Everything you need to know for setting up a company in Colombia

Todo lo que necesitas saber para crear una empresa en Colombia

In an era where global business landscapes are rapidly evolving, Colombia emerges as a beacon of opportunity, particularly for those entrepreneurs and investors eyeing expansion into Latin America. This guide to set up a company in Colombia in 2024 aims to be the comprehensive compass for navigating the vibrant economic, cultural, and regulatory terrains of this South American jewel.

From understanding the nuanced benefits of the Colombian market—such as tax incentives for environmental sustainability, access to burgeoning markets, and a favorable investment climate—to the step-by-step intricacies of company registration, this article is your gateway to tapping into Colombia’s flourishing economy.
Whether you’re drawn to its growing sectors like technology and renewable energy or the competitive advantages offered by its strategic location, this guide is designed to equip you with the essential knowledge and insights to establish and thrive in your Colombian venture.

Why set up a company in Colombia?

Colombia, with its vibrant culture, diverse landscapes, and burgeoning economy, stands out as an attractive destination for entrepreneurs looking to set up a company. In recent years, Colombia has emerged as a hub for business opportunities, offering a favorable environment for both local and foreign investors.

If you’re considering expanding your business horizons, understanding how to set up a company in Colombia could be a game-changer. Let’s delve into why Colombia is a prime location for business ventures and explore the intricacies of starting a business in this dynamic South American nation.

The appeal of Colombia for entrepreneurs and businesses

Cultural and geographical advantages

Colombia’s allure for entrepreneurs and businesses stems from its rich cultural heritage and diverse geography. A melting pot of indigenous, African, and European influences, Colombia boasts a vibrant society pulsating with energy. From the cosmopolitan streets of Bogotá to the peaceful vistas of Medellín and the lush expanses of the Amazon rainforest, the country offers an inspiring backdrop for business ventures to flourish amidst cultural richness and natural splendor.

Growing economy and market potential

Colombia’s economy has exhibited remarkable resilience and growth, buoyed by thriving sectors including agriculture, manufacturing, tourism, and technology. This economic momentum is further fueled by Colombia’s strategic positioning between the Pacific and Atlantic Oceans, serving as a gateway to both North and South American markets.

With a market of over 51 million people and an economy projected to outpace regional giants like Brazil and Mexico in the coming years, Colombia presents a lucrative landscape for businesses seeking expansion and market penetration.

Key benefits and opportunities for companies in Colombia

Tax benefits for environmental investments

Tax benefits for environmental investments in Colombia are designed to incentivize businesses to engage in activities that promote sustainability and environmental responsibility.
These benefits, outlined in the Colombian Tax Code, offer significant advantages for entities investing in elements, equipment, and machinery necessary for environmental control and monitoring systems, as well as environmental programs. Specifically, Article 424(7) and Article 428(liters fi) provide VAT exclusion for such investments.

Moreover, Article 255 extends tax incentives in the form of income tax discounts of up to 25% for legal entities making direct investments in environmental preservation and improvement. These tax benefits are further complemented by regulatory frameworks such as environmental licensing requirements, ensuring that projects adhere to stringent environmental standards.

The Colombian government, through legislative modifications and resolutions, streamlines the process for obtaining VAT exclusion certificates and rent reduction certificates, facilitating access to these incentives. Overall, these measures not only encourage businesses to adopt environmentally friendly practices but also contribute to Colombia’s broader goals of sustainability, biodiversity conservation, and transitioning to a low-carbon economy.

Access to emerging Markets

Colombia’s strategic geographical location, nestled in the heart of South America and boasting extensive coastlines both on the Pacific and Atlantic oceans, positions it as a gateway to emerging markets. Moreover, the country’s participation in numerous free trade agreements with nations worldwide enhances its appeal as a prime location for businesses seeking to access new markets.

