How to open a company in Colombia as a foreigner

If you are considering a region of South America for your business, Colombia's flexible legal system makes the country an excellent choice for entrepreneurs.

The Colombian government is constantly striving to encourage foreign investment and assist foreign entrepreneurs in the administrative process of opening a company in the country. Colombia offers numerous opportunities for any foreigner who wants to start a business in the region.

Types of Companies in Colombia

• General Partnership (Sociedad Colectiva): A general partnership is a closed company in which the partners must manage the company themselves or authorize third parties to do so, and also allow full or partial transfer of participation in the company.
• Limited Partnership (Sociedad en Comandita Simple y por Acciones): This is a type of company in which the partners can be managers or limited partners. Each type of partner has different levels of responsibility, functions, voting rights, and duties in the company.
• Limited Liability Company (Sociedad de Responsabilidad Limitada): This type of business structure is formed by partners as opposed to shareholders. It is a type of company in which partners can limit their liability to the amount of their contributions, but there are certain exceptions, such as liability for tax purposes, labor law, or if such broad liability is provided for in the company's articles of association.
• Corporation (Sociedad Anónima): This type of company structure can be advantageous in situations where there are a large number of shareholders. In this structure, shareholders do not have any personal liability. A corporation must have a general meeting of shareholders, a board of directors, a legal representative, and an auditor. A minimum of five shareholders is required.
• Simplified Joint Stock Company (Sociedad por Acciones Simplificada): This company structure was introduced into Colombian law in 2008 to simplify the process of company formation. A simplified joint stock company must have a general meeting of shareholders and a legal representative. A minimum of one shareholder is required.
• Foreign Company Branch (FCB): Branches are the choice for companies headquartered in foreign countries, and they have been an attractive option for foreign investors and entrepreneurs. Colombian law considers a foreign company branch and its parent company to be the same legal entity.

Company Registration

Step 1 — Drafting and Signing a Power of Attorney

The first step to starting your Colombian business is drafting and signing a power of attorney that will allow your Colombian legal representative to act on your behalf.

If your company's shareholders are foreign companies or individuals, you will need to provide additional documents to the government. These additional documents must be legalized through any public notary before they are sent to Colombia.

Step 2 - Choosing a Company Name

Before you proceed with a company name, you need to make sure that it is available and accessible to you. For this reason, you can access the public database RUE. RUE (Registro Único Empresarial) is the public database of the Chamber of Commerce. Your company's legal name does not have to be the same as your brand name.

Step 3 - Choosing a Legal Structure for Your Company

When choosing a legal structure for your company, make sure you choose one that best suits your business's economic activities and other needs. Depending on the structure you choose, you will have to provide certain documentation and go through additional accounting and legal procedures.

Step 4 - Writing Your Company's Articles of Association

Once you have chosen a legal structure for your company, it is time to start writing your articles of association. Your articles of association will be the constitution of your company and will determine how it will be run on a day-to-day basis.

The articles of association should contain all the information about the company, including its operations, economic activities, capital, number of shares, legal representatives, and shareholders.

Step 5 - Registering with the Chamber of Commerce (COC)

Once the company name and all the necessary documents are prepared, it is time to register it with the relevant Chamber of Commerce. This structure is responsible for the creation and regulation of all companies in Colombia.

The COC will review these documents to ensure approval within the next 24 hours, after which you can begin your business activity.

Step 6 - Obtaining a Tax Identification Number (NIT)

DIAN (National Board of Taxation and Customs) will provide your company with a NIT (Tax Identification Number). This unique number will be used by the authorities to identify the company for each relevant accounting and tax activity, as well as for the annual and monthly tax returns you will have to file on behalf of your company.

In some cases, the NIT is generated automatically once you receive COC approval. However, if this is not the case, your company’s legal representative will need to visit the DIAN office to begin this process.

Step 7 - Opening a Business Bank Account

The final step in this process is opening a bank account for your business activity. Colombia offers a variety of options when it comes to banks, each with its own set of benefits and rules for corporate accounts.

To set up a bank account for your business, you will need to provide the certificate you received from the COC - a certificate that proves the existence of your Colombian company. Along with the COC certificate, you will need to provide your NIT (tax certificate), your legal representative's identification number, and the opening balance of your corporate account. Depending on the bank you choose, you may need to provide some additional information.

Step 8 - Register with Social Security

Finally, to start hiring workers in Colombia, you must register with the social security system. This allows the company to guarantee its staff protection against accidents, disabilities, or health problems.

Once this step is completed, you and your company are finally ready to start operating in Colombia.