How to Set Up Your Colombian Corporation as an Expat: A Step-by-Step Guide
Colombia, with its strategic location at the crossroads of the Americas, a resilient economy, and a burgeoning middle class, presents a compelling landscape for expat entrepreneurs. As a key player in Latin America, it offers a dynamic and evolving market ripe with opportunities. While headline figures show Foreign Direct Investment in Colombia decreased to USD 14.23 billion in early 2024, this reflects a shift in global markets rather than a lack of opportunity, especially as investment in non-extractive sectors continues to grow (source: International Trade Portal). For foreigners looking to formally establish a presence, creating a Colombian corporation is the definitive step toward long-term success, offering legal protection, enhanced credibility, and a clear path to obtaining a resident visa.
Why Consider a Colombian Corporation as an Expat?
Establishing a formal company structure transforms your business idea from a personal venture into a legitimate, recognized entity. A corporation provides limited liability, separating your personal assets from business debts—a critical protection for any entrepreneur. This legal structure is crucial for securing contracts, hiring employees, opening a corporate bank account, and building trust with clients and suppliers. For many expats, the corporation also serves as the required vehicle for investments that can qualify them for a business owner or resident visa, solidifying their legal status in the country and providing a stable foundation for growth.
A Roadmap for Expats: What This Guide Covers
This guide provides a comprehensive, step-by-step roadmap designed specifically for expats navigating the Colombian business environment. We will walk through three critical phases: pre-incorporation planning, the official incorporation process, and post-setup compliance. By the end, you will have a clear understanding of the legal, financial, and practical requirements for launching your company successfully in one of South America’s most promising economies.
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Phase 1: Pre-Incorporation Essentials for Expats
Thorough preparation is the foundation of a smooth incorporation process. Before you draft a single document, it’s essential to make key strategic decisions, assemble your support team, and understand the personal requirements you must meet as a foreigner. This initial phase sets the stage for a legally sound and operationally efficient business launch.
Understanding Your Business Legal Structure Options
Choosing the right legal structure is the most critical initial decision you’ll make. Your choice will impact your liability, tax obligations, and administrative requirements. While Colombia offers several corporate entities, one stands out for its flexibility and suitability for foreign investors: the Simplified Stock Company (Sociedad por Acciones Simplificada, or S.A.S.).
The S.A.S. is the overwhelmingly popular choice for new ventures. In 2022 alone, 81,834 new businesses were registered in Colombia, with the vast majority opting for the S.A.S. model. Its key advantages include:
- Flexibility: It can be established with a single shareholder and has no minimum capital requirement.
- Ease of Formation: It can be created via a private document, avoiding the need for a public deed in most cases.
- Governance: The corporate structure and rules are highly customizable within the company bylaws.
While the S.A.S. is dominant, it’s wise to consider other options:
- Limited Liability Company (Sociedad de Responsabilidad Limitada, or LTDA): This structure requires 2 to 25 partners and offers limited liability. It’s more rigid than an S.A.S. and may be suitable for partnerships where control needs to be more tightly defined.
- Corporation (Sociedad Anónima, or S.A.): Designed for large enterprises, this structure requires a minimum of five shareholders and is subject to stricter oversight, making it less common for expat startups.
- Branch of a Foreign Company (Sucursal de Sociedad Extranjera): If you have an existing company abroad, you can establish a branch in Colombia. This links the Colombian operation directly to the parent company.
Your choice of structure will also affect how you hold assets. For instance, if your business involves real estate, the property can be owned directly by your S.A.S. or other corporate entity, providing a layer of protection and simplifying transactions.
Securing Professional Legal and Accounting Support
Navigating Colombia’s legal and tax systems without local expertise is a significant risk. Engaging a qualified Colombian lawyer and accountant from the outset is not an optional expense but a crucial investment. A lawyer will ensure your company bylaws (estatutos) are drafted correctly and that the incorporation process complies with all regulations. An experienced accountant is vital for navigating the complexities of the complex tax system, managing payroll, understanding income tax obligations, and ensuring ongoing financial compliance with the tax authority (DIAN). This professional support system will be your most valuable asset in avoiding costly mistakes.
Personal Identification and Visa Requirements for Expats
As a foreigner, your personal documentation is key. While you can initiate the company setup process with your passport, you will eventually need a Colombian ID (Cédula de Extranjería) to act as the primary legal representative for many essential activities, including opening the company’s bank account.
Furthermore, the creation of your company is directly linked to your immigration status. The Migrant (M-Type) visa for business owners is a common route. This typically requires a minimum investment in your company’s capital, a sum often tied to a multiple of the Colombian minimum monthly salary. Your legal counsel can provide the most current investment figures and guide you through the visa application process with Migración Colombia, ensuring your business plan and capital investment align with immigration requirements to secure your long-term residency.
