and will define how the company is run on a day-to-day basis.
The bylaws, naturally, will contain all company information, including details of its operations, economic activities, capital, share quantity, legal representatives, and shareholders.
Step 5 – Registering with the COC (Chamber of Commerce):
The COC in Colombia regulates the company-creation process in the country. To get registered with the Chamber, you will need to provide documents that outline your business’ activities, shareholder information, POA, and the bylaws.
These documents will be reviewed by the COC to ensure that they are aligned with the Colombian legal requirements and company formation policies.
Once you have submitted your documents, you can expect to receive an approval within the next 24 hours, after which you are free to initiate your business operations.
Step 6 – Obtaining NIT (tax identification):
The DIAN (National Directorate of Taxes and Customs) will provide an NIT (tax identification number) for your company. This unique number shall be used by the authorities to identify the company for every pertinent accounting and tax activity, along with the annual and monthly tax returns that you will have to submit on behalf of your company.
In certain cases, the NIT is generated automatically as soon as you receive the COC’s approval (step number five). However, if that is not the case, your company’s legal representative will need to visit the DIAN office to get this process underway.
Step 7 – Opening a business bank account:
The last step in this process is opening a bank account for your business activities. Colombia offers plenty of options with regards to banks, each one coming with its own set of advantages and rules regarding corporate accounts.
To get your business bank account ready, you need to show the certificate that your received from the COC – the certificate that confirms your Colombian company’s existence. Along with the COC certificate, you will need to present your NIT (tax certificate), your legal representative’s identification number, and your corporate account’s opening balance. Depending on the bank that you choose, you might be required to present some additional information.
Once this step is done, you and your company are finally ready to begin operations in Colombia.
The government of Colombia is constantly striving to stimulate foreign investments and to assist foreign entrepreneurs in the administrative process associated with starting a company in the country. Colombia has numerous opportunities for any foreigner looking to start a business venture in the region.
If you think that you are ready to begin your Colombian ventureand are looking for support to execute the incorporation process without any setbacks or hurdles, please feel free to reach out to us.