Starting a Business in Colombia: A Comprehensive Guide for Entrepreneurs 

• Colombia has become one of the sought-after destinations for starting a business. The country’s strategic location, growing economy, and pro-business atmosphere have made it an attractive destination for business owners wanting to access North and South American markets with easy entry and exit points. However, it is crucial to understand the legal requirements, market conditions, and business atmosphere of Colombia in order to set up a business. The following blog acts as a guide providing detailed insights about starting a business in Colombia, including Colombia company registration to overcome any challenges.  

Why You Should Start a Business in Colombia? 

• Colombia has become a prime destination for business owners wanting to expand their business into Latin America. Here are some reasons why you should start a business in Colombia: 

Trade agreements 

• Colombia has multiple free trade agreements with the European Union and the USA, which facilitate easy international trade without any barriers. These free trade agreements reduce tariffs, improve market access, and promote economic cooperation with multiple countries and regions. Some of the key trade agreements are the U.S.-Colombia Trade Promotion Agreement and the EU-Colombia-Peru-Ecuador Trade Agreement.  

Government support 

• The Colombian government actively supports foreign investment by introducing multiple policies and incentives. The government has launched several financing and credit programs such as Bancóldex which offers financing options to small and medium enterprises and mainly focuses on productive investments as well as sustainable development. The Inter-American Development Bank (IDB) also supports these efforts by granting major loans.  

Economic growth and stability 

• Over the past decade, Colombia has experienced steady economic growth and has created a favorable atmosphere for new businesses. The GDP of the country is expected to grow around 2.5% in the year 2025, and several projections have been made that it can even reach 3.2% in 2026, mainly by private consumption as well as fixed investment. The inflation in Colombia is declining at a rate of 5.2% in November 2024 and is projected to go down further to 3.1% by 2026.  

Diversified market 

• The country has a diversified range of sectors such as manufacturing, agriculture, and services. This diversification has created a strong foundation for economic growth as well as stability. Each sector showcases unique opportunities for companies in order to expand their core business operations. Furthermore, the expanding middle class of the country has created an increasing demand for high-quality goods and services, creating opportunities for businesses offering premium products.  

Legal Structure for Starting a Business in Colombia 

• In Colombia, business entities can be structured into multiple legal entities. Each of these entities possesses its own unique characteristics, benefits, and regulatory requirements. Some of the common types of entities are: 

Limited Liability Company (LTDA) – Sociedad de Responsabilidad Limitada 

• This type of business entity is best for small to medium-sized businesses, providing limited liability to its business owners. It is simple to manage when compared to other types of business corporations, but it also has more regulatory requirements than a simplified stock company.  

Individual Limited Liability Company (E.I.R.L) – Empresa Individual de Responsabilidad Limitada 

• This type of entity is best for solo entrepreneurs and provides limited liability protection. This entity follows individual income tax rates and also has restrictions on the accumulation of capital. The process of setting up this entity is simple and has favorable tax treatment.  

Simplified Stock Company (SAS) – Sociedad por Acciones Simplificada 

• This is the most common type of business entity in Colombia and is known for its easy setup process and flexibility. It only requires one shareholder and has no maximum limit on the amount of shareholders. Simplified stock company has a limited liability. The social purpose of this entity is not defined, this enables the participation of multiple business activities and there is no requirement for a board of directors.  

Corporation (SA) – Sociedad Anónima 

• A corporation has a distinguished legal personality and offers limited liability to its shareholders. This type of entity has a minimum capital requirement and also needs a board of directors. This structure is best for larger business organizations wanting to raise their capital through shares.  

Process of Starting a Business in Colombia 

• Starting a business in Colombia consists of multiple legal and regulatory requirements that should be fulfilled to ensure compliance with the local laws as well as regulations. Here is how to register a company in Colombia: 

Select a business name 

• You need to select a business name and ensure that it is unique and verified through the Chamber of Commerce to make sure it is not in use already. You can also use the Single Business and Social Registry (RUES) to look for name availability.  

Select a business structure 

• You need to select a business structure for your business. Each structure has its own characteristics and legal requirements. Select a structure that is most suitable for the type of business activity you conduct.  

Draft company bylaws 

• After selecting the business structure, you need to draft the bylaws of your company. Bylaws should outline the purpose of the company along with its type of structure and government. Ensure that the bylaws are being reviewed by a lawyer to make sure that they are adhering to Colombian Law.  

Register the company 

• You need to register your company with the Chamber of Commerce where it is going to operate. This consists of filling out the Single Business and Social Registry (RUES) form, an inscription fee will be applied which will be 0.7% of the capital.  

Get a tax identification number 

• Businesses should be registered with the National Tax and Customs Administration (DIAN) to get a unique tax registry (RUT) number. This step is significant for ensuring tax compliance and getting a tax number.  

Opening a business bank account 

• You need to open a separate business bank account which is crucial for financial operations. For this, you will need a legal representative’s ID, certificate of registration, introductory letter, and a tax certificate.  

Register employees 

• Register your employees with relevant employment funds in order to comply with the labor laws. For foreign companies, it is significant to register with the Central Bank of Colombia and get the necessary approvals and permits.  

• Regularly update and renew your licenses to comply with tax and labor laws in order to avoid any penalties.  

Conclusion  

• Starting a business in Colombia has its own fair share of exciting business opportunities and a tedious registration process. Over the past few years, Colombia has become an attractive destination for foreign entrepreneurs due to the efforts of the Colombian government and its robust economy. However, it is crucial for business owners to understand the regulatory requirements, select the right business structure, get required funding, and create strategic business partnerships in order to successfully establish their foothold in Colombia. If you need help with Colombia business registration, contact Tetra consultants and our team will help you easily set up your business in Colombia.  

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