Estimating the Initial Costs of Setting Up Your Corporation
Budgeting accurately is essential. Initial costs extend beyond just the capital investment for your visa. Key expenses to plan for include:
- Legal and Notary Fees: Costs for drafting and notarizing the company bylaws.
- Registration Fees: Paid to the Chamber of Commerce (Cámara de Comercio) upon registration. This fee is typically calculated based on the company’s stated assets.
- Professional Services: Fees for your lawyer and accountant for their support during the setup phase.
- Tax Identification (RUT/NIT): While obtaining the number itself is free, there may be associated administrative costs for professional assistance with the registration.
- Bank Account Setup: Some banks may have initial deposit requirements or account opening fees.
A clear budget will prevent unexpected financial strain and ensure your corporation starts on solid financial footing.
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Phase 2: The Incorporation Process – A Step-by-Step Guide
With your foundational planning complete, you can proceed with the formal incorporation. This phase involves interacting with several key Colombian government entities to bring your company to life legally.
Step 1: Drafting and Notarizing the Company Bylaws (Estatutos)
The company bylaws (estatutos de la empresa) are the constitutional document of your corporation. This document, which must be drafted by a lawyer to ensure compliance, outlines the core aspects of your company, including:
- Company name, legal address, and duration.
- Business purpose and activities.
- Share capital structure, number of shares, and their nominal value.
- Shareholder information and their initial capital contributions.
- Appointment of the legal representative and a description of their powers.
- Rules for governance, shareholder meetings, and decision-making.
For an S.A.S., this is typically a private document signed by all shareholders. For other structures like an LTDA, it must be notarized and converted into a public deed (Escritura Pública).
Step 2: Registering with the Chamber of Commerce (Cámara de Comercio)
After the bylaws are finalized and signed, the next step is to register your new company with the local Chamber of Commerce (Cámara de Comercio) in the city where your business will be legally domiciled. This is the official birth of your company as a legal entity (Persona Jurídica). You will submit the bylaws and other required forms. The Cámara de Comercio reviews the documents, assigns a commercial registration number (matrícula mercantil), and issues a Certificate of Existence and Legal Representation (Certificado de Cámara y Comercio), which serves as official proof of your company’s legal status.
Step 3: Obtaining Your Tax Identification Number (RUT/NIT) from DIAN
Simultaneously with the Chamber of Commerce registration, you will obtain the company’s Tax Identification Number (Número de Identificación Tributaria, or NIT). This unique number is issued by the Colombian tax authority, the Dirección de Impuestos y Aduanas Nacionales (DIAN). The NIT is essential for all financial and tax-related activities, including issuing invoices, paying taxes, and opening a bank account. You will also receive the Registro Único Tributario (RUT), a detailed document that formally outlines the company’s specific tax obligations, such as its responsibility for corporate income tax and sales tax.
Step 4: Opening a Corporate Bank Account
With the Certificate of Existence and the company’s NIT in hand, you can now open a corporate bank account. This is a critical step for managing company finances, receiving payments, and separating business funds from personal assets. Most Colombian banks require the legal representative to be physically present and possess a Colombian ID (Cédula de Extranjería) to finalize the account opening. This is a key reason why aligning your visa process with your company setup is so important. The bank account is also where you will formally deposit the initial capital, a crucial part of documenting your foreign investment.
Step 5: Registering with Municipal Authorities for Industry and Commerce Tax (ICA)
Finally, your corporation must be registered with the municipal finance secretary in your city to handle the Industry and Commerce Tax (Impuesto de Industria y Comercio, or ICA). This is a local tax levied on gross revenues generated from industrial, commercial, or service activities performed within the municipality. Each city has its own rates and filing schedules. Your accountant will manage the ongoing filing and payment of this tax, but the initial registration is a mandatory part of the setup process to ensure full compliance from day one.
Phase 3: Post-Incorporation & Ongoing Compliance for Expats
Your company is legally formed, but the work isn’t over. Ongoing compliance with Colombian regulations is crucial for maintaining your company’s good standing, avoiding legal penalties, and ensuring its long-term viability.
Understanding Your Ongoing Colombian Tax Obligations
As a Colombian corporation, your company is subject to several key taxes. Managing these tax obligations diligently is fundamental to your business’s health. The main taxes include:
- Corporate Income Tax (Impuesto de Renta): This is the primary corporate tax, levied annually on the company’s net profits.
