International companies planning to widen their global horizons can consider a subsidiary entity set up in Colombia. However, establishing a presence in a foreign country can be costly, both in time and money, without any certainty that the effort and financial outlay will bring success.
Suppose the blossoming economy of Colombia is the target for Global Expansion. In that case, foreign companies planning to hire or move staff there and operate payroll must establish a legal entity as a subsidiary. This is so they can deal with the Colombian Tax and Customs National Authority (Dirección de Impuestos y Aduanas Nacionales, DIAN) and the General System of Social Security in Health (Sistema General de Seguridad Social en Salud, GSSSH).
A popular choice is to establish a limited liability company operating under Colombia’s Commercial Code and known as a Sociedad de Responsabilidad Limitada (SRL). It has a minimum of two partners who generally have no liability. However, expanding overseas is a significant step. If the move fails, companies face the extra expenditure and stress of closing their operation, selling property and paying off employees. It is easy to stumble while chasing two objectives – advancing your company at home while crossing the world into new territory.
The sensible alternative is to use a Professional Employer Organisation (PEO) and Employer of Record (EOR), such as Bradford Jacobs, to locate the finest local talent and administer your payroll in Colombia. Your company will be up-and-running in days rather than weeks or even months and without running any risks.
Are you considering a subsidiary entity set up in Colombia? First, decide on the business structure best suited to your vision for expansion. The typical choice is to move with a limited liability subsidiary. This operates under the Commercial Code in Colombia and is a Sociedad de Responsabilidad Limitada (SRL). It has a minimum of two partners who generally have no liability.
Registration and other procedures include the following:
After establishing the subsidiary, companies must take on other procedures and responsibilities to run payroll for their staff. Essential requirements include:
International companies having established a subsidiary entity in Colombia operate under the Commercial Code, while the Labour Code governs the relationship with their employees. The subsidiary has a separate legal identity from the parent company and is treated the same as a local company. The parent company’s liability is generally restricted to the invested share capital; neither is it responsible for any subsidiary debts.
The subsidiary provides the parent company with the potential for further expansion throughout Central and South America as a stepping stone into other regional economies. Additionally, the subsidiary can ‘test the market’ by following its business ideas and entering into different areas of operation for the owning company. The subsidiary can also draw up its contracts and agreements with clients.
Other benefits for a subsidiary:
However, there is a more straightforward option to the risks and costs of setting up a subsidiary in Colombia. Working with Bradford Jacobs and using a global Professional Employer Organisation (PEO) such as Bradford Jacobs means staff can be sourced, placed in their roles and be up and running within days rather than months. All the payroll, taxation and compliance difficulties are under control thanks to our Employer of Record (EOR) services.bo
The Commercial Code regulates all companies operating in Colombia. Registration, compliance and management requirements include:
Registration and Documentation:
Accounts and Taxation: