How to start a business in Colombia: a guide for foreigner investors and entrepreneurs

Starting a business in Colombia, as well as in any part of the world, requires a process of research, money and time investment and, above all, determination. We will learn in this article what are the key points to start a business in Colombia.

Index:

• Overview
• As a foreigner: How to start
• Key steps
• Common legal structures when creating a company

Overview

Colombia has one of the most agile legal systems in South America when it comes to starting a business. With an emphatic government agenda to encourage foreign investors and entrepreneurs in the country, institutional support for starting a business in Colombia is not that difficult.

Ranking in the top three of the ease of doing business in Latin America index (after Chile and Mexico) according to The World Bank, the Colombian government’s effort to encourage foreign investment to boost the economy has yielded positive results.

As a foreigner: How to start a Business in Colombia

For many foreigners it is attractive to create businesses and investments in Latin America, this due to the economic growth potential of the countries. Colombia is usually one of the countries with the best projection to invest or create a company.

For a foreigner investors and entrepreneurs interested in doing business in Colombia, it is important to have a business visa, and there are several types of business visas. The most appropriate one must be chosen for the development of activities or the creation of a company within the country.

• Work Visa (TP-4): This visa is designed for people who are going to work in Colombia for a Colombian company or corporation and generally, to obtain it, they must show documents that validate professional training, among others.
• Investor Visa (RE): With this visa a foreigner can create a company in Colombia, but to do so they will need an investment that represents an amount greater than 650 minimum wages (depending on the exchange rate, about 200 thousand US dollars). In addition, the form of investment must be through the purchase of shares in a company or corporation.
• Visa Partner, Shareholder, Manager or Owner of Colombian Business (TP-7): This is an option for the foreigner who is starting or creating a new company, although it also works for an investor looking to buy shares in an established company. The investment amount to access this visa is 100 minimum wages. It is important to keep in mind that due to Colombian laws, when applying for this visa, foreigners cannot be exclusive owners of a company, but they can invest in a corporation to obtain the business owner visa.

Key steps

There are several formal legal steps to starting your business in Colombia. Be sure to get assistance and advice from a local legal expert in the country, to ensure you comply with all corporate legal and accounting requirements.

Draft and sign a power of attorney

The first step in starting a business in Colombia is to draft and sign the power of attorney document (POA) for your legal representative. In the event that the shareholders and the legal representative are not in Colombia, a power of attorney must be drafted to sign the bylaws and submit them to the Chamber of Commerce.

Choose your company name

Through the public database of the government, in the Single Registry of Companies, you must confirm that the desired name for your company is available. It is important to note that the legal name of your business may be different from your brand name.

Choose the right legal structure

You must choose the type of social structure that fits the needs and economic activity of your business. Please note that depending on the structure, specific documentation or additional legal and accounting processes may be required.

Draft the company bylaws

In this document you must provide all the information related to the company, how it will work, the economic activities that the company will carry out, the company’s capital, the number of shares, the shareholders and the legal representatives.

Register with the Chamber of Commerce

The Colombian Chamber of Commerce is responsible for regulating the creation of companies in Colombia. For this registration, you must provide a set of documents that describe the activities of your company, the statutes and power of attorney and information for shareholders.

The Chamber of Commerce will review this documentation to confirm that it meets the legal requirements and policies for business creation in the country. Registration approval will take only 24 hours, after which your business can begin operations.

Get your tax ID (NIT)

The National Directorate of Taxes and Customs, DIAN, is the entity responsible for assigning a tax identification number or “NIT” to your company. This is a unique number with which the Colombian authorities will identify your company for all relevant tax and accounting activities, in addition to the monthly and annual tax returns that your company must submit. This can be obtained from the Colombian Tax Administration website. You’ll need to provide some basic information about your business, such as its name, address, and contact information.

In some cases, once the Chamber of Commerce has approved your registration, the NIT will be generated automatically. On other occasions, the legal representative of the company must approach the DIAN offices to carry out this process.

Open your corporate bank account

Finally, you must open a corporate bank account to finish the process and start your business in Colombia. There are many different banks in Colombia, and each one offers different benefits and agreements for corporate accounts.

To open a corporate bank account in Colombia, you must present the certificate from the Chamber of Commerce that certifies the existence of your company in Colombia, your tax certificate (NIT), the identification number of the legal representative and the opening balance of the company account. Each bank may request additional information for this step.

Obtain the necessary permits and licenses.

Depending on the type of business you’re starting, you may need to obtain some special permits or licenses from the government. For example, businesses that sell food or alcohol need to have a license from the Ministry of Health. Check with your local chamber of commerce or city hall to find out what permits and licenses are required for your business.

Once you have completed this step, your company will be ready to start operating in the country.

The Colombian government strives to promote foreign investment and facilitate administrative processes. For this reason, many of these company incorporation processes can be done online.

Common legal structures when creating a company

• Simplified Stock Company or SAS: Unlimited number of shareholders, and corporate documents do not need to be publicly available.
• Limited Company or SA: The capital is divided into shares of equal value and are represented by a negotiable title.
• Branch of foreign company: Extension of a foreign parent company.

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