Set up your subsidiary in Colombia
Capital
Bogota
Official Language
Spanish
Currency
Colombian Peso
Payroll cycle
Monthly, Bi-Weekly
Quick facts about Colombia
Straddling the border between Central and South America, Colombia is one of the most biodiverse countries in the world. From the country’s high altitude sprawling capital Bogotá to the Caribbean island San Andres, Colombia offers some of the best natural resources in the world. The country is known for its robust education system, which makes it an appealing place to build out a local employment hub.
If you’re looking to establish a business In Colombia, you can set up either a subsidiary or an entity, or partner with an EOR service if you're just looking to hire new talent.
The parent company must have substantial time and resources to establish a physical presence.
Here's a look at everything you need to know about establishing a Colombian subsidiary.
Why companies establish subsidies over entities
Many companies choose to establish a subsidiary within Colombia in order to better protect the company's assets and give the shareholders more freedom. Setting up an office in a country has a multitude of benefits, because it allows you to offer products that are specific to the market.
An entity does have advantages for some. However, it requires companies to fully integrate themselves into the country’s work culture. For instance, a tech company might open an office in London or Madrid in order to expand their overall presence in EMEA. In general, opening an entity is a more costly process.
If you’re mainly looking to build out your workforce in Colombia, another option to look into is partnering with an employer-of-record (EOR) service like Via.
Subsidiary types in Colombia
There are a number of options when you choose to open a business in the country. The three main types are:
simplified stock company or S.A.S. (sociedad por acciones simplificada)
a limited liability company or LTD (sociedad de responsabilidad limitada)
a regular corporation or S.A. (sociedad anomina)
Today, S.A.S. is chosen the most, since it offers the most flexibility. This option has the quickest administration process and gives the shareholders freedom to determine the terms and conditions of the subsidiary.
How to open a subsidiary in Colombia
Setting up in Colombia is a relatively simple approach to expanding your business. However, the process can take months and you have to ensure you’re following all of the necessary steps.
To begin the process, you need the following:
You must have a minimum of 2 partners and a maximum of 25 partners to incorporate an LLC
You will need a statutory audit if:
Assets are greater than 5,000 times the minimum wage
Revenues are greater than 3,000 times the minimum wage
Occasionally, assets will be 30,000 times the minimum wage. In this instance, the subsidiary should fall under the Company Superintendent's supervision. The Company Superintendent is a government agency overseen by the Ministry of Commerce and is responsible for the supervision of companies. The Superintendent oversees compliance with government regulations and ensure company cooperation. This is also the case when supervision does not correspond to any specific superintendent.
When choosing a location for a subsidiary, you should always consider how the location will benefit your business and what the laws and regulations of that given jurisdiction are. Most companies choose to open subsidiaries in major cities, including Bogotá, Medellín, Calí, Bucaramanga, and Cartagena.
Colombia subsidiary laws and regulations
You do not need investment capital, as long as there are two shareholders at all times. At the time of the incorporation, you must pay the required capital.
You also do not need a board of directors in order to establish a subsidiary in Colombia. You simply need partners and an acting General Manager to make decisions.
To register a subsidiary, it costs between 17 USD and 873 USD.
Pros and Cons of setting up a Colombian subsidiary
This process has multiple advantages. You can establish a wider range of businesses to accommodate a larger customer base. A subsidiary can also help the parent company better integrate into the culture and allow you to run payroll in Colombia internally.
However, establishing a subsidiary in Colombia has its disadvantages too. The process can take a while. Further, you need to have the knowledge and time to invest in order to ensure that you are following all of the necessary business and tax laws, as to avoid further ramifications.
Colombian Subsidiary vs. EOR: What’s right for you?
If your main goal in Colombia is to hire knowledge workers such as engineers, designers, and data scientists, then you might consider partnering with an EOR service like Via. By partnering with an EOR service like Via, you do not need to worry about establishing a physical business presence.
With our easy-to-use platform, Via helps you manage local HR processes for direct employment such as benefits, payroll, background checks, and more. Our team of local labor lawyers and on-the-ground experts ensure that your company remains compliant while expanding abroad. As your employer-of-record/entity in Colombia, Via assumes responsibility for employment liability, so that you can focus on what matters: recruiting and managing your team.
With Via’s transparent pricing, you can pay full-time employees or contractors with no hidden set-up fees, no foreign exchange or transaction fees, and no minimums–start with 1 employee and scale up at your own pace.
