How can you start your own business in Colombia? My business has been around for about 7 years now, and like many, it was quite a figuring out process. Are you also planning to start a business in Colombia? In this article you will find a complete roadmap, with helpful links and useful tips. Also useful if you are going to work in Colombia for a Colombian company.
Important! Starting a business in Colombia is not as easy as it may be in your home country, and there are many forms and situations where things are different. In addition, the tax system is very complicated and I don’t understand half of it myself. So it means you may have to follow different steps than those in this article. The main purpose of the article is to get you started and provide useful tips.
Having my own business in Colombia: what do I actually do?
Let me begin by telling you something about what I actually do. In 2017, I made a career switch from scientific researcher at the National Cancer Institute of Colombia to web designer. Working in Colombia is a lot of fun and educational, but I also regularly went nuts. In addition, I already wanted to be my own boss for a long time. Click here if you want to learn more about why I made my career switch (Dutch).
So I started my own business as a web designer and blogger, where I can develop myself and work independently of location. And that includes registration with the Chamber of Commerce, just like in other countries. Although I work with Dutch-speaking clients from the Netherlands, Belgium and anywhere else in the world, my company is 100% based in Colombia. And here I’ll tell you from A to Z how that went.
What is your situation in Colombia?
Often when I get questions about setting up a business in Colombia it is from people with the most diverse situations. For example:
- People who are still registered in the Netherlands and want to establish a company in Colombia. In this case, it seems to me the first step is to arrange a visa in Colombia, deregister from the Netherlands, cancel the tax office and arrange everything in Colombia. But possibly it also depends on how long you want to stay and what you have left in the Netherlands.
- US nationals who do not yet have a work visa in Colombia and want to establish a company. Again, the first step will be to arrange a visa, even if, for example, you have been away from the US for more than a year and now want to settle (temporarily) in Colombia.
- People who have a company in their country and want to work with it in Colombia. As a digital nomad I don’t think this is a problem, but if you plan to live in Colombia for a longer period of time you might just have to deregister from the Chamber of Commerce in your country and register in Colombia. The best thing to do in this case is to contact the Chamber of Commerce in your home country.
But as mentioned, this all depends on your situation and plans. How long you are going away and whether you really want to emigrate like I did or stay in Colombia temporarily. For me, it is impossible to have an answer for every situation. I can also imagine that there are other solutions than the ones I know and thus more is possible.
Therefore, my situation
I emigrated to Colombia in 2014 (You can read about emigrating to Colombia here) and immediately deregistered myself from the Netherlands. Since then, I no longer pay health insurance and taxes in the Netherlands, but in Colombia. Some Dutch people in Colombia pay for health insurance with the Dutch company OOM insurances, with which they also receive care in Colombia (or anywhere in the world). In my case, I am 100% insured in Colombia and have nothing to do with the Netherlands in terms of healthcare.
From the beginning, I have had a visa that allows me to live and work in Colombia. With this, I may also start my own business. I never had my own business in the Netherlands, so I have nothing to do with deregistering with the Chamber of Commerce from the Netherlands and transferring it to Colombia. In addition, the length of stay in Colombia is not an issue for me: I emigrated and have no plans to go back after a certain time. Meanwhile, I have my second resident visa in Colombia, which stands for longer/permanent stay.
All this is important to understand the steps for setting up your own business. And to know that certain things may therefore not apply to you.
Starting my own business in Colombia: the steps I followed
Now all about how I started my business in Colombia. Includes tips for handy tools you can use for creating invoices and paying your retirement and health insurance, among other things.
Step 1: Arrange a visa in Colombia
If you do not already have a visa in Colombia, you should arrange it. So that you can go do anything with your cédula. You can only apply for a visa online here. Through this link you can also find the conditions you need to meet and what you need for the visa. For additional explanations click here.
Step 2: To the DIAN
DIAN stands for Dirección de Impuestos y Aduanas Nacionales de Colombia and is the Office of Taxation and National Customs. So the Colombian tax authorities. At the DIAN, you must register for tax registration. This is called RUT (Registro Único Tributario). A RUT is needed by everyone who works in Colombia, so even if you are not going to start your own business, but will be employed somewhere.
So because I was previously employed, I already had a RUT. Once you go to register for your RUT then you are attached to a number, this is called NIT (Número de Identificación Tributaria) and that is your tax number that you need for everything.