These agreements not only reduce rates and trade barriers but also streamline regulatory processes, facilitating smoother market entry for businesses across various sectors.
Whether in manufacturing, services, or technology, establishing a foothold in Colombia presents unparalleled opportunities for businesses to expand their reach. By leveraging Colombia’s favorable trade agreements and strategic position, companies can access a diverse array of regional and international markets.

This access not only fosters growth but also enables businesses to capitalize on the dynamic economic landscape of emerging markets, driving innovation and competitiveness on a global scale.


In recent years, Colombia has emerged as a noteworthy advocate for sustainability, aligning itself with internationally recognized agendas such as the United Nations Sustainable Development Goals (SDGs).

This commitment extends to embracing best practices outlined by the Organization for Economic Cooperation and Development (OECD). Notably, Colombia has demonstrated its dedication to combating climate change through active participation in global alliances, exemplified by its ratification of ambitious targets to reduce greenhouse gas emissions and achieve carbon neutrality, a pledge solidified during COP 26 in Glasgow.

Furthermore, Colombia has taken on a leadership role within the region as President of the Independent Association of Latin America and the Caribbean (AILAC), as well as within the G77+China group of developing nations.

At COP 27, Colombia and its allies successfully advocated for the establishment of an independent fund dedicated to assisting developing and vulnerable countries in addressing the losses and damages associated with climate change. This achievement underscores Colombia’s proactive stance and leadership in addressing the urgent challenges posed by climate change on a global scale.

Favorable investment atmosphere

Colombia offers a favorable investment climate characterized by pro-business policies, political stability, and a robust legal framework. These factors collectively create an environment that is conducive to attracting and retaining foreign investment.

The transparent regulatory regime ensures clarity and predictability for investors, mitigating risks associated with regulatory uncertainties. Furthermore, Colombia’s commitment to fostering collaboration between foreign investors and local partners enhances opportunities for synergistic partnerships, driving innovation and market expansion.

Moreover, Colombia’s dedication to infrastructure development and innovation amplifies its attractiveness as an investment destination. The government’s ongoing investments in infrastructure projects not only improve connectivity and logistics but also create new avenues for business growth and development.

Competitive labor costs

Colombia’s competitive labor costs, combined with its skilled and educated workforce, present a compelling proposition for businesses seeking to establish operations in the region.
With a diverse talent pool spanning various industries, Colombia offers ample opportunities for companies looking to set up manufacturing facilities, regional headquarters, or outsource business processes.

The availability of skilled professionals enables businesses to access specialized expertise while benefiting from cost-effective labor solutions compared to other Latin American countries. Furthermore, Colombia’s flexible labor laws and productivity incentives contribute to its attractiveness as an investment destination. These regulations allow companies to adapt their workforce strategies to meet evolving business needs efficiently.

By providing incentives for productivity improvement, Colombia encourages businesses to enhance operational efficiency while simultaneously maintaining high-quality standards.
This combination of competitive labor costs, skilled workforce, and favorable regulatory environment positions Colombia as a compelling choice for companies seeking to optimize their operational efficiency and maximize their competitive advantage in the global market.

Understanding the colombian business environment

Setting up a company in Colombia: Insights into the local market

Starting a Business in Colombia requires a deep dive into the nuances of the local market landscape. Conducting thorough market research is paramount before embarking on the journey of company formation. By analyzing market trends, consumer behavior patterns, and competitive dynamics, entrepreneurs can gain invaluable insights that inform strategic decision-making.

Whether catering to urban millennials or rural communities, understanding the intricacies of the market enables businesses to tailor their offerings to meet the specific needs and preferences of their target audience, thereby increasing the likelihood of success.

Moreover, market research empowers entrepreneurs to identify untapped opportunities and potential challenges within the Colombian market. Armed with this knowledge, businesses can develop robust business strategies that capitalize on market strengths while mitigating potential risks.

Additionally, understanding the regulatory landscape and cultural nuances is essential for navigating the complexities of doing business in Colombia effectively. By leveraging insights gained from comprehensive market analysis, entrepreneurs can position their businesses for long-term success and sustainable growth in the dynamic Colombian market.

