Colombia ranks among the top 5 most relevant economies in Latin America (2022); in terms of economic growth and is expected to grow even more over the next couple of years. The country looks to accomplish this by fostering international cooperation in areas such as trade, education, and technology. It tops the list of the “30 Countries Preferred for Investment by Foreigners” published by the United Nations Conference on Trade and Development (UNCTAD) and is included in the group of new emerging markets (CIVETS) alongside Indonesia, Egypt, Turkey, and South Africa. Colombia possesses a very business-friendly environment and may be interesting for businesses across a variety of industries. 

Latin America is forecast to grow by 2.1% in 2022 and 2% in 2023. In particular, Colombia is projected to have the highest growth in comparison to its regional neighbours [Figure 5]. By 2023, economic growth of 3.5% is being forecast for Colombia which could stem from less uncertainty once the new President Petro takes office and starts to get settled. This blog will explain the process of forming a company in Colombia as efficiently as possible.

Forming a Company in Colombia

Steps to Setting Up a Business in Colombia

The following steps will outline the process of forming a company in Colombia.

Step 1: Choose a Company Name

First, a name for the company is selected. The availability of the company name can be checked in the RUES, the Colombian business register. This will help avoid any unnecessary legal complications in the future. Bear in mind that the name of the legal entity may differ from the brand.

Step 2: Select a Legal Structure [Check all Company Forms in Colombia]

In the next step, a legal structure for the company is chosen. It is important to choose the structure based on the business activity that will be conducted. Depending on the structure, documentation may vary.

The 3 common legal structures in Colombia are:

  • Simplified Shares Company (Sociedad por Acciones Simplificadas, or SAS)
  • Corporation (Sociedad Anónima, or SA)
  • Branch

According to the records of the chambers of commerce, today close to 97% of the companies created are S.A.S. which is similar to a Limited Liability Company (LLC) in the United States or a SE (Societas Europea) in Europe.

Step 3: Draft the Company Bylaws

Drafting the company bylaws is an essential part of company formation. This document lists the economic activities of the company, its capital, the number of shares and shareholders as well as their legal representatives.

What should the company’s bylaws contain? 

  • The name of the company
  • The duration of the company
  • The corporate purpose of the company
  • The address of the company
  • The date on which it will begin operations
  • The amount of shares it will have
  • The share capital it will contain
  • The legal structure selected
  • The consent to the terms of this legal structure [those might be found in the chambers of commerce website]

Step 4: Register the Company with the Chamber of Commerce

The Chamber of Commerce oversees the formation of all companies in Colombia. In order to gain approval, several documents must be provided including the company bylaws, shareholder information, and documents outlining the company’s commercial activities.

After review and upon approval of the documents, which should not take more than 24 hours, the company will be ready to begin operations.

Step 5: Obtain the Tax Identification Number (NIT)

The last step in the process is obtaining the tax identification number “NIT.” This will be handled by the National Directorate of Taxes and Customs (DIAN). With this number, the Colombian authorities will be able to identify you for all crucial tax and accounting activities.

Normally, this number will be automatically generated. However, sometimes the legal representative has to visit the DIAN offices to carry out this process.

Ongresso Performs Company Formation in Colombia

Colombia ranks third when it comes to ease of doing business in Latin America. It is only 3 hours away from the United States by plane, has an educated workforce with strong English skills, and a continuously rising Gross Domestic Product (GDP). Following the 5 steps outlined above, Colombia can be home to your next subsidiary.

These regulations can be cumbersome, so Ongresso experts based in Colombia are available to help. With experience assisting more than 100+ clients, Ongresso is a strategic and preferred partner in the region. Message us to learn more about outsourcing the time-consuming administrative work involved with this process. Mistakes can lead to delays, so working with an experienced local partner can drastically increase efficiency.

Ongresso has over 10+ years of experience in supporting companies in Colombia and can provide you with a complete market entry package as well as the associated back-office services.

Contact us today for more information on how to form a company in Colombia and request a quote for services.