How to Form a Company in Colombia: A Complete Guide for Foreign Investors and Expats
Introduction: Why Colombia Is Becoming a Global Business Hub
Colombia is rapidly positioning itself as one of Latin America’s strongest environments for international business. With a resilient economy, a growing middle class, and policies that favor foreign investment, it has become a preferred entry point for entrepreneurs expanding into the region.
However, navigating the legal, tax, and administrative process in a new country can be challenging—especially for expats who are unfamiliar with Colombian regulations. This guide provides a clear, legally accurate roadmap to help foreign investors successfully establish a company in Colombia.
If you need personalized support with company formation, legal compliance, immigration, or commercial contracts, investor visas, a qualified lawyer in Medellín can simplify the entire process. Call us at (1) 305-767-2766
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Welcoming International Entrepreneurs to a Dynamic Market
The Colombian government has made significant strides in simplifying the path for foreign investors looking to establish a commercial presence. This commitment is reflected in streamlined regulations and the creation of business-friendly legal structures that cater specifically to the needs of modern enterprises. As a result, the opportunities for growth and innovation are substantial for those prepared to take the leap into this vibrant market.
What This Guide Covers: A Strategic Roadmap for Company Formation
This article provides a comprehensive, step-by-step roadmap for forming a company in Colombia. We will move beyond a simple checklist to offer strategic insights, covering everything from the economic advantages of doing business in Colombia to choosing the optimal legal structure and navigating the incorporation process. Our goal is to equip you with the essential knowledge to make informed decisions and set your venture up for long-term success.
Why Colombia? Strategic Advantages for Foreign Direct Investment
Before diving into the procedural details, it’s crucial to understand why Colombia represents such a compelling opportunity for international investors. The country’s appeal is built on several strong pillars that foster a stable and profitable business environment.
A Robust and Growing Economy in LATAM
Colombia stands as one of Latin America’s most stable and promising economies. Despite global uncertainties, the outlook remains positive. The IMF recently raised its 2025 economic growth forecast for Colombia to 2.5%, and projections from The World Bank suggest similar growth driven by private consumption. This consistent performance signals a healthy market with strong domestic demand, creating a solid foundation for new businesses.
Favorable Regulatory Framework and Investment Opportunities
Colombia actively encourages foreign investment by offering legal security and equal treatment for both national and international investors. The regulatory framework is designed to be transparent and predictable. This confidence is reflected in the numbers; over the last five years, approximately 200 foreign companies have successfully established operations in the country, demonstrating strong faith in the market. While overall Foreign Direct Investment declined in 2024, largely due to shifts in sectors such as mining and oil, according to the International Trade Portal, opportunities in technology, services, and renewable energy continue to expand.
Strategic Geographic Location and Access to Trade Relationships
Positioned at the crossroads of North and South America with coasts on both the Atlantic and Pacific Oceans, Colombia offers unparalleled logistical advantages. This geographic privilege is enhanced by a network of free trade agreements with over 60 countries, including the United States, the European Union, and key Latin American nations, providing businesses with preferential access to a global market of over 1.5 billion consumers.
Government Support for Foreign Investment (e.g., ProColombia)
The Colombian government actively facilitates foreign investment through agencies like ProColombia. This entity provides invaluable support to international entrepreneurs, offering market intelligence, identifying investment opportunities, and assisting with the practical aspects of establishing a business. This hands-on support significantly lowers the barriers to entry for newcomers.
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Choosing the Right Legal Structure for Your Colombian Company
Selecting the appropriate legal structure is the foundational decision for your Colombian enterprise. This choice will impact liability, tax obligations, governance, and operational flexibility.
Understanding the Landscape of Colombian Legal Structures
Colombia offers several types of corporate entities, but one stands out for its adaptability and popularity among foreign investors: the Simplified Stock Company, or Sociedad por Acciones Simplificada (S.A.S.). This modern legal structure was created to simplify the incorporation process and offer maximum flexibility. Key advantages of an S.A.S. include the ability to be formed by a single shareholder, limited liability for its owners, and a flexible governance structure defined by its bylaws rather than rigid legal mandates.
Other Key Company Types for International Investors:
While the S.A.S. is often the preferred choice, understanding the alternatives is essential for making a fully informed decision based on your specific business model and long-term goals.
The Limited Liability Company (Sociedad de Responsabilidad Limitada – Ltda.)
An Ltda. is a more traditional structure requiring a minimum of two and a maximum of 25 partners. Liability is limited to the amount of each partner’s capital contribution. This structure can be suitable for joint ventures or partnerships where a more rigid framework for partner participation is desired.
The Public Limited Company (Sociedad Anónima – S.A.)
The S.A., or Corporation, is designed for large-scale operations and is the only structure that can be listed on the public stock exchange. It requires a minimum of five shareholders and has more stringent governance and oversight requirements, including a board of directors and a statutory auditor.