Signing up for your RUT
Enrolling in RUT can be quite an adventure. You first have to find a DIAN (it’s not hard), then find out whether or not you need an appointment (can vary by DIAN and the rules still change sometimes, so better call ahead), then wait a long time and when it’s your turn you get a bunch of questions. This is because on your RUT there are numbers that indicate what kind of work you do. So you have to indicate what kind of work you do and to which description the DIAN has that most closely matches. Depending on what you do, it is either very simple or very difficult.
The DIAN’s website: here’s what to do with it
Click here for the official website of the DIAN. You will need this to make appointments, call if you have questions, and to set up the resolution number (Número de Resolución por Computadora). You need a digital signature in the DIAN’s system to do this. It is best to ask for help in obtaining this. The form you have to eventually create with your digital signature is called Solicitud sobre Numeración de Facturación. This is the numbering of your invoices (see below), which you must renew every so often. To find out how this works, it is most convenient to ask for help from the DIAN. You will also find a tutorial here.
I don’t know if this applies to every DIAN, but many have free help available on site on the computer to help you with your registration and numbering. Only when you have this form can you start scibing invoices.
Step 3: Register your business with the Chamber of Commerce (Cámara de Comercio)
Now is the time to register your business with the Cámara de Comercio, or Chamber of Commerce. Where you do this depends on the city where you live. I did my registration at the Cámara de Comercio de Bogotá (CCB). They have a clear and comprehensive website where you can find a lot of information. Are you going to register in another city? Then Google the Cámara de Comercio there.
To enroll, go to a CCB office (in Bogotá). Now comes the tricky part:
- You need to know what kind of business you want to establish. Here you will find various forms of business.
- Depending on that form of business, you must have certain forms and documents. My company is on Persona Natural (in my own name) and for that you can find here a list of documents.
- Depending on (a) the form of business and (b) what services you provide fall under a certain tax system. I am enrolled as an independiente, which is the easiest. In Colombia, independientes are affiliated with the tax system simplificado, but because I export services (in other words, I mostly provide services to Dutch clients) I cannot. Therefore, in my case, it is común and simplifacado. What all this means exactly I do not know and I don’t want to know either, too difficult. My accountant handles everything regarding taxes.
- There are 2 documents that you have to fill out completely and are quite tricky. Although I had managed this myself at home I ended up having full help at CCB to fill it out properly. This went quite easily. It’s not just about your address and workplace, but also about your expected income and expenses for your business. In addition, you will need your cédula (you apply for this after obtaining a visa) and your RUT.
- If everything is filled out correctly, you must pay a small fee for your registration. Every year you must renew and pay for your registration.
- You get your registration mailed to you, and you can pay for a hard copy (which I would do). The form is called Certificado de Matricula Mercantil. You pay for each copy, but it is useful to have it for your accountant, for example.
Back to the DIAN
Once you have your Certificado de Matricula Mercantil in hand, you must return to the DIAN to have your enrollment put into your RUT.
Renewing your registration
In Colombia you must renew your registration every year. Colombians can do this quite easily through the Internet, but as a foreigner, I had to go to an office of the Cámara de Comercio. Pretty handy anyway, because the girl at the front desk didn’t understand it at all, so I hadn’t managed it myself at all. As a foreigner, apparently different or more things need to be completed. In any case: you must have done so by March 31 to avoid a fine.
The form that is renewed every year is called Certificado de Matricula Mercantil.
Your re-enrollment will cost money, and how much depends on (a) your age and (b) your income. In fact, under a certain age it is free, I think it is under 35 or 36. So don’t forget to declare this because it saves a lot of money (at least at the Cámara de Comercio de Bogotá).
Which office you go to does not matter, as long as it is with the chamber of commerce in the city where you registered and an office where you can do renewals. At the Chamber of Commerce in Bogotá, you can find it simply on the Internet. By the way, my re-enrollment was very quick and easy.
You can also do this online, but it took me about 4 years and many visits to the CCB before this finally worked out as a foreigner.
Step 4: Invoices
After doing everything above, I was ready to start sending official invoices. Invoices in Colombia must comply with the terms of the DIAN, so you can’t just furbish something together. The invoice should be in English or Spanish, but at least it should say Factura de Venta in Spanish. In addition, you must follow the numbering you created at the DIAN.
How do you create official invoices?
Fortunately, in Colombia there are services that allow you to create compliant invoices. I myself use Facturatech. This is a very handy software that allows you to create invoices, track your income, register your clients, etc. It is a paid service and you pay according to the amount of invoices you need.