- Value Added Tax (IVA): This is a sales tax applied to most goods and services, typically at a rate of 19%. Your company must collect IVA from customers and remit it to the DIAN periodically.
- Withholding Tax (Retención en la Fuente): Your company is required to withhold a percentage of certain payments (e.g., for services, rent, purchases) and remit it to the DIAN as an advance payment of the recipient’s income tax.
- Industry and Commerce Tax (ICA): As mentioned, this is a municipal tax on gross revenue.
An expert accountant is indispensable for managing these obligations, ensuring timely filings, and helping you navigate the intricacies of the Colombian tax system.
Labor and Social Security Considerations (If Hiring Employees)
If you plan to hire employees, you must navigate Colombia’s protective labor laws. This includes registering your company as an employer with the social security system, which covers health insurance (EPS), pension funds (AFP), and professional risk insurance (ARL). Employers are required to make significant monthly contributions for each employee, alongside payroll deductions. All employment relationships must be formalized through proper Labor Contracts that comply with Colombian law. Failing to meet social security and labor obligations can lead to severe financial penalties and legal disputes.
Accounting Requirements and Statutory Auditor
All Colombian companies must maintain proper accounting records in accordance with local regulations. These records must be kept in Spanish, denominated in Colombian Pesos, and reflect all financial transactions accurately. Depending on your company’s total assets or annual revenue, you may be legally required to appoint a statutory auditor (Revisor Fiscal). This is an independent Certified Public Accountant who inspects the company’s financial operations and reports to the shareholders, providing an essential layer of oversight and ensuring financial transparency.
Foreign Investment Registration with Banco de la República
Any capital brought into Colombia from abroad for your company—whether as initial capital or subsequent investments—must be properly registered as foreign investment with the central bank, Banco de la República. This is a crucial, often overlooked step that legitimizes your investment and grants you the legal right to repatriate profits or capital in the future. The process is typically managed through specific declaration forms filed via your commercial bank at the time the funds are transferred into the country. Proper registration is vital for long-term financial planning and exit strategies.
Practical Tips and Common Expat Challenges
Theory is one thing; practice is another. Here are some practical insights to help you navigate the common hurdles faced by expats establishing a business in Colombia.
Navigating Language and Cultural Barriers in Business
While the business community in major cities like Bogotá and Medellín often has a high level of English proficiency, all official documents, legal proceedings, and government interactions will be in Spanish. Having a bilingual lawyer or a trusted translator is essential for understanding contracts and official requirements. Furthermore, understanding local business culture—which often prioritizes relationship-building before closing deals and may have a more fluid approach to punctuality—can significantly improve your professional interactions and negotiations.
Remote Setup Considerations for Expats Abroad
It is possible to set up your Colombian corporation entirely from abroad. This is typically achieved by granting a notarized and apostilled Power of Attorney (Poder) to a legal representative in Colombia. This individual can then sign documents, complete registrations with the Chamber of Commerce and DIAN, and act on your behalf. However, be aware that you will almost certainly need to be present in Colombia to finalize the opening of the corporate bank account, as most banks have strict in-person verification policies for account signatories.
Avoiding Common Pitfalls and Legal Issues
The primary pitfalls for expats involve inadequate planning and trying to cut corners on professional advice. Common mistakes include misclassifying employees as independent contractors, failing to register foreign investments correctly, and neglecting monthly or annual tax filings. The long-term survival of a business can be challenging; data shows that of Colombian companies created in 2017, only 24% were still operating in 2022. Proactive legal and accounting support is the single best defense against these common issues, helping you build a sustainable and compliant company from the ground up.
The Value of Ongoing Legal and Accounting Support
Your relationship with your lawyer and accountant should not end once the company is incorporated. They are ongoing strategic partners who provide crucial support for your growth. Your accountant will handle monthly and annual compliance, optimize your tax position, and provide financial reporting. Your lawyer can assist with drafting commercial contracts, navigating labor disputes, ensuring corporate governance, and advising on regulatory changes. This continuous support frees you to focus on what you do best: growing your business.
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Conclusion
Setting up a corporation in Colombia is a detailed but entirely manageable process. By understanding the legal framework, planning meticulously, and engaging expert support from the beginning, expats can successfully establish a formal business presence. This strategic move not only legitimizes your venture but also allows you to fully tap into the country’s immense economic potential and build a thriving enterprise.
Your Path to Success: Key Takeaways for Your Colombian Business Journey
Your journey begins with choosing the right legal structure, most likely the S.A.S., and securing a strong professional team. The process is a careful sequence of legal drafting, registration with the Cámara de Comercio and DIAN, and establishing financial infrastructure with a corporate bank account. Remember that this process is intertwined with your personal visa requirements. Finally, long-term success depends on diligent ongoing compliance with tax, labor, and accounting regulations, transforming a complex process into a clear path to achievement.
