Practical guide for the incorporation of companies in Colombia

Practical guide for the incorporation of companies in Colombia

Any person who wishes to formalize a business must know all the requirements set forth in the Law for incorporating a company in Colombia. In this article we will present you with a guide on each step that you must follow to correctly comply with this process.

We explain what forms of legal figures exist.

What are the requirements to create a company in Colombia?

First, you must bear in mind that for the incorporation of a company in Colombia you must comply with a series of legal requirements framed in the regulations of the country.

We will present the legal requirements that you must follow to create a company in Colombia. These are:

  1. Choose a company’s name

The business name refers to the name with which you are going to make your company known before the Law and is the first requirement that must be met. This must be registered in the RUES and you have to make sure that the name is original and is not being used by another organization.

To verify availability of the legal name of a company, you must access the portal of the city’s Chamber of Commerce.

  1. Classify your economic activity

In this step, you must define the type of work to be carried out in the company. To achieve this task, you can access the CIIU portal and classify the type of economic activity that you will carry out.

  1. Register as an individual or company

If you are going to formalize the incorporation of a company in Colombia, you must register as a legal entity. You have to keep in mind that the tax rates applicable to individuals are different to the ones for individuals; tax rates for companies are higher depending on the net profits and its size.

On the other hand, regardless of whether or not the company has registered profits during the year; You are obliged to declare the Income Tax to the corresponding government entity.

  1. Register in the RUT (Tax Registry)

The RUT consists of a certificate that is used to access the NIT (tax information number). The latter will allow DIAN to have control of all taxpayers (both individuals and companies) in the country in order to verify who has or has not complied with their tax obligations.

  1. Register in the merchantile registry

After having carried out the previously mentioned steps, you will be able to register the company in the commercial register. The tax that you must pay to carry out this procedure is 0.7% of the total amount.

  1. Open a bank account

Once the company is formally incorporated in Colombia, you must open a bank account with the name of the company. All income received by the company must be exclusively deposited to this account to facilitate the bookkeeping and tax control of the company and avoid inconveniences with the tax office in case of carrying out an inspection.

It is important to note that this step must be completed regardless of whether it is a small, medium or large company. All must have their respective bank account with the name of the company to declare VAT, income tax and other taxes as the case may be.

  1. Register the books in the Chamber of Commerce

You must register the minutes and shareholders books so that they become official and are valid before any government inspection.

After completing this step, the name of the company will appear in the database of the Chamber of Commerce.

  1. Register in the Social Security System

This step is one of the most important because it will ensure coverage against accidents or health problems for employees who formally join the company to work.

We will tell you how to obtain the NIT of a company.

If you want to formalize a business, you must first review all the legal information regarding the incorporation of a company in Colombia so that you are attentive to the requirements that you must follow and the regulations that the Government demands for all commercial activities.