Main types of companies in Colombia?

There are different types of legal entities and each one has distinctive features. If your goal is to make a profit, you need to form a business entity so that you can provide goods or services to customers in exchange for money. Likewise, business entities can be divided into various categories based on their size, legal structure, and other criteria.

In this order of ideas, if you want to incorporate a company in Colombia, we will tell you first that it is a process that requires full attention and regulation, since this will define the approval of your economic activity before the different national entities. Mainly in this article we will explain the types of companies that are the most used in the country.

We tell you what type of companies can be established in Colombia.

Types of companies in Colombia

The most common types of companies in Colombia are:

• Simplified joint stock companies (SAS)
• Limited liability companies (LTDA)
• Corporations (SA)

The main steps to incorporate a company in Colombia include:

• Formalization of the bylaws
• Request for NIT (tax identification number of the company)
• Opening a Colombian bank account

Simplified joint stock companies (SAS)

It should be noted that the Ministry of Commerce, Industry and Tourism has stated that Simplified Stock Companies (SAS) is the type of company most used in Colombia. As the newspapers reiterate, there is a significant increase of incorporations of this type of company, thanks to the fact that they allow the reduction of costs.

Other key characteristics that distinguish a SAS include:

• Only (1) shareholder is required (either an individual or company), with no cap.
• Limited liability equivalent to the amount of capital of the company.
• The corporate purpose may remain undefined, allowing the company to engage in almost any business activity.
• A board of directors is not required.

Limited liability companies (LTDA)

In regards to this type of partnership, it should be noted that the responsibility of the partners is limited to the amount of the capital contribution, in addition that the partners are not responsible for the payment of debts.

The characteristics are:

• Minimum of 2 partners, no more than 25.
• The partners’ contributions will be paid in full when the company is incorporated.
• Generally, it must be incorporated by a public deed. However, the document can be kept private if:
  • The company has fewer than 10 employees.
  • The company has assets below 500 times the monthly minimum wage in Colombia.
• The social purpose must be defined, limiting the commercial activities of the company.
• A board of directors is not required.

Corporations (SA)

Important aspects of a corporation include:

• Minimum of 5 shareholders, none of whom can have more than 95% of the outstanding capital stock.
• Similar to LTDA, this company is generally incorporated through a public deed. However, the document can be kept private if:
  • The company has fewer than 10 employees.
  • The company has assets below 500 times the monthly minimum wage in Colombia.
• The social purpose must be defined.
• The corporation must have a board of directors.

Know the importance of accounting records in a company.

With the previous clarifications, you are ready to choose the type of company you want to set up under the current laws in force of the country. To clear up your doubts or start the process, remember that our experts at JLC ​​Auditors can advise you so that your company complies with all the requirements established by law.