A complete guide to registering and starting a business in Colombia

Unlock business success in Colombia, Latin America’s thriving economy.

Unlock the exciting possibilities of doing business in Colombia, Latam’s thriving economy.

Colombia, located at the crossroads of North and South America, is Latin America’s fourth-largest economy. Its thriving tech ecosystem, skilled bilingual talent, and competitive labor costs attract many global companies. 

But starting a business here involves navigating unfamiliar legal and administrative regulations. Many companies prefer using an Employer of Record (EOR) to reduce their legal exposure while swiftly building a workforce here.

This guide walks you through company registration in Colombia and its associated costs and explores whether an EOR might be a smarter, faster alternative.

Why register your company in Colombia?

Here are some of the advantages of registering your business in Colombia:

• Strategic market access: With 17 active trade agreements, Colombia offers access to numerous global markets, enhancing export potential.
• Economic stability: Research predicts a GDP growth of 2.5% in 2025.
• Competitive tax benefits: The general corporate income tax rate is 35%.
• Skilled and cost-effective workforce: With a population of 52.3 million, this country boasts a substantial market and a growing, bilingual (Spanish and English) talent pool with competitive labor costs.
• Pro-business regulations and infrastructure: Starting a business here is straightforward. It has a streamlined registration process, helpful government incentives, and solid infrastructure.

These factors collectively make Colombia an attractive destination for business expansion.

Two options for growing your business here are Standard company registration and Employer of Record (EOR).

A step-by-step guide to starting a business in Colombia

Here’s a step-by-step guide to setting up your company in Colombia.

Step 1: Determine the structure of your business

Colombia offers different business structures for companies setting up a local presence. The right choice depends on whether you want full operational control, need investment, or just want to hire talent without opening a local entity.

Sociedad por Acciones Simplificada (SAS) – Simplified Stock Company. 

SAS is the most commonly used business structure in Colombia It is also the most flexible. In this structure, shareholders are not personally responsible for the company’s debts or legal obligations. Their risk is limited to the amount they invested in the company.. You only need one shareholder to register, and there’s no minimum capital requirement.

Choose this structure if: you want to start a small-to-medium business, hire employees locally, open a bank account, and sign contracts directly as a Colombian entity.

Sociedad de Responsabilidad Limitada (Ltda.) – Limited liability company

The Ltda. is a more rigid structure than SAS and is used for small partnerships or family-owned businesses. It requires at least two and no more than 25 partners, and decision-making must follow more formal internal rules.

Choose this structure if: You’re launching a small, closely managed business with known partners and don’t plan to seek external investment or scale aggressively. 

Sociedad Anónima (S.A.) – Corporation

The S.A. structure is designed for large businesses with many shareholders and high levels of oversight. It requires at least five shareholders and involves more complex governance, including a board of directors.

Choose this structure if:  You plan to operate at scale in Colombia, raise money locally, or eventually go public.

Sucursal de Sociedad Extranjera (SA) – Branch of a foreign company

Commonly chosen by Multinationals, this structure involves incorporating a separate company that lets you operate in Colombia as an extension of your headquarters. It involves heavy compliance and tax requirements, and the parent company assumes full liability for the branch’s actions.

Choose this structure if:  You need a strong brand presence and full operational footprint in Colombia, with direct control from HQ.

Empresa Unipersonal, or sole proprietorship

Colombia also offers the Empresa Unipersonal or sole proprietorship. This structure allows an individual to operate a business under their own name with separate legal status from their personal assets.

Note: You don’t need any of these business structures to build local teams in Colombia.
If you only want to hire local employees in Colombia — without going through the hassle of setting up any of the above entities — you can use an EOR like Multiplier. An EOR lets you hire full-time employees in Colombia legally and quickly without setting up a local entity. It’s best for companies that want to onboard employees within days or build a remote team without low-risk.

If you are setting up a local entity however, once you choose your business structure its time to name your company.

Step 2: Decide on the name of your company

Before incorporation, check with the Chamber of Commerce (Cámara de Comercio) to ensure your desired company name is available. Once approved, your business name is officially registered. You can do all of this using the single business window, VUE.

Step 3: Prepare and notarize legal documents

Key documents required include:

• Articles of incorporation
• Shareholder agreements (if applicable)
• Proof of capital investment
• Tax identification details

Step 4: Request a tax identification number

Your business must register with the National Tax and Customs Directorate (DIAN) to obtain a NIT (Número de Identificación Tributaria) for tax compliance and invoicing purposes.

An EOR like Multiplier, on the other hand, eliminates this burden by handling tax registration, payroll, compliance, and legal requirements on your behalf. Instead of setting up a local entity, an EOR ensures your workforce is legally employed and tax-compliant, allowing you to grow in Colombia without administrative hassles.

Step 5: Apply for a corporate bank account

You require a Colombian business bank account for transactions, payroll, and tax payments. Digital banking solutions can streamline this process for foreign-owned companies.