Invest in Colombia: Economic sectors and opportunities

Colombia presents an enticing landscape for investment across various sectors, including technology, renewable energy, agribusiness, infrastructure, the financial sector, and healthcare.

In technology, Colombia’s burgeoning startup ecosystem coupled with government initiatives supporting innovation foster an environment ripe for investment. Renewable energy represents another promising area, with Colombia’s vast natural resources enabling significant growth in solar, wind, and hydroelectric power generation, aligning with global trends towards sustainability.

Moreover, the agroindustrial sector, fueled by fertile land and favorable climatic conditions, presents ample opportunities for investment in agricultural production, processing, and export.

In infrastructure, Colombia’s ongoing development projects, such as road and transportation networks, offer avenues for investment, while the financial sector’s stability and innovation create a favorable environment for investors seeking opportunities in banking, fintech, and insurance.

Additionally, the healthcare sector, buoyed by increasing demand for quality healthcare services and technological advancements, presents opportunities for investment in hospitals, medical devices, and telemedicine solutions. By strategically navigating these diverse sectors, investors can leverage Colombia’s economic potential and contribute to its continued growth trajectory.

Choosing the right type of company structure

Register a company in Colombia: Step-by-Step Process

What is the business structure of Colombia?

In Colombia, the landscape of business formation is characterized by several distinct types of entities, each catering to different needs and objectives of entrepreneurs. The Types of Businesses in Colombia range from the S.A.S. a Ltda. Below we explain each of them:

  • Simplified Stock Company (S.A.S.): is favored for its flexibility in terms of management and minimal requirements for incorporation, making it an attractive option for small to medium enterprises (SMEs) looking for ease of operation and the ability to quickly adapt to market changes.
  • Stock Company or Corporation (S.A.): is more traditional, offering a structure that is ideal for larger businesses seeking to raise capital through the issuance of shares, with the added benefit of limited liability protection for its shareholders.
  • Limited Liability Company (LLC or Ltda.): requires establishment through a public deed signed in front of a notary. It necessitates at least two founding members, who can be either natural or legal entities, from Colombia or abroad.  These members liability is limited to their investment in the company, except for obligations related to labor and taxes, where they share joint liability with the enterprise.  The business name must include “Limitada” or its abbreviation “Ltda.”, indicating its limited liability nature, similar to “LLC” in English.
  • Branch of a foreign company: allows international firms to maintain a presence in Colombia, operating under the parent company’s legal identity while adhering to Colombian regulations. This option is often pursued by multinational companies aiming to expand their operations into the Colombian market without the need for a separate legal entity.

The choice among these structures hinges on various factors, including the degree of liability protection, tax considerations, and the level of regulatory compliance the business is prepared to undertake, highlighting the importance of careful selection in ensuring the company’s longevity and prosperity.

How to choose a business structure: Factors to consider in Colombia

The choice among these structures hinges on various factors, including the degree of liability protection, tax considerations, and the level of regulatory compliance the business is prepared to undertake, highlighting the importance of careful selection in ensuring the company’s longevity and prosperity.

Entrepreneurs must assess the pros and cons of each business structure and align them with their strategic objectives and risk tolerance. Consulting with legal and financial experts can provide valuable insights and guidance throughout the decision-making process, ensuring compliance with local laws and maximizing operational efficiency.

Comprehensive guide to set up a company in Colombia

Register a company in Colombia: Step-by-Step Process

Set up a company in Colombia involves several steps  is a comprehensive process that begins with deciding the nature of the establishment. To streamline the process of setting up a business in Colombia, follow these simplified steps:

