Colombia offers a wide range of benefits to companies that are considering expanding into the country. It’s rich in natural resources, has a highly qualified workforce, and offers business-friendly legislation towards foreign investment—each an important box to check when it comes to choosing a Latin America country for expansion. It has the third best-trained labor force in all of South America, outpacing both Peru and Brazil. But despite its benefits, expanding into Colombia still requires organizations to proceed with a certain degree of caution.
Starting a Business in Colombia
To establish a presence in Colombia, businesses will need to complete a series of essential steps, including:
- Registering with the Registry of Commerce and obtaining a taxpayer ID, which usually takes about two days and includes a 0.7% capital registration tax and company registration fee, business establishment fees, and other fees
- Opening a company bank account
- Obtaining an authorization for invoices and electronic signatures
- Registering with the Family Compensation Fund, the Government Learning Service, and the Colombian Family Institute, all of which usually takes about five days
- Registering employees for public health coverage, which takes about six days
- Registering the business and its employees for pension plans with either the public fund or one of several private funds
- Registering the company with the Labor Risks Administrator
- Registering the employees with a severance fund
These considerations of course in addition to dealing with construction permits and similar matters, all of which are just as important but will vary depending on the situation. The fee structure will also vary depending on the project’s specifics.
Generally speaking, it takes about 11 days to start a business in Colombia if all proper steps are followed. To put that into perspective, it can take as many as 21 days in Brazil. It can take as long as 230 days in Venezuela, as well. But even with its specific and tedious requirements, starting a business in Colombia is quicker (and less expensive) than other Latin American countries.
Additional Considerations for Starting a Business in Colombia
Over the last ten years, the country’s GDP growth rate has surpassed the world average. It’s also shown tremendous economic stability, and has taken steps to adequately control its own inflation rate. The principal risk rating agencies have given Colombia higher and higher confidence indices as well, creating something of a perfect storm for global organizations with the best intentions.
Break into the Colombian Market with an Experienced Global Expansion Partner
Rather than becoming an employer and starting a business in Colombia on your own, you may also want to consider enlisting the help of a partner like an International PEO (Professional Employer Organization) to streamline the process.
Velocity Global has helped hundreds of companies establish their presence across the globe, with many choosing Colombia as their new location. We utilize our global infrastructure to help organizations expand faster than with traditional entity establishment, saving not only time, but overall costs. Our expansion experts handle many of these infrastructure-related issues on your behalf, including all compliance considerations, providing access to the highest skilled workforce, and making sure you’re aware of relevant cultural norms.
If you’d like to find out more about how to become an employer and start a business in Colombia, or if there are any related issues that you’d like to discuss in more detail, reach out to Velocity Global today.