Starting a business requires more than acquiring property and managing the funds agreed upon between the parties involved. Because when we speak of companies, we also speak of their incorporation, which is regulated by the Colombian State.
Therefore, we must not underestimate the importance of having legal counsel before carrying out any procedures in the formation of a company or that entail financial implications.
Company Formation Process in Colombia
The existing laws regarding business administration have been created depending on the established structure, which in turn depends on the needs and expectations of each particular project. These are the types of companies that exist in the country, regulated by the Colombian Commercial Code.
Individually incorporated companies
When an entrepreneur wishes to start his business individually in Colombia, he can resort to three modalities:
- Natural person merchant: professionally engaged in commercial activities, must register with the Single Tax Registry (RUT) and subsequently go to the Chamber of Commerce to present this registration document and the Single Business Registry (RUES) form.
- Sole proprietorship: differs from the previous structure because the business has legal personality independent from the person who creates it: It consists of a person (Natural or Legal) allocating a portion of their assets for the development of a business activity.
- Simplified Stock Companies (S.A.S): arise with Law 1258 of 2008, through which it is legislated that such company may be incorporated by one or more natural or legal persons, whose responsibilities are closely linked to the value of their contributions.
Companies formed by two or more persons
Some of the companies that have two or more partners and are legally incorporated in Colombia are:
- General Partnership: its incorporation is legalized by means of a public deed and its administration may be in charge of the partners or delegated third parties.
- Corporation (S.A): incorporated by five or more shareholders through a public deed. The responsibilities of this type of company are in accordance with the amount contributed by each shareholder, and the capital is represented in shares of equal value for each one.
- Limited Liability Company (Ltda.): it has a minimum of two partners and a maximum of 25, and each one is liable for its contributions.
- Sociedad en Comandita Simple (S. en C.): it is formed by managing partners and limited partners, while the former are in charge of managing the company and the development of the business, the limited partners contribute the capital.
Other Types of Companies
Other companies frequently formed in the country are Associated Work Companies (E.A.T.), in which the partners focus their knowledge and work performance with the aim of achieving certain objectives in the business area, and in this way the project is carried forward.
And finally, there are Agricultural Transformation Companies (S.A.T), which are dedicated especially to agricultural or livestock activities.
If you are about to undertake an important project, do not hesitate to consult with attorneys in Medellín who can accompany you throughout the entire process of forming companies, trademark registration, review and drafting of contracts, negotiations with third parties, among other processes that will be better handled with excellent legal counsel to establish a successful business.
