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Cost of incorporating a company in Colombia 2024
Regardless of whether you’re planning to start Airbnb businesses in Colombia, invest in coffee plantations, or expand your company to the Colombian (or South American) market, the best option for conducting business in Colombia and protecting your assets is through a Limited Liability Company, known in Colombia as SAS (Sociedad por Acciones Simplificadas). But the immediate question arises: How much does it cost to incorporate a company in Colombia this 2024?
Here, we’ll address that question.
Government fees
The official costs of incorporating a company in Colombia primarily depend on two variables: i) the company’s capital to be registered and ii) the age of the investors.
The Company’s Capital
This is the main variable and depends on the amount of the company you wish to register; it determines the tax value you will be charged for registration. Essentially, and aside from some minor additional expenses, the largest item when creating a company is the departmental company registration tax, which is 0.7% of the paid-in capital. This refers to the initial and actual amount of money deposited by shareholders in the company to carry out its corporate purpose.
This means that if you set up a small business, for example, to sell street food and start with a capital of 5,000 dollars, you will pay around 35 dollars. However, if you start an avocado export business with an initial investment of 350,000 dollars, you will have to pay around 2,450 dollars. However, this should be approached with caution and, above all, in the company of an lawyer, to define the best strategy that allows you to optimize these costs, as a company planning to handle large business does not necessarily need to start with such large registered capitals.
With this variable in mind, for a small to medium-sized company with an approximate capital of 50,000 dollars, expect to pay around 350 dollars in registration tax
The Age of the Investors
In Colombia, there is a law that promotes young entrepreneurship. Therefore, companies formed with a capital contribution of over 50% by individuals under 35 years of age receive a discount on some legal company registration fees, with an estimated saving of approximately 250 dollars for small to medium-sized companies with capitals of more than 30,000 USD.
Approximate Cost
To the 0.7% registration rate, other costs are added which, depending on the size of the company, whether it benefits from being a young investor under 35 years, and whether physical books for the registration of shares and shareholders are desired, can range from 50 dollars to 300 dollars additional.
In conclution, for small to medium-sized businesses with capitals ranging from 30,000 USD to 100,000 USD, expect to pay between 500 to 1,200 USD in government fees.
IMPORTANT NOTE: Keep in mind that if you wish to obtain an investor visa that allows you to stay in the country to develop your business, the registered capital of your shares or company must exceed 100 Colombian legal minimum wages, which in 2024 represent 130,000,000 million pesos. At a rate of 3,800 COP/1 USD, this is equivalent to 34,210 dollars.
Foreign capital investment (Bank fees)
Assuming that the capital for the incorporation of the company comes from abroad, it’s important to consider the bank commission cost for legalizing or monetizing foreign currency in Colombia. For this, it’s essential to clarify that the only legal currency in Colombia is the Colombian Peso, and in turn, the only foreign currency for which banks exchange Colombian Pesos is the US Dollar. This means that if your investment capital is in Euros, for example, you will have to make two bank exchanges through the bank, first from Euro to Dollar and then from Dollar to Colombian Peso, according to the official rates minus a commission charged by the bank for each Dollar converted.
Regarding the bank commision you have to consider:
Firstly, the commission of the originating bank where your money is located. This bank will only charge a sending commission, which often involves fixed rates under 100 USD.
Secondly, the exchange rate of the Colombian bank (You must first open an account at the Colombian bank of your choice.). Colombian banks, depending on market movements, the value of the transfer, and the client’s profile, will charge a commission of a couple of tens of pesos for each dollar converted.
For instance, if the exchange rate is 1 dollar to 4,000 Colombian pesos, the Colombian banks might offer a rate, for example, of 1 dollar to 3,950 Colombian pesos, meaning 50 pesos per dollar. For transfers of 50,000 dollars, this would equate to a bit more than 600 USD.
Legal Fees
The first question here is: Do I need to hire a lawyer to incorporate a company in Colombia? The answer is technically NO. In theory, you could do it yourself; however, even though the process is not very complicated itself, you will be asked for information on forms that are very technical regarding financial and accounting data of the company to be created, as well as the presentation of company creation statutes, declarations, and a series of documents that you could essentially complete yourself. But learning to fill them out would take considerable time, and you might face possible reprocessing and devolutions by the Chambers of Commerce (the entity in charge of this kind of process).
So, the main advice is to hire a law firm to handle this process for you.
Regarding the costs, there are different ranges depending on the legal firm, with prices that can reach up to 5,000 or 6,000 dollars per incorporation to prices ranging from 800 to 1,000 dollars. When choosing the right firm, it’s very important to review what services are included in this incorporation process, for example, opening a bank account, managing the opening of other accounts like the National Tourism Registry, creating a user account with the tax entity, among others.
Final cost
Therefore, depending on the company’s capital, the age of the investors, the law firm you choose, and whether the invested capital is foreign or not, the incorporation costs will either increase or decrease. However, for small and medium-sized companies, and adding up the previously mentioned concepts, we could say that all the official & legal costs to carry out this process would be around 1,500 to 3,000 dollars, and for large-scale businesses from 3,500 to over 5,000 dollars.