Next Steps and Where to Find Further Support
Your immediate next step should be to contact a reputable law firm and accounting firm in Colombia that specializes in supporting foreign investors. They can provide a detailed consultation based on your specific business goals, offer up-to-date information on investment amounts for visa purposes, and guide you through every step outlined in this guide. Official government websites for DIAN, the local Cámara de Comercio, and Migración Colombia are also valuable resources for official forms and information. With the right strategy and expert support, your Colombian corporation can become a thriving and successful venture.
EEAT Case Studies: How to Set Up a Colombian Corporation for Expats in Medellín
Proven Experience Setting Up a Colombian Corporation That Supports Visa Approval & Renewals
By James Lindzey – Colombia Legal & Associates
For expats learning how to set up a Colombian corporation, the goal is not only to incorporate legally—it’s to build a company that shows
real economic substance (bank movement, DIAN filings, invoicing, and—when appropriate—Colombian employment).
Below are realistic Medellín-based case studies that reflect the most common compliance gaps that can lead to visa denial or renewal issues.
Case Study: Boutique Hotel Corporation in El Poblado, Medellín
Client (Fictitious): Michael R. (Canada) | Business: 14-room boutique hotel
Problem: The company was incorporated, but the initial investment was not clearly visible in the corporate bank account and the business showed limited financial movement.
Why it triggers visa risk: When you set up a Colombian corporation for visa purposes, authorities often review whether the investment and operations are traceable, consistent, and supported by bank records and tax compliance.
Solution: We restructured the investment trail into the corporate account, implemented DIAN-compliant invoicing practices aligned to bookings, and aligned bank activity with DIAN filings to demonstrate real economic activity.
Result: The corporation presented a clean compliance profile and the visa process moved forward with stronger supporting evidence.
Case Study: Street-Side Café in Provenza (El Poblado), Medellín
Client (Fictitious): Laura M. (USA) | Business: Street-side café & small retail concept
Problem: The business had sales, but no electronic invoices and tax filings showed little operational visibility.
Why it triggers visa risk: A Colombian corporation may appear “inactive on paper” when DIAN filings and invoicing don’t reflect day-to-day operations—this can become a common reason a visa is denied or a renewal is questioned.
Solution: We implemented DIAN electronic invoicing practices for reported income, formalized supplier and service payments, and built consistency between invoices, bank statements, and tax filings.
Result: Improved operational visibility and reduced the risk of denial based on “no activity” indicators.
Case Study: Restaurant Corporation on Calle 10 (Parque Lleras / Zona Rosa), El Poblado
Client (Fictitious): Daniel S. (Europe) | Business: Restaurant & bar concept
Problem: The corporation showed revenue, but lacked a clear labor compliance footprint—no Colombian employee registered with social security and limited payroll visibility.
Why it triggers visa risk: For certain business models, a lack of employment and social security payments can be interpreted as weak economic contribution and can become a denial factor depending on the case.
Solution: We structured compliant hiring where commercially appropriate, ensured payroll documentation, and aligned social security payments with accounting and DIAN compliance.
Result: Stronger renewal posture with better proof of local economic integration.
EEAT Summary: What These Medellín Cases Prove
Incorporation is step one. Long-term success requires that your company’s investment trail, tax filings, invoicing, and banking movement stay consistent.
This is how expats set up a Colombian corporation that is both operational and visa-ready.
Disclaimer: This content is for general information only and does not replace legal advice.
Visa requirements and procedures in Colombia can change and outcomes depend on the facts of each case.
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If you’re researching how to set up a Colombian corporation, these related guides can help you plan the next steps
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Frequently asked questions
Why are Colombian business visas denied even after you set up a Colombian corporation?
Solution: Ensure the company shows economic substance—consistent bank activity, DIAN filings, and operational documentation aligned to the business purpose.
How to set up a Colombian corporation when the initial investment is not visible in the bank account
Solution: Deposit funds into the corporate bank account, keep transfer evidence, and maintain documentation that supports the investment trail during both the initial application and renewals.
Colombian corporation visa denial reason: corporation shows no economic activity in DIAN taxes
Solution: Align accounting and DIAN filings with actual operations. Even early-stage businesses should show a coherent financial story supported by records.
Colombian corporation renewal problem: bank statements show no movement or income
Solution: Route client payments through corporate accounts and keep records consistent with tax filings and invoicing.
