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Colombia 

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    Company Registration Colombia 

    • Company Registration Colombia represents an excellent chance for any business that strives to develop its presence in this dynamic market. Geographically located in the center of South America, Colombia easily opens its paths to regional and international markets.  
    • Its growing economy has become one of the symbols of innovation and creative industry, supported by a young, skillful workforce that helps maintain labor costs at reasonable levels. Regulatory reforms that have improved the business climate include simplifying bureaucratic procedures and providing incentives through tax breaks and free trade zones among other benefits.  
    • By the year 2020, Colombia became a member of Organization for Economic Co-operation and Development (OECD) and has taken many of its current practices into international standards. The country has a large abundance of natural resources in agriculture, mining, and renewable energy. Major infrastructural improvements are also needed to assist business operations.  
    • Colombia economic growth is making the country very inviting to corporations and investors alike. Tetra Consultants provides many business-related services to entrepreneurs looking to thrive in this promising market. Our services include: 
      • Company Registration Colombia 
      • Corporate bank account opening 
      • Legal representative services 
      • Nominee director and shareholder services 
      • Business license and trade permits acquisitions 
      • Registered local address  
      • International trademark registration 

    Advantages of Company Registration Colombia 

    Advantages of Company Registration Colombia 

    Strategic geographical position: 

    • Colombia, geographically centered in South America, provides easy access to both the Atlantic and Pacific Oceans. Therefore, there is significant potential for International Trade, and it is basically a gateway for regional markets. 

    Economic growth: 

    • The economy of Colombia has been growing annually with a drastic rise in foreign direct investments. Reports have claimed that FDI reached about US$17.05 billion in the year 2022. Therefore, this growth creates an appropriate atmosphere for new businesses. 

    Tax incentives: 

    • The Colombian government provides several tax incentives, such as exemptions and reduction for companies based in free trade zones or in specific areas such as R&D. The corporate tax rate is set at 35% but several deductions can lower it to an effective rate. 

    Free trade zones: 

    • Colombia has designated several free trade zones which offer much tax and customs incentives encouraging international business operations free of the normal regulatory inconvenience. 

    Access to finance: 

    • There are various initiatives promoting entrepreneurship, especially access to credit and funding opportunities for start-up companies, thus increasing the possibilities of sustainable business operations. 

    Regulatory reforms: 

    • In the last few years, there has been a simplification of procedures, which made it easier for foreign investors to decipher the legal environment and go about setting up business more efficiently. 

    Competent labour force: 

    • It has a young and educated workforce, with competitively low labor costs, and a talent pool that can drive innovation within companies. 

    Investor confidence: 

    • The country has ranked better in investor protection, hence creating a stable business environment as against many other countries. 

    Business-friendly environment: 

    • The Business Formalization Program encourages business registration as well as further support in terms of training and resource mobilization for compliance with local regulations. 

    Time required to proceed for Company Registration Colombia 

    • Tetra Consultants will complete the company registration process in Colombia within 8 weeks. After we receive the necessary due diligence documents from the directors and shareholders, our team will check the availability of your chosen company name with the appropriate Colombian authorities. We will handle the incorporation efficiently, so you will not need to travel. 
    • Within 4 weeks of establishing your company in Colombia, Tetra Consultants will assist you with corporate bank account opening with a reputable local or international bank as per your requirement. We will provide all the required forms for this process, ensuring that travel is not necessary. If the bank needs any additional KYC verifications, Tetra Consultants will arrange an online video conference to facilitate communication among all parties. 
    • As a result, you can expect to commence operations and issue invoices with your Colombian company within 12 weeks of partnering with Tetra Consultants. 

    Are foreigners allowed to proceed for Company Registration Colombia? 

    • Yes, foreigners can register a company in Colombia. They have the option to incorporate various types of business structures. The registration process involves several steps including the registration with the Colombian Chamber of Commerce and Director National y Aduanero (National Tax and Customs Directorate). 
    • Foreigners can also operate in Colombia remotely by designating a local legal representative. Iti s essential for them to obtain the appropriate visas for conducting business in the country; Tetra Consultants can assist with visitor or migrant visa options. Colombia’s legal framework supports foreign investment and entrepreneurship, making it possible for individuals from outside the country to establish and manage their operations here. 

