How can you start your own business in Colombia? My business has been around since 2018 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.
Table of contents
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 the Netherlands. 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 start a company in Colombia. In this case, the first step seems to be arranging a visa in Colombia, deregistering from the Netherlands, notifying the tax authorities, and arranging everything else in Colombia. But it may also depend on how long you want to stay and what you still have 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. It is impossible for me 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 from the Netherlands. Since then, I no longer pay for health insurance or taxes in the Netherlands, but in Colombia.
Some Dutch people in Colombia pay for health insurance with the Dutch company OOM Verzekeringen, which also provides them with care in Colombia (or anywhere else in the world). In my case, I am 100% insured in Colombia and no longer have anything to do with the Netherlands regarding healthcare.
I started with a partner visa, now I have a residente visa, which allows me to live and work in Colombia. This also allows me to set up my own business.
I never had my own business in the Netherlands, so I didn’t have to deal with deregistering from the Dutch Chamber of Commerce and transferring it to Colombia. In addition, the duration of my stay in Colombia is not an issue for me: I have emigrated and have no plans to go back after a certain time. I now have my second residente 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 and you can do so here. Through this link, you will also find the conditions you must 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 National Tax and Customs Directorate. The Colombian tax authority, in other words.
You must register for tax registration with the DIAN. This is called RUT (Registro Único Tributario). Everyone who works in Colombia needs a RUT, so even if you are not going to start your own business but are going to be employed somewhere.
Because I previously worked as an employee, I already had a RUT. As soon as you register for your RUT, you will be linked 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.
Your RUT contains numbers that indicate what kind of work you do. You must therefore indicate what kind of work you do and which description provided by the DIAN matches it most closely. Depending on what you do, this is either very simple or very difficult.
The DIAN’s website: here’s what to do with it
Click here for the official DIAN website. You need this to make appointments, call with questions, and to arrange the resolution number (Número de Resolución por Computadora). For this, you need a digital signature in the DIAN system.
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 it is time to register your company with the Cámara de Comercio, or: the 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 extensive 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 business form, you must have certain forms and documents. My company is registered as a Persona Natural (in my own name) and you can find a list of documents for that here.
- Depending on (a) the form of business and (b) what services you provide fall under a certain tax system. I am registered as an independiente, which is the easiest. In Colombia, independientes are part of the simplificado tax system, but because I export services (in other words: I mostly provide services to Dutch clients), that is not possible. That is why in my case it is común and simplificado. I don’t know exactly what all this entails and I won’t go into it. My accountant handles everything regarding taxes.
- There are 2 documents that you have to fill out completely and are quite tricky. Although I managed to do this myself at home, I eventually received full assistance at the CCB to fill it out correctly. This went quite easily. It’s not just about your address and your workplace, but also about your expected income and expenses for your business. In addition, you need your cédula (which you apply for after obtaining a visa) and your RUT.
- If everything is filled out correctly, you have to pay a small fee for your registration. Every year you must renew your registration and pay.
- You will receive your registration by email, and you can pay for a paper version (which I would do). The form is called Certificado de Matricula Mercantil. You pay for each copy, but it is useful to have these 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
Unlike in the Netherlands, in Colombia you have to renew your registration every year. You can easily do this online at the Cámara de Comercio; you must do this before 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. Under a certain age it is actually free; I believe that is under 35 or 36 years old. So don’t forget to indicate this because it saves a lot of money (at least at the Cámara de Comercio de Bogotá).
Step 4: Invoices
After doing everything above, I was ready to start sending official invoices. Invoices in Colombia must meet the DIAN requirements, so you can’t just whip 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?
In Colombia, there are services you can use to create invoices that meet the requirements. I use Facturatech myself. This is very useful software for creating invoices, tracking your income, registering your clients, etc. It is a paid service and you pay based on the number 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 you, like me, have a Colombian company with foreign clients, then you are exporting a service and do not have to charge IVA (VAT). The IVA must be 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. Firstly, it depends on whether you earn in pesos or in euros and secondly, what kind of business form you have. I personally 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 current account and that was my solution for receiving a 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 honestly, I would recommend this to you even if it weren’t 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.
It took a while for me too, but now my accountant handles the tax affairs. She enters my invoices into the DIAN every month and has been doing my tax returns for years. I am extremely happy with her; without her, I would have no idea how to get this done.
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 again depends on where you build up your pension and with which service you have arranged your health insurance. I am with SURA and pay about 90 euros as standard for basic insurance. I also have supplementary insurance, but you pay for this separately.
So regardless of your salary, you pay that base amount every month.
On top of that come extra costs, 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. How much that is depends on how much you earn, but it can easily add up to 300 euros or more.
How do you pay for retirement and health insurance?
Paying for pension and healthcare is not automatic; you have to do it yourself every month. Various services are available for this. I use Aportes en Linea myself.
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, for which you need a Colombian bank account. Once you have paid, you receive a summary of your payment in PDF; this is called a planilla and you must also send it 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 main challenge is the tax-related matters, but hopefully the accountant will take care of those.
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!
