Essential Steps to Start a Business in Argentina
With a GDP of approximately US$ 519 billion as of 2018, Argentina is one of the largest and most prosperous Latin American economies. Realizing the massive potential for foreign investment, the Argentine government is putting great efforts to ease the bureaucratic procedures for entrepreneurs looking to turn to Argentina for their businesses.
Thanks to a high literacy rate and a growing middle class, Argentina is a highly attractive investment destination for foreign investors. Get familiar with the steps involved in getting your business registered in Argentina and discuss all the benefits that you can derive by taking those steps.
Steps to Start a Business in Argentina
1) Define your company’s legal structure
Before you begin your Argentine business, you need to make sure that you are clear on your business plan and type. This way, you will be able to determine the legal entity that suits your business the best.
The Companies Law in Argentina provides several legal entity options for those looking to initiate a business in the country. Some of the most commonly used legal entities are:
Simplified Joint Stock Company
This is perhaps the most popular legal entity type in Argentina, owing to its low share capital requirement (minimum US$ 600) as well as the need for a minimum of one shareholder. Complete foreign ownership is also permitted under this structure.
Public Limited Company
This type of legal entity allows you to issue public shares to raise business capital. For this reason, this business entity option is most desirable for businesspeople looking to raise large amounts of cash for their business.
Limited Liability Company
The biggest benefit of choosing a Limited Liability structure for your business is that your personal assets will remain protected from business liabilities. This means that in case your company assets are unable to meet your business debt obligations, your creditors cannot come after your personal assets (such as your house, vehicle, or the money present in your PERSONAL bank account).
Your chosen entity will play a major role in how you conduct business in the country, so make sure to spend a considerable amount of time on this first step and make a wise choice.
2) Pick a POA (Power of Attorney)
The next step is drafting and signing a POA document that will allow a lawyer to incorporate your new company for you.
In certain cases, such as those in which you or the other partners are based outside Argentina, a POA document will be necessary to permit an Argentine lawyer to start with the company formation.
With a POA document, you are essentially granting all required powers to an Argentine lawyer who will be representing your company throughout the incorporation process. In other words, this lawyer will make sure that there are no loopholes that might prevent you from running your Argentine company.
3) Pick a name for your company (optional)
Although it is not mandatory to get a name reserved for your Argentine business, we recommend that you do it to make sure that your desired business name is available to you.
This process is handled by the General Inspection of Justice, who will also be responsible for verifying your company name. If you want to reserve your company name, you will be required to fill out and submit a form through the IGJ website and make the required payments.
4) Prepare the social contract or bylaws
The company bylaws are pretty much its ‘constitution’ and determine the way the company will be run and outline the commercial intentions of the business. Bylaws are sometimes also referred to as ‘social contracts.’ Every company shareholder must sign the bylaws, and the signatures will have to be certified through a specific Public Notary.
Before you can initiate your business in Argentina, you will have to get in touch with the Public Registry of Commerce and get your bylaws certified.
5) Other documentation
At the time of bylaws certification, the Public Registry of Commerce will probably demand other documents, which include:
- Prequalification opinion.
- Publication proof present in the ‘Official Gazette.’
- Acceptance proof signed by the director or manager.
- The capital deposit support by Argentina’s national bank.
- Proof that all required fees have been paid.
- Financial Beneficiary Affidavit.
6) Initial share capital deposit
To start a new business in Argentina, you must deposit at least 25% of your subscribed capital in the country’s national bank. You are also required to obtain payment proof for this particular transaction.
The amount can also be submitted to the Notary in the form of cash, who will then be certifying this amount. Remember that once you get the bylaws registered through the Public Registry of Commerce, you can withdraw the submitted deposit.
7) Publish your company’s formation
The next step is to publicly announce your new business through the Official Gazette – one of Argentina’s national publications.
You will require a lawyer or any other authorized individual to execute this particular step. Keep in mind that you will have to pay for every line that you publish at a rate of approximately US$ 3 per line.
8) Incorporation fee payment
When you submit the documents for your new Argentine business, you will also need to pay an amount for the processing costs and forms. You can execute this process through the Ministry of Justice and Human Rights website.