What about VAT?
If you have Colombian clients with your own business in Colombia, you must ask for IVA (VAT). But if, like me, you have a Colombian business with foreign customers, then you are exporting a service and do not have to charge IVA (VAT). However, the IVA must appear on the invoice as IVA 0%.
In which account do you put the money?
Actually, you need a business account where your customers deposit the money, but this is not so easy. It depends, first, on whether you earn in pesos or euros and, second, what kind of business form you have. I myself earn mainly in euros, but because I am not registered in the Netherlands, I cannot open a business account in the Netherlands. I was able to open an additional checking account, though, and that was my solution to receiving salary.
A business account in Colombia, I believe, can only be opened with a certain business form, and that is not persona natural. Salary I receive from Colombian clients I have deposited into my Colombian checking account.
Step 5: Find an accountant & tax return
This does not apply to everyone, but as a foreign persona natural, it is mandatory to have an accountant for your tax affairs. And frankly, I would recommend this even if it is not mandatory.
Now the tax system in Colombia is so complicated that it almost makes you miss the Dutch tax authorities. In fact, it is so difficult, especially if you have foreign income with a business in Colombia, that neither the DIAN nor accountants know exactly how it works. And that is exactly what makes the search for an accountant a challenge. After all, you need someone who is going to figure it out and not always know better. And go find those.
With me it took a while too, but now my accountant does the tax stuff. She enters my invoices into DIAN every month and has been doing my tax returns for years. I am happy with her, without her I would have no idea how to pull this off.
Beware: the Colombian tax authorities like to look for foreigners who do not file tax returns correctly and issue high fines. Find an account that knows how it works, even with income from abroad. You also MUST always report your foreign accounts and assets on your tax return. If you don’t, you can expect fines.
Step 6: Pension and health insurance in Colombia
Now that you are working with your own business in Colombia, pensions and healthcare must also be paid for. Just like in most other countries. In Colombia it is mandatory to pay this as a self-employed person, but I have heard on occasion that you can get out from under the pension. At least I pay pension and healthcare every month.
How much money do you pay into retirement and health insurance?
Pension and healthcare costs in Colombia depend on your salary, but there is always a mandatory minimum you must pay. This in turn depends on where you accrue your pension and with which service you have arranged your health insurance. I myself am with SURA and pay about 90 euros for basic insurance as standard. I also have supplemental insurance, but you pay for this separately.
So regardless of your salary, you pay that base amount every month.
There are additional costs on top of that, depending on your salary. Up to a certain amount you pay nothing extra (around the minimum wage of about 280 euros), but if you go above that you have to pay more. So how much that is depends on how much you earn, but can easily add up to 300 euros or more.
How do you pay for retirement and health insurance?
Paying for retirement and healthcare is not automatic; you must do it yourself each month. To do so, several services are available. I myself use Aportes and Linea. The best thing to do is to call them, explain your situation and let them help you do this the first few times. The support is good and over the phone they walk you through all the steps until you get the invoice.
Depending on your cédula numbers, you must pay by a certain date each month. If you pay later, a very small amount is added every day as a penalty.
You pay online, which requires a Colombian bank account. Once you have paid, you will receive a summary of your payment in PDF, this is called a planilla and should also be sent to your accountant.
ARL
In addition to retirement and healthcare, you can also choose to pay an ARL. ARL stands for Administradora de Riesgos Laborales and means something like occupational hazards. So if you are affiliated with an ARL you can pay for this as well, as an insurance for business-related accidents. You indicate this to Aportes and Linea (or whatever service you use).
Your own business in Colombia: get to work!
Once you have completed all the steps, you can get to work. It seems like an awful lot, but in the end with me it was all settled pretty quickly. The trickiest part is especially the tax stuff, but if all goes well, the accountant will take that out of your hands.
Again: exactly what you need depends on your situation.
List of websites & tools
Another overview of websites and tools that you will have to deal with in many cases anyway:
- Apply for a visa for Colombia
- Tax Office DIAN
- Cámara de Comercio (Chamber of Commerce) Bogotá
- Facruratech To make invoices with
- Aportes and Linea For payment of your pension and care
What about paying taxes, transferring VAT, your CoC registration, creating a web shop and having your own business if you are a digital nomad?
Read all about doing business from abroad, with Dutch clients. (in Dutch)
Do you have your own business in Colombia and additional tips/information? Leave it below in the comments!