  1. Choose the Business Type: Decide if the business will be registered as an individual (persona natural) or a legal entity (persona jurídica). This decision impacts legal and tax responsibilities.
  2. Classify Economic Activity: Use the Colombian Classification of Economic Activities (CIIU) to identify the business’s primary economic activity, crucial for regulatory and tax purposes.
  3. Draft Company Bylaws: Create the company’s statutes, detailing the organization’s structure, operational rules, and shareholder information. These must be notarized.
  4. Complete the Pre-RUT: Fill out the preliminary tax registration form, a step towards obtaining the business’s Tax Identification Number (NIT).
  5. Register the Business: File with the National Registry of Commerce at the Chamber of Commerce to legally establish the company.
  6. Open a Corporate Bank Account: Essential for managing finances, requiring the company’s registration certificate and RUT.
  7. Present the RUT: Submit the Tax Identification Number to the Chamber of Commerce, formalizing the business’s legal status.
  8. Register Company Books: Enroll the company’s financial books with the Chamber of Commerce, as mandated by law.
  9. Enroll in Social Security: Register the company and its employees in the Comprehensive Social Security System, covering health, pension, and risk insurance.

These steps ensure legal compliance and set a solid foundation for business operations in Colombia.

Company registration in Colombia: Required documents and legal procedures

Throughout the company registration process, entrepreneurs must compile a comprehensive set of documents, including identification records, proof of address, and corporate bylaws. In Colombia, the process of register a company entails a meticulous compilation of essential documents and adherence to a series of legal procedures designed to ensure the legitimacy and transparency of business operations.

Among the key documents required are photocopies of the identification cards (cédulas) of the legal representatives, the company’s registration with the Colombian business registry, the Pre-RUT (preliminary tax identification number), and documentation regarding the incorporation of the company. Additionally, the Pre-Matricula mercantil, which is a preliminary commercial registration, is crucial for establishing a business’s legal existence.

This comprehensive documentation framework is foundational for navigating Colombia’s regulatory landscape, underscoring the importance of accuracy and completeness in fulfilling all legal prerequisites for business establishment.

Entrepreneurs embarking on the journey of company formation in Colombia often face various challenges, including bureaucratic delays and potential discrepancies in documentation.
The complexity of legal requirements and compliance standards necessitates a thorough understanding and meticulous attention to detail. To mitigate the risks associated with these challenges and to facilitate a smoother registration process, entrepreneurs are advised to adopt proactive measures and seek strategic solutions.

This might include consulting with legal experts specialized in Colombian corporate law, leveraging professional services for document preparation and submission, and staying abreast of any changes in registration procedures. By strategically navigating these hurdles, entrepreneurs can enhance their chances of success, ensuring their business operations commence on solid legal and regulatory ground.

Opening a business bank account in Colombia: A complete guide

Opening a business bank account in Colombia is a crucial move for entrepreneurs aiming to streamline their operations, manage payroll efficiently, and ensure compliance with local regulations. The journey begins with selecting the right type of account that aligns with the company’s financial activities and future growth plans. This decision is foundational, as it influences how businesses manage their cash flow, save for future investments, and handle day-to-day transactions.

Following this, the search for the ideal banking partner commences. This step involves researching and comparing various banks, considering factors such as service fees, ease of access, digital banking capabilities, and customer support.

Selecting a banking partner that aligns with the company’s values and financial needs is pivotal for establishing a long-lasting and beneficial relationship.Once a banking partner has been chosen, the next steps involve initiating the account opening process, which can vary in complexity depending on the bank’s requirements and the business’s legal structure.
Gathering all necessary documentation is a critical phase, requiring meticulous attention to detail to ensure compliance with both regulatory demands and bank policies.

This documentation often includes legal paperwork, identification documents of the company’s principals, and proof of business registration. Navigating the subsequent paperwork demands a thorough understanding of the terms and conditions to avoid potential pitfalls and ensure the account meets the business’s needs.

Finally, activating the account marks the commencement of its operational use, allowing the business to start managing its financial transactions through the new bank account. This step is a significant milestone, signifying the company’s readiness to embark on or expand its business journey with a solid financial foundation.

Legal and regulatory framework for companies in Colombia

Business laws in Colombia: Understanding the legal landscape

Compliance with corporate governance standards and contractual agreements is essential for maintaining transparency and accountability in business operations. Entrepreneurs must navigate Colombia’s legal landscape, ensuring adherence to regulatory requirements and enforcement mechanisms.

Additionally, safeguarding intellectual property rights and trade secrets is paramount for protecting innovation and fostering a competitive business environment.

Tax regulations for businesses in Colombia: Compliance and optimization

Navigating Colombia’s tax landscape is paramount for businesses aiming for compliance and optimization of their fiscal responsibilities. The country’s comprehensive tax regime encompasses various taxes such as the Income Tax and its Supplementary Tax, which are central to corporate taxation, alongside specific levies like the Industry and Commerce Tax (ICA) and the Uniform Property Tax.

Additionally, businesses must adhere to International Taxation principles and the Tax on Financial Transactions (GMF), ensuring compliance with global and local standards. The management of taxes such as VAT, National Sales Tax, and the SIMPLE tax regime is crucial for businesses to effectively plan their tax liabilities.

Moreover, understanding the implications of Withholding Tax, Tax on Dividends, and Double Taxation is vital for optimizing financial resources, as these can significantly impact a company’s tax burden and its international operations.

To maintain a competitive edge and foster sustainable growth, companies in Colombia must leverage tax incentives and navigate the intricacies of Tax Procedures and Formalities. Taxes like the Carbon Tax, Estate Tax, and Registration Tax, while specific, play a significant role in the overall tax strategy of a business.

The avoidance of double taxation, through the careful planning around international tax agreements, and the strategic management of sales taxes, both VAT and National Sales Tax, are key areas where businesses can optimize their tax obligations.

In essence, a thorough understanding of Colombia’s diverse tax environment, from the GMF to the various corporate and property taxes, enables businesses to not only comply with regulatory requirements but also to strategically minimize tax liabilities, thereby enhancing profitability and ensuring long-term success.

Employment and labor laws: Hiring in Colombia

setting up a company in Colombia

How to hire employees in Colombia: Legal requirements and best practices

In Colombia, the challenge of hiring and retaining a capable workforce is a critical aspect of achieving business success, particularly in a market that’s as competitive as it is diverse. For entrepreneurs, it’s essential to gain a thorough understanding of the local labor laws and recruitment strategies to draw in the talent that can drive their business forward.

The creation of employment contracts that adhere to the stringent requirements set forth by national labor laws, while also meeting industry standards, is fundamental to mitigating legal risks and ensuring full compliance.

The Colombian labor legislation enshrines employee rights and protections as public policy, establishing a set of minimum standards that neither employers nor employees can opt out of. However, businesses are encouraged to provide benefits that surpass these minimums, provided they maintain compliance with the baseline requirements. This regulatory environment underscores the importance of a well-informed hiring process, one that safeguards employee rights and fosters a legally compliant, yet dynamic, work culture.

Employment Contracts in Colombia: Understanding Local Labor Laws

Navigating the complexities of employment contracts in Colombia is crucial for businesses striving to maintain compliance with local labor laws. The legal framework in Colombia categorizes employment agreements into several types, including fixed-term, indefinite-term, and project-based contracts.

Each category comes with its own set of specifications regarding the rights and duties of both employers and employees, encompassing salary, work hours, and additional benefits. A keen understanding of these distinctions, along with the procedures for terminating employment and the associated severance obligations, is essential for managing employee relationships effectively and minimizing the risk of disputes.

Furthermore, adherence to regulations concerning workplace safety and health not only promotes the well-being of employees but also bolsters the resilience of the organization. Such compliance highlights the critical nature of occupational health and safety measures, positioning them as a key priority for businesses aiming to thrive in Colombia’s labor market.

Online Businesses: E-Commerce Regulations and Digital Presence

In the wake of digital transformation sweeping across Latin America, Colombia has positioned itself at the forefront, emerging as a beacon of stable economic development and e-commerce innovation.

