Columbia is the 4th largest and the 2nd most populous country in South America with over 50 million people. Columbia is neighbored by Panama, Peru, Venezuela, Brazil, and Ecuador. The country is known for its notoriety in the illicit drugs trade and mafia chiefs. Despite all the hindrances, Columbia has the 4th largest economy in Latin America relying on its coffee production, precious stones, agriculture, and other natural resources.
Columbia has a diverse geography comprising mountain ranges, rainforests, and beaches. The culture too is versatile as the landscape involving music, festivities, cuisine, art, sports, etc. The country is so culturally rich that first-time tourists are often awestruck at the contrast between perception and reality.
Types of companies in Columbia
Columbia has a thriving economy that offers growth opportunities for local and foreign investors. Here are the permissible business formats that investors can choose from according to their needs.
| S# | Type of company | Local name | Min.paid-up capital required |
| 1. | Sole Proprietorship | Persona Natural | No paid-up capital required |
| 2. | Partnership | Sociedad en Comandita Simple | No paid-up capital required |
| 3. | Limited Liability Company | Sociedad por Acciones Simplificada (SAS) | $240 |
| 4. | Public Limited Company (Stock Corporation) | Sociedad Anónima (SA) | $24,000 |
| 5. | Cooperative | Cooperativa | No paid-up capital required |
Noteworthy, is that in the case of a stock corporation, at least 50% of the capital must be submitted at the time of incorporation.
Sole Proprietorship
A sole proprietorship is owned and operated by a single natural person. The owner is solely responsible for all the debts and losses in a personal capacity. Due to its simple structure and operation, this format is the best option for small investors, retailers, freelancers, etc.
Partnership
A partnership is formed between two or more natural persons. A partnership can be general; all partners are equally responsible to compensate debts and liabilities in a personal capacity. The other type is a limited partnership; a group of partners is liable only to the extent of their contribution to the business.
Limited Liability Company
An LLC provides the owners (shareholders), personal protection against debts and liabilities. All liabilities are assumed by the company as it is recognized as a legal person in the eyes of the law.
Public Limited Company
A PLC or Stock Corporation is the most complex format of a company. It has a defined structure and regulations that the company is obliged to comply with. Favored by large investors and companies that wish to raise capital through the public instead of bank loans and personal equity.
Cooperative
A cooperative is owned and operated by its members solely for the purpose of providing them with goods and services. Members are usually owners of other businesses or government agencies who initiate projects for the benefit of the members.
Cost involved in registering a company in Columbia
The cost involved at the time of incorporating and registering a company in Columbia varies depending on the size, location, and nature of the business. A few costs that should be accounted for in the budget are:
Legal Fees
The legal fees for registering and incorporating a company in Colombia can range between $273 to $1,365 depending on the complexity of the process, the type of company, and the services provided by a legal professional.
Notary Fees
Notary fees for registering and incorporating a company in Colombia can range between US$55 to US$547 depending on the scope of activities and the amount of paid-up capital.
Commercial Registry Fees
The fees for registering a company with the commercial registry in Colombia can cost approximately $118 to $235.
Other Expenses
Other expenses that may be incurred when incorporating a company in Colombia include translation fees, travel expenses, and administrative expenses such as obtaining a tax identification number (RUT) and opening a bank account.
General expenses incurred by a company in Columbia
The general operation expenditure may vary depending on the size, location, etc. of the company. The recurring expenditures shall be budgeted well before commencement; here is a list of some general expenses that are most likely to be incurred.
Labor Costs
Labor costs in Colombia are generally lower than in other countries in the region. The minimum wage in Colombia is currently $277 per month. However, other factors such as social security contributions, benefits, and taxes can increase labor costs.
Taxes
The tax system in Colombia can be complex, and taxes can vary depending on the type of business and location. The main taxes levied on businesses in Colombia include income tax, value-added tax (VAT), and payroll taxes.
Utilities
The cost of utilities such as electricity, water, and gas can vary depending on the location and the size of the business. In some areas, businesses may need to pay additional fees for environmental permits or waste disposal.
Rental expenditure
The cost of rent and real estate in Colombia can vary depending on the location and the size of the business. Commercial rental rates in major cities such as Bogotá, Medellín, and Cali are generally higher than in smaller towns or rural areas.
Transportation and logistics
Transportation and logistics costs in Colombia can vary depending on the location and the mode of transport. In some areas, businesses may need to pay additional fees for tolls or permits.
Legal and administrative Costs
Legal and administrative costs in Colombia can vary depending on the type of business and the scope of activities. These costs may include legal compliance, registration fees, permits, licenses, and inspections.
Advantages of incorporating a company in Columbia
Contrary to the popular belief, Columbia has tons of potential for investment, especially in the energy, agriculture, transportation, and healthcare sectors.
Other strategic benefits are discussed here:
Strategic Location
Colombia is strategically located in South America, with access to both the Pacific and Atlantic Oceans. This location provides companies with access to a large market of over 500 million people in the region.
Growing Economy
Colombia has a growing economy, a stable political environment, and favorable business conditions. The country has implemented several economic reforms in recent years, leading to increased foreign investment and economic growth.
Competitive Labor Costs
Labor costs in Colombia are lower than in other countries in the region, making it an attractive location for companies looking to reduce their operational costs.
Free Trade Agreements
Colombia has free trade agreements with several countries, including the United States, Canada, and the European Union. These agreements provide companies with access to these markets with reduced tariffs and favorable trade conditions.
Supportive Government Policies
The Colombian government has implemented several policies to promote investment and business growth in the country. These policies include tax incentives, investment protection, and streamlined registration processes.
Skilled Workforce
Colombia has a skilled workforce with a high level of education and proficiency in English. The country has several universities and technical institutes that provide training in various fields, providing companies with access to a talented pool of workers.
