Launching a business in Colombia is an exciting opportunity—provided you follow each legal step carefully. We’ve created a guide to walk you through the process, from choosing your entity type to getting your tax ID, so you can focus on growth instead of red tape.

1. Understand Your Legal Structure

You may spend some time thinking and researching on Colombia’s several legal structures. However, the most common option is always a SAS (in Spanish “Sociedad por Acciones Simplificada”) because of it’s flexibility and lower maintenance costs. There are, however, three cases where a SAS is not the best option and we must dig deeper before moving forward:

1. Financial sector: If you’re looking to engage in operations that involve soliciting money or securities from the public with promises of future benefits, such as savings, capitalization, or similar schemes, or considering going public in Colombia, incorporating a SAS is not your best choice.
2. Existing foreign entity: To establish a presence for an existing foreign entity, a branch may be your way to go depending, of course, on the particular circumstances surrounding your business model.
3. Public funding: A SAS may not receive public funding from any government entity

💡 Tip: You can always change your company’s legal structure, but a lot of time, money and energy are saved when you get it right the first time.

2. Verify Your Company Name

Make sure your name isn’t taken already by verifying with Unique Business and Social Registry (RUES)

💡 Tip: Because this is not your brand, the name is really not that important.

3. Draft the Incorporation Documents

You will always need a set of bylaws (consider drafting in English and Spanish) that detail how the company is to be run and managed, and if you’re incorporating a SAS you will also need the following:

1. The RUES incorporation form (provided by the Chamber of Commerce)
2. A letter from the legal representative acknowledging he accepts to act as such
3. Accounting form named “the taxing responsibilities of a company” which an accountant (or us) can help with
4. Notification form to make sure your email address and phone number are correct
5. If a single entity or person owns over 50% of the company’s shares, you must declare so by filling in a declaration provided by the Chamber of Commerce

💡 Tip: Incorporating a SAS is fairly easy. However, having a Spanish-speaking attorney by your side can save a lot of time and unnecessary misunderstandings considering there is no guarantee the lovely Chamber of Commerce officials are English speakers.

4. Register with the Chamber of Commerce

The only cases when you require a notary are:

1. If you decide on a different legal structure (S.A., for example) or your attorney (I’d like to say we here) incorporates your company
2. If your attorney incorporates your company using a power of attorney which must be notarized

Otherwise, signatures don’t require much formalities.

💡 Tip: Let’s say your a young entrepreneur (under 35, not that above that you’re old!) and wish to incorporate a company with a conservative capital of one million pesos, or US$ 250, (which is a great idea to avoid higher expenses while you grow your business), your incorporation costs can be estimated at $ 390.000 pesos or US$ 95.

5. Obtain Your Tax Identification Number (NIT) and RUT (Tax ID Document)

You will use your NIT and RUT so much you’ll end up memorizing both of them. As soon as your company is incorporate, understanding the differences between them is going to save you many headaches:

NIT (Número de Identificación Tributaria): A unique number issued by DIAN (Colombian tax authority). You will be using this number so long as your company remains alive.

RUT (Registro Único Tributario): An online registration via the DIAN website which indicates your tax obligations (VAT, withholding, etc.). Every single supplier or major client is going to ask for this, all the time.

💡 Tip: Skipping on VAT obligations is a huge deal, you must know that most companies are legally obliged to charge VAT from the moment they are incorporated.

Conclusions

Starting a company in Colombia needn’t be daunting process. Follow these five steps, lean on local counsel for templates and filings, and you’ll be ready and positioned for sustainable growth.