The website will contain an invoice that you will have to download and settle at Argentina’s Banco de la Nacion. The Public Registry of Commerce will then verify your paid invoice.
9) Register your company books
Forming an Argentine company requires you to register the various accounting books (balance, inventory, and journal) along with other books containing the meeting minutes, a record of actions, board minutes, share deposit details, and meeting attendance details.
You will need to submit all of these books to the Public Registry of Commerce in order to get them formalized. Usually, the Public Registry of Commerce will directly deliver a few of the certified books.
10) Obtain the CUIT (Unique Tax Identification Code) and social security registration
You will have to show up to the Federal Public Revenue Administration to obtain your CUIT. You will have to prove that your company has been registered and also present other related documents.
After obtaining the CUIT, you can visit the AFIP’s page and get yourself registered for social security and taxes. You can visit this page through the company Manager or Administrator profile.
Ensure that all partners, administrators, and legal representatives of the business possess their own CUIT or CDI.
The AFIP will allow you to get your company registered for every pertinent corporate tax. Remember that reporting your local taxes will require you to get the company registered with the General Revenue Department. The pertinent local taxes for your Argentine company will depend upon the company’s registered address.
11) Start a business bank account
The final step is to get a bank account for your company that you will use to execute all commercial transactions.
The documentation required for this purpose will vary, depending upon the bank that you choose. In general, you will be required to provide identification proof for your shareholders, along with your new business’ details.
The good thing is that this step does not require you to make the trip to Argentina. You can partner with an Argentine accounting and legal expert and get the ball rolling even while you are not present in the country.
Reasons to Start a Business in Argentina
Now that we have covered the how of starting a business in Argentina in detail, let us get down to the why:
1) Educated population
More than 43 million Argentine citizens have completed their secondary education. Moreover, Argentina has one of the highest rates of English-speaking citizens across the entire Latin American region, which, obviously, is tremendously beneficial for any foreigner looking at Argentina for their next business venture and would like to hire local staff.
2) Economic sectors and industries
There are numerous industries and sectors in Argentina that you can explore for your new business. Argentina’s agricultural sector, for instance, is consistently improving, offering products such as meat, soy, animal fodder, wine, and more. Another sector that is on the up in Argentina is the automotive one, offering fuels such as gas and oil.
Since Argentina has suffered economic crises in the recent past, many of these promising sectors are in dire investment need, thus providing tempting opportunities to entrepreneurs across the globe to generate healthy profits while also helping the country attain its economic objectives.
Furthermore, by initiating renewable projects across all industries and sectors, the Argentine government expresses its full commitment and cooperation to the environment. All in all, Argentina is en route to economic improvement, and foreign investors have the chance to act as catalysts in this process.
3) High quality of life
Argentina offers a high quality of life, rich with premium healthcare services, excellent educational services, and plenty of recreational areas. Argentina has an intriguing history steeped in tradition and culture. You can see that the country is not just impressive in terms of education, business, and administration but also in terms of general welfare and culture. All of this means that any entrepreneur considering Argentina as their next business destination is bound to enjoy plenty of benefits.
In addition, the famous Argentine business hub of Buenos Aires has experienced rapid growth over the last few years, and its favorable business environment has been able to draw investors and businesspeople from all across the globe.
4) MERCOSUR Membership
MERCOSUR is a global trading market of which Argentina is an important member. This membership means that Argentina has easy access to associate countries due to lower legal requirements as well as reduced product taxes. Naturally, this global trading market has resulted in tremendous advantages and benefits for Argentina’s economy. Argentina will be signing numerous other trade agreements in the coming years and taking other steps to improve its business affiliations around the world to facilitate its trading and business competencies.
Argentina’s varied sectors and industries, high life quality, MERCOSUR membership, and educated population mean that it is one of the most attractive business destinations for foreign entrepreneurs with their eye on the present and future. We hope that this guide will help you make up your mind about doing business in Argentina and, later on, with the procedure for getting your Argentine business up and running.
To learn more about exploring business ideas for Argentina or initiating a business in the country, please feel free to reach out to us.