Starting a Business in El Salvador

This table summarizes the procedures and costs associated with setting up a business in El Salvador.

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Legal Form: Private Limited Liability Company
City: San Salvador

	Procedure	Time to complete:	Cost to complete:
1	Deposit the legally required initial capital in a Salvadoran bank and obtain deposit evidence or certified check.	1 day (less than an hour)	nominal
2	Check the uniqueness of the company name in the Registry of Commerce	1 day	no charge
3	Notarize the articles of association	2 days	Between $500 and $800
4	Register with the Registry of Commerce and publication and legalization of books	3 days	$0.57 for every $114.28 + US$ 0.23 + US$ 142.86 (business license) + 0.1$1003 ( legalization of books)
5	Accounting system	10 days	USD450
*6	Register employees with one of the pension administrator funds (Administradora de Fondos de Pensiones).	3 days (simultaneous with previous procedure)	no charge
*7	Register the company for tax at the Mayor’s Office	1 day (simultaneous with previous procedure)	USD 10
*8	Make a company seal	2 days (simultaneous with previous procedure)	USD 15

* Takes place simultaneously with another procedure.

Procedure 1.: Deposit the legally required initial capital in a Salvadoran bank and obtain deposit evidence or certified check.
Time to complete:: 1 day (less than an hour)
Cost to complete:: nominal
Name of Agency:
Comment:: At least 5% of the initial start-up capital has to be shown and evidenced to a Salvadoran public notary. This capital has to be shown through a certified check payable to the name of the company, for the amount for which the company will initiate its operations. The check will be deposited in the company’s new account once the deed is duly registered at the Registry of Commerce (that is, the company has been established). The bank that opens the account in name of the new corporation will require a certified copy of the articles of association and documents of the company’s legal representative.

Procedure 2.: Check the uniqueness of the company name in the Registry of Commerce
Time to complete:: 1 day
Cost to complete:: no charge
Name of Agency:
Comment:: According to Article 101 of the Code of Commerce, to select the company name, a company representative must go to the Registry of Commerce and verify that the name chosen has not been taken by another company. Since April, 2008, entrepreneurs can check the uniqueness of the company name at the Registry of Commerce online. ( For further information: http://www.e.cnr.gob.sv/portal/)

Procedure 3.: Notarize the articles of association
Time to complete:: 2 days
Cost to complete:: Between $500 and $800
Name of Agency:
Comment:: To establish a corporation, Article 22 and Article 194 of the Code of Commerce require fulfillment of the following requirements: ~- Name and personal data of company shareholders (two shareholders minimum).~- Commercial name.~- Term, domicile, and company social purpose. ~- Capital stock.~- Corporate administration shall be delegated either to a board of directors or a sole administrator. (In El Salvador no mercantile or labor limitations exist regarding the administrators of a capital stock company.)~- External and fiscal auditors. ~~The cost to notarize the articles of incorporation ranges between USED 500 to USD 1,000.

Procedure 4.: Register with the Registry of Commerce and publication and legalization of books
Time to complete:: 3 days
Cost to complete:: $0.57 for every $114.28 + US$ 0.23 + US$ 142.86 (business license) + 0.1$*100*3 ( legalization of books)
Name of Agency:
Comment:: According to article 66 of the Code of Commerce, to register a new corporation, a fee is to be paid according to the value of the capital and is $0.57 for every hundred of a dollar or fraction of a hundred, with maximum registry fee of USD 11,428.57. Since June 2008, renewal of the business license and establishment license (if applicable) must be paid within the month the company was initialy registered. The initial balance sheet is not registered, is only deposit at the Registry of Commerce, for a fee of $17.14. The business license registry fees are based on company assets, nonetheless, value of the assets and fees have been set up in US dollars as follow: --from $2,000 to $57,150: $91.43--From $57,151 to $114,286: $137.14--from $114,287 to $228,572: $228.57---If the assets exceed $228,572 one has to pay $11.43 for every $100,000 or a fraction of $100,000. The fee is not to exceed $11,428.57

Procedure 5.: Accounting system
Time to complete:: 10 days
Cost to complete:: USD450
Name of Agency:
Comment:: The external auditor of the company authorizes the accounting procedures and the internal books, which include the general shareholders meeting book, the board of directors book, the registry of shareholders book, and the increase or decrease of capital stock book.

Procedure 6.: Register employees with one of the pension administrator funds (Administradora de Fondos de Pensiones).
Time to complete:: 3 days (simultaneous with previous procedure)
Cost to complete:: no charge
Name of Agency:
Comment:

Procedure 7.: Register the company for tax at the Mayor’s Office
Time to complete:: 1 day (simultaneous with previous procedure)
Cost to complete:: USD 10
Name of Agency:
Comment:: Upon registering at the Registry of Commerce, each founder must pay a tax (Vialidad A) of about USD 5.

Procedure 8.: Make a company seal
Time to complete:: 2 days (simultaneous with previous procedure)
Cost to complete:: USD 15
Name of Agency:
Comment:: Because no authorization is required, it is customary for companies to make a seal. A company seal can be made in 1 or 2 days at a cost of about USD 15–USD 30, depending on the size and design selected by the client.