Company Formation Colombia: Essential Steps for Starting Your Business 

• In the present scenario, company formation Colombia has become a new trend. Entrepreneurs are choosing Colombia as a favored destination for opening their businesses because of the country’s stable economic growth, supporting government initiatives, and favorable business atmosphere. Furthermore, the quality of life in Colombia has enhanced its appeal as a place to work and live. The cultural richness of the country not only attracts business owners but also retains talent. The following blog will guide you through the process of Colombia company registration and why you should start your business in Colombia.  

Why Businesses are Opting for Colombia?

• Colombia has become a prime destination for starting a business because of the following reasons: 

Economic growth 

• The economy of Colombia is expected to rise at a steady rate. Inflation is predicted to decrease, improving the purchasing power of customers. It has been projected that in the year 2025, the inflation rate will be around 3.1%-3.6%, which will create a more stable economic atmosphere. The GDP rate of Colombia for 2025 will be around 2.7% and will position the country as favorable for company formation in Colombia when compared to other countries.  

Trade agreements 

• Colombia has established free trade agreements with several countries across Europe, Asia, and the Americas. These agreements are focused on reducing tariffs on goods and services and also promote trade, hence creating a more favorable atmosphere for international businesses opting for company formation in Colombia.  

Infrastructure 

• Colombia has also invested in its infrastructure, consisting of modern highways, airports, and ports. Furthermore, development in digital infrastructure also supports the growth and development of tech companies and startups. The Colombian government is also focusing on the 4G and 5 G road development plans, which aim to develop a national road network. This initiative consists of 47 ongoing road projects with an initial investment that is expected to reach US$16.2 billion in the year 2025.  

Legal Business Structures for Company Formation in Colombia 

• In Colombia, businesses can select from multiple business structures for company formation in Colombia. Each structure has its own unique features, advantages, and legal requirements. Some of the main legal structures are: 

Sociedad por Acciones Simplificada (Simplified Stock Cimnapny) 

• This is the most popular type of legal entity for businesses in Colombia and accounts for more than 95% of new company formations. This type of entity requires only one shareholder, and there is no maximum number of shareholders. Shareholders’ liability is limited to the number of their contributions.  

Sociedad de Responsabilidad Limitada (Limited liability company) 

• This structure is created for small to medium-sized companies and offers limited liability similar to corporations. It usually requires 2 to 25 partners who are liable only up to their contributions. There are no minimum capital requirements in this entity; however, the capital should be defined in the bylaws.  

Sociedad Anónima or S.A (Corporation) 

• This structure is best for large businesses and those wanting to go public. This entity requires a minimum of five shareholders, and none of those can have more than 95% of the capital. The liability of shareholders is limited and up to their contributions, however, there are exceptions in the case of fraud. The capital of the company will be divided into shares, and the social purpose for the creation of the company should be stated in the bylaws. 

Process of Company Formation in Colombia 

Step 1- Register your business name 

• The first step is to verify the availability of your chosen company name. Select at least 5-6 names and go with the one that seems most appropriate. Conduct effective research to ensure the availability of your chosen company name. Register your chosen company name with the local Chamber of Commerce.  

Step 2- Select the business structure 

• Based on your business activity select an appropriate legal structure for your organization. There are 3 types of business structures, select the one that is the best fit for your business activity. Each structure has its own unique features and regulatory requirements.  

Step 3- Draft articles of incorporation 

• You need to prepare Escritura de Constitución which is also known as Articles of Incorporation. In this document include the purpose of your company, its structure, and rules. The document should offer a clear and effective description of the objectives of the company and specify the product or services it is going to offer.  

• Articles of incorporation also include the bylaws of your business. You will also have to include all the information about your company such as how it will function, the type of business activities, and ownership of the company.  

Step 4- Register the company with the Chamber of Commerce 

• After the application is submitted, you will also have to submit a list of documents that are crucial for company formation in Colombia. The documents often consist of articles of incorporation and identity proof of owners. You will also have to provide a document that provides details of your business activity, Power of Attorney, information about the shareholders, and by-laws.  

• The receipt of the registration fees will act as proof of payment and will cover all the administrative costs related to the company registration process.  

• The COC will review these documents and will make sure they are aligned with the legal requirements of Colombian laws, after submitting the documents you will get approval within 24 hours.  

Step 5- Get a tax identification number  

• You need to get a tax identification number (Número de Identificación Tributaria) from the Colombian tax authority. This number is crucial for conducting business in Colombia, as it shows adherence to tax regulations. For this, you need to fill out a Pre-RUT which is a certificate that will enable you to receive the tax identification number.  

• After the process of Pre-RUT is completed, you should make the registration. The registration tax consists of 0.7% of your total capital amount.  

Step 6- Bank account 

• Now it is time to establish a bank account in the company’s name with the tax identification number. For this you will have to prepare an existence certificate from the Chamber of Commerce, the tax ID certificate, the balance sheet of your company, and the ID of the legal representative of the company.  

• Once you get the bank certificate, you should go to the Colombian tax authority to process your company’s final RUT. Now present the final RUT to the Chamber of Commerce. This will verify your business and enable your company to gain official status.  

Step 7- Register with social security 

• Register your business with the Family Compensation Fund, the Government Learning Service, and the Colombian Family Institute.  Register your employees for public health coverage and business with the Labor Risks Administrator.  

Conclusion 

• The process of Company Formation in Colombia presents wonderful opportunities for companies to operate their business in Colombia. The government support, free trade agreements, and steady economic growth make Colombia a preferred destination for companies. If you want to register your company in Colombia but find it difficult to navigate through the complex legal process, contact Tetra Consultants and our team of experts will assist you in Company formation in Colombia.  

• Contact us and our team will get back to you within 24 hours.