Over the last decade, the country has seen an unprecedented growth trajectory in its digital marketplace, with expectations pointing towards a 74% increase in the e-commerce sector over the next four years. This surge is anticipated to elevate online sales to represent 22% of the total by 2025, a testament to the dynamic shift in consumer behavior and the digital economy’s expansion.

Digital Marketing in Colombia: Strategies for Growth

In the vibrant digital landscape of Colombia, where e-commerce and online engagement show remarkable growth, digital marketing has become a cornerstone for businesses aiming to capitalize on this expanding market.

As Colombian consumers increasingly turn to the internet for shopping, entertainment, and information, companies are presented with a unique opportunity to harness digital marketing strategies to foster growth and increase their market share. The success of these strategies hinges on understanding the local consumer behavior, preferences, and trends, which are significantly influenced by Colombia’s diverse culture and digital adoption rates.

Key to this is the integration of localized content that resonates with the Colombian audience, ensuring that marketing messages are not only relevant but also culturally sensitive and engaging.

Social media platforms, in particular, offer a rich avenue for engagement, with tailored advertising and organic content strategies enabling businesses to connect with their target audience in a more personal and interactive way.

Additionally, employing data analytics and AI-driven tools can provide businesses with insights into consumer behavior, allowing for more targeted and efficient marketing campaigns. By embracing these digital marketing strategies, companies in Colombia can navigate the competitive digital economy more effectively, fostering growth and building lasting relationships with their consumers.

Frequently Asked Questions About Setting Up a Company in Colombia

1. What are the different types of business entities I can establish in Colombia?
Colombia offers various business structures including Sociedad Anónima (S.A.), Sociedad Limitada (S.A.S.), Sucursal, and others. Each has its own legal requirements and implications.
2. What is the minimum capital required to establish a company in Colombia?
The minimum capital requirement depends on the type of entity you choose to establish. For example, for a Sociedad Limitada (S.A.S.), there’s no minimum capital requirement.
3. Are there any specific requirements for foreign investors to establish a company in Colombia?
Foreign investors do not need any specific requirements, passport is enough. Legal presence through a local representative might be required for setting up a bank account. They may also need to comply with foreign investment reporting requirements.
4. Is it necessary to have a local director or shareholder to establish a company in Colombia?
All entities will always need shareholders and directors which in Colombia are called legal representatives. Shareholders and legal representatives can be foreigners and there are no restrictions as to nationality or any other specific limitations.
5. How long does it typically take to register a company in Colombia?
The registration process might take from 1 to 3 days for SAS entities to complete. Setting up a bank account might take from 1 week to several weeks depending on the bank chosen.
6. What are the ongoing compliance requirements for companies in Colombia?
Companies in Colombia must fulfill annual reporting requirements, hold shareholder meetings, maintain proper accounting records, and comply with tax obligations.
7. Are there any specific industry regulations or permits required for certain types of businesses in Colombia?
Yes, certain industries such as banking, pharmaceuticals, and telecommunications have specific regulations and may require additional permits or licenses.
8. Can I operate my business remotely from outside Colombia?
While it’s possible to manage a business remotely, certain activities may require a physical presence in Colombia, and compliance with local laws and regulations is necessary regardless of the location of operation.

Launching Your Business in Colombia

In conclusion, setting up a company in Colombia offers myriad opportunities for entrepreneurs seeking to capitalize on the country’s economic growth, cultural richness, and favorable business environment.

By understanding the regulatory landscape, leveraging strategic insights, and prioritizing compliance with legal requirements, businesses can establish a solid foundation for success in Colombia’s dynamic market. Whether you’re venturing into emerging industries or expanding existing operations, Colombia presents a promising landscape ripe for exploration and innovation.

For personalized guidance and support throughout the company formation process, consider partnering with experienced professionals like JLC Auditors, who can provide tailored solutions and help you navigate the complexities of doing business in Colombia. Embark on your entrepreneurial journey in Colombia today and unlock the potential for growth, prosperity, and impact in this vibrant Latin American nation.


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