Steps that a foreigner must follow to set up a company in Colombia

Steps that a foreigner must follow to create a company in Colombia

The inflow of foreign capital has been one of the engines that has driven economic and financial growth in the country in recent years. This has been possible due to current economic policies, which offer foreign investors optimal conditions for the establishment of private industries and businesses. In this article we will explain the steps you must follow to set up a company in Colombia legally.

  1. Define the business name of the company

The business name refers to the legal name with which the company will be identified in the commercial sphere. This is an essential legal requirement, and it is important that it is not assigned to another company, otherwise, it cannot be registered in the corresponding public entity (commercial register).

  1. Define the type of company

Defining the type of company that is going to be carried out is an essential element for setting up companies in Colombia. The types of commercial companies are:

  • Limited company
  • Limited Liability Company
  • Collective Society
  • Stock Simplified Company
  • Sole proprietorship

Most investors opt for Public Limited Companies, especially because in the event of a legal problem, they will only respond with the capital destined exclusively for the company and not with the shareholders’ equity.

  1. Take to the Mercantile Registry

Subsequently, you must take all the documents to the commercial registry and wait for the entity to legally approve setting up the company in Colombia. This process can take some time because the number of signatures that are registered daily in the country is extensive, so you must be patient while waiting. It should be noted that carrying out this process has a cost of 0.7% of the capital to be subscribed.

How to create a company in Colombia as a foreigner

  1. Register with DIAN

After the company has been formally registered in the commercial register, it continues to be registered before DIAN (Tax Administration). To do this, you must request the Tax Office the Tax Identification Number (NIT), this will be the document that will allow the entity to monitor and control the fiscal situation of the company. This procedure can be requested through the entity’s website.

If you have any questions about registering with DIAN, visit the institution’s website.

  1. Registration with the local Chamber of Commerce

Then you will proceed to register the company at the headquarters of the Chamber of Commerce of the city where the company will reside. It is important that, in addition to the legal documentation, you also supply the company’s accounting books.

  1. Legalize foreign investment

A crucial requirement that all foreigners must comply with is to legalize foreign investment, which is carried out through the Banco de la República. This must be carried out around the first three (3) months after the capital enters Colombia and after completing the necessary legal forms.

  1. Open a business bank account

Then you will proceed to open a bank account in the name of the company. This account must be used to have control over all commercial transactions that the company executes periodically. Keep up an excellent bookkeeping because DIAN will validate it to make visible the fiscal situation of the organization.

  1. Register the company with Social Security

All companies located in Colombia are required to register to Social Security; this is an essential requirement to hire personnel.

As you can see, all procedures aimed to set up companies in Colombia must be oriented from a legal point of view. Thus, you will avoid legal problems with government authorities, and you will be able to carry out commercial operations within the country.

Find out Do I need legal advice to incorporate a company in Colombia?