Step 6: Fill out social security and labor registration forms

To legally hire employees, your company must register with:

• Colombian Social Security System (Sistema de Seguridad Social)
• Compensation Funds (Cajas de Compensación Familiar)

This ensures compliance with Colombia’s labor laws and contributions to mandatory health, pension, and family welfare programs.

Step 7: Acquire permits and licenses

Depending on your industry, you may need additional permits, such as environmental or health – related licenses. Consult local regulations for sector – specific requirements.

The registration process is just the beginning. As you continue operations, you must adhere to Colombian sector-specific laws, labor laws, and employment regulations. If things don’t work out, liquidating your company can be equally complex.

If you’re unsure about your long-term plans, an EOR is definitely a faster and less risky alternative. With an EOR, you can quickly grow your teams but save time — and expenses — related to company registration. An EOR is particularly advantageous for foreign companies. They can compliantly manage a remote workforce in Colombia with very little administrative overheads or legal exposure.

How can a foreigner operate a company in Colombia if they are overseas

Yes — foreigners can own and operate a company in Colombia without living there. However, certain local requirements must be met for the business to function compliantly. In addition to the seven steps listed above, you will need to:

Appoint a legal representative who resides in Colombia

Colombian law requires you to appoint a local legal representative if you’re setting up a company from abroad. This person must be a Colombian resident. They will handle official correspondence and sign documents on your behalf. Many foreign companies appoint a local lawyer, accountant, or trusted partner in this role.

Maintain ongoing compliance

Once you’ve registered your company in Colombia, you need to handle several ongoing compliance tasks, such as filing taxes with DIAN, paying payroll and social security benefits, maintaining records, and renewing licenses. It is best to hire a local accountant or legal advisor fluent in Spanish and well-versed in Colombian regulations. 

Or, partner with an EOR

If your primary goal is to hire employees, build a team, or test the market, you don’t need to set up a company or manage any of the above. An EOR handles everything for you — from onboarding and payroll to taxes and social security compliance. You manage the day-to-day work while we take care of compliance, administration, and record-keeping.

It’s a faster, safer, and more cost-effective way to grow your business in Colombia.

An EOR is a simpler alternative to company registration, especially for foreign companies.

An EOR, or Employer of Record legally hires employees in Colombia on your behalf. It prevents the legal risks of misclassification, managing payroll, or keeping up to date with the latest employment laws.

Both company registration and partnering with an EOR are viable ways of entering the Colombian market. What you choose depends on your long-term goals, risk appetite, and how quickly you need to hire and grow a team there. Lets compare how an EOR stacks up against setting up your own company in Colombia.

Standard company registration in Colombia vs EOR 

Should you register a company or use an Employer of Record (EOR)? Here’s how to decide:

Aspect	Standard company registration	EOR
Purpose	Establish a permanent business presence with full control	Hire employees in Colombia without setting up an entity
Control	Full autonomy over business operations, hiring, and finances	Limited control over HR and payroll, as the EOR acts as the legal employer
Cost	High upfront costs for entity setup, legal fees, and compliance	Lower costs since no entity formation is required
Compliance	Must adhere to corporate laws, tax regulations, and labor laws independently	The EOR ensures compliance with local employment laws and tax requirements
Setup time	Several weeks to months due to legal and administrative processes	Quick setup—typically within days—allowing for immediate hiring
Scalability	Suitable for long-term growth within the country	Ideal for testing new markets or hiring remote teams without long-term commitments

Choose company registration: If you’re planning a long-term presence in Colombia, want full control over local operations, or need to invoice clients as a registered entity. It’s the right move if you’re building a local team, opening physical offices, or expanding your brand footprint in the region.

Choose an EOR: If you’re testing the market, need to hire quickly, or want to avoid the time and cost of setting up a local entity. An EOR lets you legally employ talent in Colombia without dealing with complex tax, payroll, or labor law requirements. It’s ideal for remote teams, small or mid-sized teams, pilot operations, and early-stage expansion.

Simplify hiring in Colombia: the EOR advantage.

Here’s how an EOR can save you time and money:

• Fast setup: Engage employees within days, bypassing the lengthy entity registration process.
• Payroll and compliance: An EOR ensures accurate salary disbursements, proper tax deductions, and adherence to Colombian labor laws, mitigating the risk of non-compliance.
• Cost savings: Eliminate the expenses associated with setting up and maintaining a local entity.
• Scalability: Easily expand or downsize your workforce without the constraints of long-term commitments, providing flexibility as your business needs evolve.
• Risk protection: An EOR assumes responsibility for compliance with local employment regulations, safeguarding your business from potential tax liabilities and employee misclassification issues.
• Equity plans: Attract and retain top talent by offering Employee Stock Ownership Plans (ESOPs) through an EOR, enhancing your competitive edge in the Colombian market.

If you partner with an EOR, company registration is not essential. But if you’re establishing a company in Colombia, you must follow a systematic process to get your operations up and running.

Costs related to registering your company in Colombia

Anticipating your company registration costs ensures a smooth setup process and helps you avoid unexpected financial hurdles.

