Colombia

Starting a Business in

Colombia

Below is a detailed summary of the bureaucratic and legal hurdles faced by entrepreneurs wishing to incorporate and register a new firm in Colombia. It examines the procedures, time and cost involved in launching a commercial or industrial firm with up to 50 employees and start-up capital of 10 times the economy's per-capita gross national income.

This information was collected as part of the Doing Business project, which measures and compares regulations relevant to the life cycle of a small- to medium-sized domestic business in 189 economies. The most recent round of data collection was completed in June 2014.

Compare Colombia to 188 other economies.

  • Standardized Company

  • Legal form: Sociedad por Acciones Simplificada (SAS)
  • Paid in minimum capital requirement: COP 0
  • City: Bogota
No. Procedure Time to Complete Associated Costs
1 Register with the Registry of Commerce and obtain a "pre-taxpayer ID" (pre RUT)
Agency: Chamber of Commerce

The new Law 1429 of 2010 and decree 545 of 2011 introduced a new progressive fee schedule in which new companies are exempted from paying certain fees during their first years in operation. For example, the "matricula comercial" is no longer payable at registration.

Law 1258 of 2009 introduced a new type of company - the SAS (Sociedad por Acciones Simplificada ). An SAS is incorporated by the parties through a private document (or by attorney, if that is the case) that is submitted to the Chamber of Commerce. There is no need for a public deed. As an exception for this rule, if the procedure supposes the transference of real property, it is mandatory to set up the company by public deed (Notary Public).

Since May 2008, applicants can go online to register all of the above at portal www.dian.gov.co. The portal provides access to information and speeds up the process of starting a business.

The cost are the following: 0.7% of capital registration tax + COP 30.000 fix fee + COP 4.000 for the registration form + 4000 for the certificate of existence and legal representative (required to open a bank account) + COL 5,500 per book (Libro de Actas de Asamblea and Libro de Registro de Accionistas) + COP 20,600 (COP 10,300 cost of registration per book).
3 days see comment
2 Open a bank account with a "pre-taxpayer ID" (pre RUT) and deposit the nominal capital
Agency: Bank

To open an account at a branch of a commercial bank, the owner encloses the certificate of existence and legal representation, the TIN document, and a photocopy of the certificate of citizenship of the legal representative. A savings account may be opened in minutes, but a checking account could take 3 or more business days for the bank to verify the company information, due to the compliance and revision requirements stemming from money-laundering prevention laws and regulations. Depending on the bank, a minimum initial deposit of about COP 500,000 is required.
1 day no charge
3 Obtain a final tax payer ID number
Agency: Tax authority (DIAN)

In order to obtain the final ID number (RUT) from the tax agency (DIAN), the "pre-tax ID" (pre RUT) and the bank account certificate are required. The tax authority will then electronically inform the formalized RUT to the Registry for the issuance of the Certificate of Registration and the final ID number.
1 day no charge
4 Register company with the Family Compensation Fund (Caja de Compensación Familiar), the Governmental Learning Service (Servicio Nacional de Aprendizaje, SENA) and the Colombian Family Institute (Instituto Colombiano de Bienestar Familiar, ICBF)
Agency: Family Compensation Fund (Caja de Compensación Familiar), the Governmental Learning Service (Servicio Nacional de Aprendizaje, SENA) and the Colombian Family Institute (Instituto Colombiano de Bienestar Familiar, ICBF)

Decree 3667 of 2004 created a unified form to self-assess and pay social security and payroll contribution. And be advised that the unified form can be submitted electronically but not in person to the Governmental Learning Service (Servicio Nacional de Aprendizaje, or SENA), the Colombian Family Institute (Instituto Colombiano de Bienestar Familiar, or ICBF) and the Family Compensation Fund (Caja de Compensación Familiar). This unified form must be submitted electronically or in person.
The term for payment of the monthly contributions to the Family Compensation Fund expires within the first thirteen business days of each month depending on the last number of the Tax Identification Number (NIT) of the company.
5 days no charge
* 5 Register employees for health coverage (public)
Agency: EPS

To register employees for health coverage, the company must submit a form that indicates the affiliation of its employees to the national health system (Plan Obligatorio de Salud, POS), be it through the public entity) or through a private ""promoter of health"" (EPS). Each employee has the right to choose a provider, and the company is obliged to submit the respective form to the provider designated by the employee. Normally, each company must make its submissions to at least one provider.

In practice, it usually takes longer than assumed here, because the providers normally do not accept affiliations immediately. The employer is obligated to complete and present different forms, enclosing the documents requested by each entity (which may vary), including the administrator of professional risks.
6 days, simultaneous with previous procedure no charge
* 6 Register employer and employees for pension with Colpensiones or one of the private funds
Agency: Social Security Institute

The company must affiliate itself with the pension system. The company must then submit a form that indicates employee affiliation to the pension system (affiliation either to the public pension fund through Colpensiones or to a private pension and compensation fund). The employer cannot choose the pension fund on behalf of the employee. Each employee has the right to choose between the public or private pension fund, and the company must complete the respective submissions to the pension funds.
1 day, simultaneous with previous procedure no charge
* 7 Register company with the Administrator of Professional Risks (ARL)
Agency: Administrator of Professional Risks (ARP)

The company must submit a form listing its affiliation and its employees to an administrator of professional risks (ARP), private or public (Instituto de Seguros Sociales, ISS), which covers workplace injury and professional illness. The employer chooses the ARP to which it affiliates all employees and pays the monthly contributions. Coverage begins 24 hours after submitting the form. Before affiliating employees, some administrators of professional risks request that they attend a short course.
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1 day, simultaneous with previous procedure no charge
* 8 Register employees with a severance fund
Agency: Severance fund

The company is required to present a form that indicates employee affiliation to the severance fund. Each employee has the right to freely choose the severance fund. Consequently, the company is obliged to complete the respective submission to the severance fund requested by the employee. Although 1 day is typically required to affiliate an employee to a severance fund, the time frame may vary depending on the number of entities chosen by the employees. The employer must deposit the employee’s severance payment annually before February 15th.
1 day, simultaneous with previous procedure no charge
* Takes place simultaneously with another procedure.

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