    Types of business entities allowed for Company Registration Colombia 

    Sociedad de Responsabilidad Limitada (SRL) 

    • An SRL in Colombia is a Limited Liability Company. In this company, the amount of capital contributed limits the partner’s liability unless otherwise stipulated by the company’s bylaws. As far as paying the debts and other legal responsibilities are concerned, no partners are liable. 
    • Various key requirements of this business entity are as follows:
      • An SRL must have a minimum of two partners, who can be either individuals or legal entities without any residency requirements. 
      • There is no minimum capital requirement. 
      • An SRL must have a registered physical address in Colombia for its operations.   
      • The company must appoint at least one legal representative, who can be a partner or an external individual and must be a resident of Colombia, responsible for all legal matters on behalf of the company. Our HR team at Tetra Consultants can help you appoint the legal representative for your company to comply with such regulatory requirements. 

    Sociedad por Acciones Simplificadas (SAS) 

    • The most popular and widely used legal entity for large and small businesses in Colombia is SAS. A SAS, in comparison with the other kinds of legal structures, has been commended in Colombia by investors for its flexibility, particularly on the fast and easy incorporation process and the ample freedom granted to shareholders to establish their own terms and conditions. 
    • One of the bigger benefits of a Simplified Stock Company (SAS), is that it can keep articles of incorporation private. The social purpose may also be left vague, so the company can engage in almost any commercial activity. 
    • Key requirements of this business entity are as follows:
      • An SAS requires at least one director, who can also serve as a shareholder without residency requirements. 
      • A minimum of one shareholder can be either an individual or a legal entity without residency requirements. 
      • There is no minimum capital requirement. 
      • An SAS must have a registered physical address in Colombia for its operations. Our experts are competent enough to find a physical address for your company in Colombia. 
      • The company must appoint at least one legal representative, who can be either a Colombian national or a foreign individual. 

    Corporations or Sociedad Anónima (SA) 

    • A corporation or SA would be the best if there is a large number of shareholders involved in the company, as, under a corporation or SA, only liability is limited to the amount of shareholders’ equity. 
    • Key requirements of this business entity are as follows:
      • A minimum of 2 shareholders, who can be either individuals or legal entities without residency requirements. 
      • A minimum of 3 directors without residency requirements. 
      • The minimum capital requirement for a Sociedad Anónima is typically set at COP 50 million (approximately US$13,000), which must be fully subscribed at the time of incorporation. At least 25% of the subscribed capital must be paid in cash upon incorporation. 
      • A Sociedad Anónima must have a registered physical address in Colombia for its operations. 
      • The company must appoint at least one legal representative, who can be either a Colombian national or a foreign individual.
      • Although there is no specific residency requirement for directors, it is advisable to have at least one director residing in Colombia in order to improve the local operations. To meet this recommendation and successfully navigate the complex regulatory landscape, Tetra Consultants offers nominee director and shareholder services to comply with clients’ needs. 

    Branch office 

    • If a company has its headquarters in another country, it can establish a branch in Colombia. These branch offices are recognized as legal extensions of the parent company, meaning they are treated as the same legal entity. 
    • To set up a Foreign Branch Office in Colombia, you will need a certificate of incorporation from the parent company, an appointed legal representative, and a notarized copy of the company’s bylaws. We are here to guide you through this process and ensure everything is in order for a successful setup. 

    Steps to proceed for Company Registration Colombia 

    Steps to proceed for Company Registration Colombia 

    Step 1: Choose your company legal structure 

    • The first step our Tetra Consultants team will take is to help you choose the legal structure that best aligns with your business needs in Colombia. Different company structures offer various advantages and considerations, and we are here to guide you through the selection process to ensure you make the right choice for your objectives. 

    Step 2: Choose a company name 

    • Further, our specialists will take steps to book your preferred corporate name after confirming its availability from the relevant authorities considering the restrictions contained in the Colombian Chamber of Commerce (Confecámaras). In this regard, we have international trademark registration services for our clients, who wish to protect their trademarks in many countries. 