Registration costs

• Business name registration:  Business name registration costs vary; check your local Chamber of Commerce.
• Total registration fees: The registration tax is approximately 0.7% of the company’s paid-in capital. For instance, if your initial capital is $100,000, the tax would be around $700. There is an additional fixed registration fee of 45,000 COP (approx. $12.23). There’s also a commercial registration fee that’s based on the company’s asset range and is determined by the Chamber of Commerce. Companies with higher assets pay a higher fee.

State fees

• National tax identification number (NIT): Free to register. Obtained from the DIAN (National Tax and Customs Directorate) for tax compliance.

Share capital requirements

• Minimum share capital for an S.A.S.: In Colombia, SAS registration requires subscribed capital, with no minimum—set it based on industry norms.

Legal and notary fees

• Legal fees for drafting articles of incorporation: Essential for creating your company’s governing documents. The cost of legal assistance for registering and incorporating a company in Colombia typically ranges from $273 to $1,365. The final amount depends on factors such as company structure, registration complexity, and the level of legal services required.
• Notary fees: Required for notarizing corporate documents such as articles of incorporation and shareholder agreements. Notary fees vary based on the company’s paid-up capital and business activities, typically ranging between $55 and $547. These fees cover document authentication, certification, and official registration processes.

Annual maintenance costs

• Annual Chamber of Commerce renewal: Mandatory for all registered businesses. Fees vary based on company size and revenue. Check with your local Chamber of Commerce for exact annual renewal costs.
• Accounting and bookkeeping: Accounting costs in Colombia vary based on business size, transaction complexity, service level, and provider type. For exact pricing, consult local firms.

Taxes

• Corporate income tax: 35% (2025 rate). Based on the company’s profits, subject to Colombian tax laws. 
• VAT: 19%. Applied to the sale of goods and services.

Address renewal fees

• Virtual business address: Rental or virtual office services are available if you need a Colombian address for legal and communication purposes.

Using an EOR in Colombia eliminates the need for company registration and associated costs. Instead, you pay a single, predictable fee that covers:

• Employee management
• Payroll and tax processing
• Compliance with local labor laws

This saves costs by avoiding registration, notary, and legal fees while ensuring compliance and risk mitigation. 

Cost comparison: standard registration vs. EOR

Cost aspect	Standard registration	Employer of record (EOR)
Setup	Up to 0.7% of the value of the capital stock or subscribed capital of the company (registration tax) + applicable fee according to the range of assets of the company (commercial registration) + 45,000 COP ($12.23) for registration fees.	$0 (No need for registration)
Share capital	No minimum share capital requirement.	N/A (No share capital required)
Notary fees	Typically between $55 and $547	Included in the EOR service fee
Annual maintenance fee	Chamber of Commerce Renewal – depends on age and income	Included in EOR
Legal fees	Typically ranges from $273 to $1,365	Included in EOR

Please note that many fees are payable in Colombian Pesos (COP). Exchange rates fluctuate, so checking current rates when planning your budget is advisable. Talk to our team at Multiplier for the latest costs and a precise comparison for your business.

If speed, cost-efficiency, and hassle-free growth are the priority, Multiplier provides a seamless solution — enabling quick hiring, compliance, and minimal administrative overhead.

Effortless expansion into Colombia with Multiplier

Multiplier, as your EOR, simplifies global expansion by handling everything from hiring and payroll to compliance and benefits, so you can focus on growth.

Why choose Multiplier’s EOR services?

• Local hiring expertise. Quickly hire top talent with fully compliant employment contracts and seamless onboarding.
• Effortless payroll management. Automate payroll, taxes, and social contributions with 100% accuracy and local compliance.
• Comprehensive HR solutions. Manage onboarding, expenses, time off, and more through an intuitive platform.
• Compliance assurance. Stay fully compliant with local labor laws, tax codes, and employment regulations in 150+ countries, including Colombia.
• Attractive benefits packages. Offer competitive, locally compliant benefits to attract and retain top talent.
• Reliable support and security. Get dedicated customer support and enterprise-grade data protection.

If you want to expand without the complexities of entity registration, Multiplier’s EOR solution can help you hire and manage employees seamlessly.

Book a demo today to learn how we can support your growth in Colombia.

Frequently asked questions

Q. How long does it take to register a company in Colombia?

The company registration process takes 4-6 weeks, from choosing your name to being ready to start operations.

Q. Can a foreigner start a business in Colombia?

Yes. Colombia ranked #4 in Latin America in the 2024 Index of Economic Freedom published by The Heritage Foundation. The country has a rich startup ecosystem and the government regularly backs innovation and digital infrastructure. You can incorporate a Sociedad por Acciones Simplificada (SAS) in a few days through Colombia’s online platform Ventanilla Única Empresarial (VUE).

Q. How can I hire employees for my Colombian company?

Once you have registered your entity or partnered with an EOR, you can hire employees by advertising jobs in newspapers and job boards. Once you select the right candidate, onboard them compliantly with a written agreement that prevents misclassification risks.