Starting a Business in Puerto Rico

This table summarizes the procedures and costs associated with setting up a business in Puerto Rico.

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Legal Form: Corporation
City: San Juan

	Procedure	Time to complete:	Cost to complete:
1	Check the uniqueness of the company name	1 day	no charge
2	Register the company at the Puerto Rico Department of State and obtain a business certificate	1 day	$100 + $10 for the issuance of the Certificate of Existence
3	Apply for an employer identification number (EIN) with the Internal Revenue Service of the United States	1 day	no charge
4	Apply for a municipal business license (patente municipal)	1 day	no charge
5	Request unemployment and disability account numbers from the PR Department of Labor and Human Resources (Departamento del Trabajo y Recursos Humanos)	1 day	no charge
6	Subscribe to a workmen’s insurance policy	1 day	no charge
7	File with the Registry of Merchants and Business, the Commercial Development Administration	1 day	no charge

Procedure 2.: Register the company at the Puerto Rico Department of State and obtain a business certificate
Time to complete:: 1 day
Cost to complete:: $100 + $10 for the issuance of the Certificate of Existence
Name of Agency:
Comment:: The company’s certificate of incorporation is filed at the Corporations Division of the Puerto Rico Department of State (División de Corporaciones, Departamento de Estado del Estado Libre Asociado de Puerto Rico). The certificate of incorporation generally sets forth the company’s business purposes, the address of its registered office, the number of shares in each authorized class, and the rights of stockholders in each of these classes. If all documents are duly filed, the corporation may be formed and incorporated and start operations the same business day.

Fee schedule for company incorporation based on authorized capital with par value:
- Up to 20,000 shares (par value): USD 0.01 per share of authorized capital. (For the purposes of this computation, the law assigns USD 100 par value to each share computation.)
- From 20,001 to 200,000: USD 0.005 per share.
- Over 200,000: USD 0.002 per share.

Fee schedule for company incorporation based on authorized capital without par value:
- Up to 20,000 shares (without par value): USD 0.005 per share.
- From 20,001 to 2,000,000 shares: USD 0.0025 per share.
- Over 2,000,000 shares: USD 0.002 per share.

The minimum fee for company incorporation is USD 100.

Procedure 3.: Apply for an employer identification number (EIN) with the Internal Revenue Service of the United States
Time to complete:: 1 day
Cost to complete:: no charge
Name of Agency:
Comment:: The employer must apply for an employer identification number (EIN) with the U. S. Internal Revenue Service. The EIN is used for all tax purposes, including Medicare and Social Security taxes, collected by the federal government through the U.S. Internal Revenue Service. Upon receipt of the EIN, the employer must submit the EIN to the Puerto Rico Treasury Department (using Form 4809), and each employee must complete Form 499-R-4 for Puerto Rico tax withholding.

Procedure 4.: Apply for a municipal business license (patente municipal)
Time to complete:: 1 day
Cost to complete:: no charge
Name of Agency:
Comment:: Within 30 days of commencing operations, any person (natural or juridical) must apply for a municipal business license in the municipality where the company will conduct business. The law exempts the company from paying tax during the first semester of operation (January 1st to June 30th or July 1st to December 31th). Upon request and compliance with certain requirements, the Company will be issued a provisional license. Commonwealth of Puerto Rico law establishes the right of every municipality to impose and collect municipal license taxes (patentes municipales) based on the volume of business of up to .5% of gross sales. Most for-profit activities that generate revenues in excess of USD 5,000 per year are covered.

Procedure 5.: Request unemployment and disability account numbers from the PR Department of Labor and Human Resources (Departamento del Trabajo y Recursos Humanos)
Time to complete:: 1 day
Cost to complete:: no charge
Name of Agency:
Comment:: Unemployment insurance tax is administered by the Commonwealth of Puerto Rico Department of Labor and Human Resources. Temporary disability insurance may be obtained privately, and proof of such insurance filed with the Department of Labor, or it must be obtained from the Negociado de Seguro de Incapacidad No Ocupacional de los Trabajadores, SINOT.

Procedure 6.: Subscribe to a workmen’s insurance policy
Time to complete:: 1 day
Cost to complete:: no charge
Name of Agency:
Comment:: Workers' compensation insurance is provided by the State Insurance Fund Corporation (Corporación del Fondo de Seguro del Estado). Insurance premiums vary with the type of business activity.

Procedure 7.: File with the Registry of Merchants and Business, the Commercial Development Administration
Time to complete:: 1 day
Cost to complete:: no charge
Name of Agency:
Comment:: According to Mandatory Registry of Merchants and Businesses (Act 71 of August 12, 2000 as amended by Act 159 of August 10, 2002 and Act 304 of September 15, 2004), all natural and juridical persons engaged in business activities in Puerto Rico must register with the Mandatory Registry of Merchants and Businesses at the Commerce and Exportation Company. The registration form must be filed on or before July 15 of each year. However, if the business commenced its operations between January 1 and July 15, the filing of the registration form is to be filed on or before July 15 of the following year. The regulation (No. 6620) imposes high fines for failure to register.