Common visa denial issue: no Colombian employee and no social security payments
Solution: Where commercially reasonable, formalize at least one compliant employment relationship and ensure payroll/social security reporting is consistent and documented.
Why DIAN electronic invoices matter when you set up a Colombian corporation
Solution: Implement DIAN electronic invoicing for income streams so the company’s sales are verifiable and consistent across records.
Visa denial red flag: federal taxes show no movement or income for the corporation
Solution: Maintain consistency between corporate activity, accounting, DIAN filings, invoices, and bank statements—especially leading into renewals.
How to Apply for Colombia Visa?
There are two ways to apply for Colombian retirement visa.
Applying for visa from abroad
A visa applicant who wishes to invest in Colombia can apply for a Colombia investment visa online. In addition, any Colombian visa can be obtained at any Colombian consulate around the world. In the U.S., Colombia has consulates located in the following cities and states:
The Colombian visa application process is fairly easy as it can be completed entirely online. You can apply for a Colombia investment visa online Tramites Visa . This application will require scanned copies of all required documents in Adobe PDF format along with your passport photo in JPEG format. In addition, a detailed guide for applying online can be found here.
If you are in another country outside of Colombia, then you have to go to nearby Colombian consulate in that country so that you can get the visa added to your passport at a Colombian consulate. Once your Colombian investment visa has been approved and added to your passport, you are ready to travel to Colombia as a migrant and an investor.
Once you receive online visa approval, if doing this in Colombia, you need to travel to Bogotá to get the visa in your passport. Visas in Colombia are issued at the Ministerio de Relaciones Exteriores office in Bogotá. Their office is located at Avenida 19 # 98-03, Torre 100 Building, 3rd Floor. It’s open from 7:30 am until noon.
The major challenge with getting a Colombian visa yourself is dealing with a government bureaucracy, making a trip to Bogota and not understanding the laws properly if you are not fluent in Sanish.
This is where you can benefit from the services of an experienced visa agency such as Visas by James. A visa agency such ours is your best bet when it comes to obtaining visa for you. An experienced visa agency which has processed hundreds of visas and knows exactly what is needed for each type of visa is exactly what you need.
Another big benefit of using a visa agency is that they offer services to courier your passport to Bogotá to get the visa put in your passport. So, you can avoid a trip to Bogotá. The cost of a visa service including the service to courier your passport to Bogotá can even be cheaper than the cost of a trip to Bogotá.
Our Path to Becoming Colombia's Leading Visa Agency
James Lindzey founded ColombiaVisas.com after relocating to Colombia in 2005. With experience as a private investigator and paralegal in the U.S., James brought a strong legal background to Colombia's complex visa system.
Today, Visas by James—part of Colombia Legal & Associates SAS—is a top provider of visa and legal services for expats. We specialize in U.S. immigration services for Colombians migrating to the USA, and Expats from countries around the world migrating to Colombia.
In addition to our visa services, our agency offers a full range of legal and accounting services to our clients. We can better assist clients with document collection services for documents located in the United States because of James's prior legal experience there.
We also maintain contact with over 800 notaries, registries, and Colombian courts to obtain any documents required in Colombia.
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What Clients Say About Working With Us
Real feedback from clients who have worked with our team on Colombian visa and legal processes.
Client feedback is sourced from publicly available third-party review platforms. Individual results may vary.
“I worked with Visas by James Medellín and had an excellent experience. Once I was connected with Isabela, I felt confident I was on the right path to obtaining my visa.”
— Mathew Sickler
“The Visas by James team helped significantly with my U.S. visa, and the process went much smoother than expected. They were knowledgeable and helpful throughout.”
— Mohan Chander Narasimman
“Visas by James is the company to use for visa services. My experience was excellent, and Lorena was absolutely amazing to work with.”
— Benjamin
“The team was responsive and professional. They provided clear guidance and helped me understand the visa process from beginning to end.”
— Robert Nepon
“Very professional service. All steps were clearly explained, and they helped me avoid mistakes that could have delayed my visa.”
— Reynaldo Araujo
“Overall, a positive experience. Communication was good, and the process was explained in a way that made sense for a foreigner.”
— Justin Halladay
Important Legal Disclaimer
The information on this page is provided for general informational purposes only and does not constitute legal advice, immigration advice, or a guarantee of any specific visa outcome.
Colombian visa requirements, procedures, government fees, and internal criteria change frequently and may vary depending on your personal situation and the policies in force at the time of your application.
Always consult a qualified professional to receive advice tailored to your individual case. Reading this website does not create an attorney–client relationship with Colombia Legal & Associates SAS, Visas by James, or any member of our team.