    Step 3: Prepare required documentation 

    • Moving further, we will start collecting the necessary paperwork that usually consists of the Articles of Association, the standard Company Registration Application Form, and ID cards or passports’ photocopies for all nominated board members and shareholders. Furthermore, we offer legal drafting services for these key legal documents to make sure all is in order. 

    Step 4: Identify company officers and shareholders 

    • Once we have prepared the legal documentation required, we will then proceed with complying with the requirements of company officers and shareholders. These requirements are based on the company structure you have chosen.  

    Step 5: Register your company 

    • Once our experts have arranged all the officers and shareholders of the company, we will continue to submit your application to the Colombian Chamber of Commerce (Confecámaras).  
    • The team will take care of ensuring that all the paperwork is done and in accordance with the local regulations, thus facilitating the process of submission. We shall also check the application progress and respond to any questions that the Chamber may have, keeping you informed about all the steps in the process for your convenience. 

    Step 6: Register for taxes 

    • Following your registration process, we will support you in getting a national identification tax number (NIT) from the National Tax and Customs Directorate (DIAN).  
    • However, this is not all, because we offer a complete range of accounting and tax obligation assistance for the purpose of making sure that all bookkeeping and fiscal obligations are at all times met without fail. 

    Step 7: Obtain necessary permits and licenses 

    • Further, in accordance with the nature of your business operations, we will assist you in obtaining any trade permits and business licenses from local and industry regulatory bodies. Tetra Consultants’ team will assist you in taking the appropriate measures to ensure that all necessary steps are taken to make your business operation compliant, so as to prevent any loss of time and legal challenges. 

    Step 8: Corporate bank account opening 

    • Moreover, we will move forward with the process of corporate bank account opening for your company and ensure that a functional account is ready within a period of 4 weeks after company registration. Our team will facilitate this for you in the most effective and efficient way possible. 

    Documents required for Company Registration Colombia 

    • Copies of passports and other valid ID’s of directors, shareholders and UBOs. 
    • Drafted bylaws that outline the company’s operational framework 
    • A preliminary tax identification number (NIT) application form 
    • Economic activity declaration 
    • Documentation proving the proof of physical address. 
    • Initial capital contribution evidence 

    For corporate shareholders 

    • A certificate of legal existence and good standing from the country of incorporation is required. 
    • Identification documents such as notarized copies of passport for individuals authorized to act on behalf of the corporate shareholder. 

    Accounting and tax obligations 

    Accounting obligations 

    Accounting standards compliance: 

    • The corporates must adhere to the International Financial Reporting Standards (IFRS) and are also known as Normas Internacionales de Información Financiera (NIFF). The result is proper financial statement preparation, as well as the avoidance of penalties that can be quite sizeable. 

    Maintaining books of accounts: 

    • Accounting records must be kept in Spanish and in Colombian peso. The accounting records should represent the company’s financial position as accurately as possible and must comply with the regulations of Colombia. 

    Monthly tax return: 

    • A business needs to file a monthly tax returns starting from the date when the first invoice is issued from that business. Also included are the cash flow statements and payroll reports in case of employees who benefit from the organization. Inactive companies or startups must file at least a quarterly report. 

    Annual financial statements: 

    • A business needs annual financial statements end calendar year. The annual financial statements entail the statement of financial position as well as the statement of profit or loss and other comprehensive income. 
    • Statement of changes in equity 
    • Statement of cash flows 

    Statutory auditor requirement: 

    • Companies with assets worth more than 5,000 minimum legal wages are mandated to hire a statutory auditor known as the revisor fiscal who is responsible for monitoring and auditing the application of accounting rules. 

    Reporting exogenous information: 

    • The company is obligated to report annually to the DIAN, by an entity, all transactions undertaken with clients and other entities. The exposition of such information will increase transparency in their financial transactions. 

    Electronic invoicing: 

    • All the companies must have e-invoices for tax compliance with proper document and reporting 

    Tax obligations 

    Corporate Income Tax (CIT): 

    • The country imposed a corporate tax rate of 35% on the net income that companies established within the country obtain. This involves foreign entities earning income from sources within Colombia, irrespective of whether they have a permanent establishment in Colombia. 
    • Besides, companies that are tax reducing in free trade zones enjoy a reduced corporate income tax rate of 20%, while some activities, such as hospitality services, enjoy reduced tax rates. 