The Branch Office of a Foreign Company (Sucursal de Sociedad Extranjera)
Instead of creating a new Colombian entity, a foreign company can establish a branch office. This is considered an extension of the parent company, not a separate legal entity. The parent company remains fully liable for the branch’s obligations in Colombia.
Non-Profit Organizations (Entidad Sin Ánimo de Lucro)
For investors focused on social impact, Colombia also provides a clear framework for establishing non-profit organizations, which operate under a distinct set of regulations and tax considerations.
The Step-by-Step Company Formation Process for Foreigners
Once you have selected a legal structure, the incorporation process involves a series of clear, sequential steps.
Step 1: Drafting the Articles of Incorporation
This foundational document outlines the core principles of your company. It is typically created as a private document for an S.A.S. but may require more formalization for other entity types.
Essential Elements of the Articles of Incorporation
This document must include the company name, address, corporate purpose, names and identification of the shareholders, the appointed Legal Representative, initial capital stock, and the company’s bylaws.
The Role of a Legal Advisor in Document Preparation
Engaging a local legal advisor is critical at this stage. They will ensure the articles are drafted in compliance with Colombian commercial law and accurately reflect your business objectives, preventing future legal complications.
Step 2: Formalization via Public Deed (If Applicable) and Notary Public
For structures like the Ltda. or S.A., the articles of incorporation must be formalized through a public deed executed before a Notary Public. The S.A.S. is exempt from this requirement unless assets like real estate are contributed as capital.
Step 3: Registration with the Chamber of Commerce (Cámara de Comercio)
The company legally exists once it is registered with the Chamber of Commerce in the city where it will be domiciled. This step formalizes the business and makes its existence public.
Obtaining the Mercantile Registry (Registro Único Empresarial y Social – RUES)
Upon successful registration, the Chamber of Commerce issues a Certificate of Existence and Legal Representation and enrolls the company in the RUES, the unified national business registry.
Legalization of Accounting Books
The company’s official accounting books must also be registered with the Chamber of Commerce, a mandatory step for financial compliance.
Step 4: Obtaining the Tax Identification Number (Número de Identificación Tributaria – NIT / RUT)
With the company officially registered, the next step is to obtain a tax ID from the national tax authority.
Registration with the National Tax and Customs Directorate (DIAN)
The company’s Legal Representative must register the company with the DIAN to obtain the Registro Único Tributario (RUT), which includes the unique tax identification number (NIT).
Significance of the NIT for Business Operations
The NIT is essential for all commercial and financial activities, including opening a corporate bank account, issuing invoices, paying taxes, and clearing customs. All resident companies in Colombia are subject to a corporate tax rate of 35% as of 2024.
Step 5: Opening a Corporate Bank Account
A local bank account is mandatory for managing company finances, processing payments, and handling payroll.
Challenges and Requirements for Foreigners Opening a Local Bank Account
Colombian banks have stringent “know your customer” (KYC) protocols. Foreign investors will need to provide the company’s RUT, the Certificate of Existence, and identification for the Legal Representative. The process requires careful preparation of all documentation.
Key Colombian Banks for Corporate Services
Major financial institutions like Bancolombia and Banco Davivienda offer robust corporate banking services and are experienced in working with foreign-owned companies.
Conclusion
Forming a company in Colombia is a structured and accessible process for international entrepreneurs who approach it with diligence and strategic planning. The country’s robust economic outlook, supportive regulatory environment, and unparalleled geographic advantages make it a compelling destination for business expansion. By carefully selecting the right legal structure—most often the flexible S.A.S.—and methodically following the incorporation steps from drafting the articles to opening a corporate bank account, you can build a solid legal and financial foundation for your venture.
Your next steps should involve consolidating your business plan and engaging with local experts. A Colombian legal and accounting firm can provide indispensable guidance to ensure full compliance with the Chamber of Commerce, DIAN, and the Central Bank’s regulations on foreign investment. With the right preparation and professional support, your business can successfully launch and thrive within one of Latin America’s most dynamic markets.
Our Story
James Lindzey founded the website ColombiaVisas.com, which is constantly updated with new information explaining visa resolutions, procedures, and laws in Colombia to expats. James has worked as a private investigator and paralegal in the United States through the 90s until he moved to Colombia in 2005. James arrived in Colombia in 2005 and started doing visas for expats, but currently works as Director of Legal Services for Visas by James, and Colombia Legal & Associates SAS since June of 2023.
Colombia Legal & Associates acquired the brand name Visas by James as it became a more familiar and easy way for foreigners to remember the business, than the previous Visas y Tramites Internacionales.
While MedellinLawyer.com focuses more on legal issues for expats, ColombiaVisas.com focuses more on visas, and holds the trademark Visas by James. ColombiaVisas.com is the oldest website and provider of visa information for expats in Colombia. We are proud to be the first and always on the cutting edge of providing interactive website content to our visitors.
In addition to our visa services our agency offers a full range of legal and accounting services to our clients. We are able to assist better in document collection services in the United States because of James previous legal experience in the United States.
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