    Value Added Tax (VAT): 

    • The standard VAT rate in Colombia is 19% on most goods and services. There are a number of products which are subject to a reduced rate of 5%, and a number that are exempt from VAT. 
    • VAT returns are normally submitted bimonthly or quarterly based on the scale of company revenue, while payment dates range from the 7th to 24th day of the following month. In contrast, a late filed return may incur penalties ranging from 5% to 200% of the tax. 

    Income Tax: 

    • Companies are subjected to a flat corporate income tax rate of 35% on their net taxable income, though this rate is capped based on a firm’s revenues for smaller companies. 
    • Companies are mandated to file yearly income tax returns that report their incomes and expenses. 

    Withholding Taxes: 

    • A business is charged with withholding certain kinds of payments to individuals and entities, including salaries, dividends, and interest payments. The withholding rates vary according to the type of payment and payee. 

    Why to proceed with Company Registration Colombia? 

    Political  

    • Colombia has a well-organized regulatory framework that governs business activities, attracting foreign investment while requiring navigation through bureaucratic processes. Despite political challenges, efforts to stabilize governance foster optimism in the business environment.  
    • However, companies must remain vigilant regarding potential leadership and policy changes. Corruption remains a concern, which can complicate compliance and lead to delays due to bureaucratic inefficiencies. Understanding these factors is essential for successful operations in Colombia. 

    Economic  

    • Colombia’s economy has demonstrated strong resilience and positive growth, making it an attractive destination for investment. The corporate tax rate is set at 35%, along with a value-added tax of 19%, highlighting the importance of tax compliance for smooth operations. Additionally, inflation can impact purchasing power and operational costs, so it is crucial for businesses to monitor economic indicators to adapt their strategies accordingly. Understanding these factors is key to successful investment in Colombia. 

    Social 

    • Colombia boasts a young and dynamic population, presenting significant opportunities for companies targeting consumer markets. Understanding local consumer behavior is essential for effective market entry strategies.  
    • Additionally, the country’s rich cultural diversity influences consumer preferences and business practices, requiring tailored marketing strategies to resonate with different ethnic groups. By recognizing these demographic and cultural factors, businesses can better position themselves for success in the Colombian market. 

    Technological  

    • Colombia is experiencing rapid technological development, leading to increased digitization across various industries. Companies that embrace technology can enhance their operational efficiency and improve customer interactions.  
    • Additionally, rising internet penetration supports the growth of e-commerce and diverse digital business models. It is essential for businesses to incorporate online platforms into their operational strategies to capitalize on this trend and connect effectively with consumers in the digital landscape. 

    Environmental  

    • Environmental protection is a critical requirement under Colombian law, mandating that businesses adhere to regulations regarding waste management and sustainability practices. Given Colombia’s status as one of the most biodiverse countries in the world, companies face heightened scrutiny concerning their environmental impact.  
    • Adopting eco-friendly practices not only ensures compliance but also enhances corporate reputation, fostering a positive image among consumers and stakeholders who prioritize sustainability. 

    Legal  

    • Understanding local business laws related to incorporation, labor rights, and consumer protection is crucial for compliance with legal requirements in Colombia. While foreign investment is permitted, it must adhere to strict regulatory norms.  
    • Additionally, protecting intellectual property rights is essential for companies operating in the country; Companies should register trademarks and patents to safeguard their innovations. This proactive approach not only ensures legal protection but also fosters a competitive edge in the market. 

    Looking for Company Registration Colombia 

    • We, at Tetra Consultants, could provide you with the easiest and the fastest process to set up your business in this dynamic market by registering your company in Colombia. Our team includes the experts who will walk you through every step of the registration process so that everything falls into place.  
    • Registration is not all we do, but we have a very broad scope of business services, able to advance your business to success in all aspects, such as digital services/SEO services, offshore financial licenses, and much more.  
    • Contact us to know more about Company Registration Colombia and our team will revert back in 24 hours.

    FAQs

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