Grow in Puerto Rico: Where tropical charm meets business-friendly incentives.
Puerto Rico, a United States (US) territory in the Caribbean, is a booming market. It offers a strategic location, access to US markets, and favorable tax incentives. Registering your company here can help your business tap into these opportunities, but administrative processes shouldn’t slow you down.
This guide will walk you through the steps to register a company in Puerto Rico in 2025, highlight the benefits of establishing a business on the island, and explore alternatives like using an Employer of Record (EOR) to simplify market entry. Let’s get started!
The business benefits of registering your company in Puerto Rico
Registering a company in Puerto Rico is a strategic choice for businesses expanding their global footprint.
Benefits include:
Access to US markets
Puerto Rico is a US territory. US-based businesses benefit from a familiar legal and financial framework, and many goods traded between Puerto Rico and the US mainland are not subject to customs duties.
Tax incentives
Puerto Rico is a tax-efficient destination. Under Act 60, eligible businesses can benefit from a 4% fixed income tax rate on eligible income, 100% tax exemption on capital gains, 75% on property tax, and 50% on municipal license tax.
Skilled workforce
Puerto Rico boasts a bilingual (English and Spanish), highly educated workforce familiar with US and Latin American culture and languages.
Strategic location
Puerto Rico’s geographic position in the Caribbean connects it to Latin America and the Caribbean region. It has excellent air and sea connectivity.
Cost efficiency
Puerto Rico has affordable office spaces and competitive labor costs, compared to the US mainland.
Beyond these cost advantages, entering the Puerto Rican market can be more affordable than you’d expect, especially with an Employer of Record (EOR) simplifying the process.
What is the difference between standard company registration and using an EOR?
When expanding to Puerto Rico, businesses have two primary options: standard company registration or partnering with an employer of record (EOR). Each approach has its advantages and challenges, depending on your business goals, timeline, and resources.
Here’s a detailed comparison:
Aspect | Standard registration | EOR |
Purpose | Establish a legal entity in Puerto Rico | Operate without setting up a local entity |
Control | Full control over operations | EOR manages end-to-end compliance and payroll |
Cost | High setup and maintenance costs, unpredictable | Low, predictable fees |
Compliance | Ongoing responsibility | Managed by the EOR |
Setup time | Weeks to months | Days to weeks |
Scalability | Requires entity restructuring | Easily scalable |
By partnering with an EOR like Multiplier, businesses can focus on their core operations while leaving the administrative and legal complexities to the experts. This streamlined approach allows companies to enter the Puerto Rican market quickly, efficiently, and with minimal risk.
How EOR facilitates Puerto Rico company registration
Expanding into Puerto Rico involves navigating complex regulatory and operational challenges. To successfully establish a presence, businesses must ensure:
- Compliance with local labor laws
- In-depth understanding of the nation’s tax regulations and schemes
- Familiarity with local employment practices
- Strict adherence to every regulatory step mandated by local authorities
An Employer of Record (EOR) helps you bypass many administrative hurdles. The EOR acts as your company’s legal employer. It helps you hire talent in Puerto Rico without setting up a legal entity, and handles payroll, taxes, and compliance on your behalf.
EOR may be the better option if you:
- Want to test the market before committing to a legal entity.
- Need to start operations quickly.
- Plan to hire a small team without a physical office.
- Want to avoid navigating dual tax systems and local labor law compliance.
- Don’t need to invoice clients locally or hold local assets.
Company registration is better suited if you: - Need a local entity to invoice clients or hold assets.
- Plan to scale operations with a physical presence.
- Need full operational control, including signing local contracts or applying for local grants.
- Want to take full advantage of Act 60 (some tax benefits may only apply to registered entities).
Understanding the registration process is crucial if you want to establish a legal entity and manage operations independently. Here’s a step-by-step guide.
A step-by-step guide to registering a company in Puerto Rico
Here are some steps you need to follow to register your business in Puerto Rico in 2025:
Choose a business structure
Registering a company in Puerto Rico necessitates a structured approach. To begin with, select the appropriate business structure. This could be a corporation, a Limited Liability Company (LLC), or a branch office of a foreign entity.
Corporations or incorporated companies must further classify themselves as for-profit or non-profit and domestic or foreign corporations.
Each business structure has distinct legal and tax implications. For example, an LLC will not have to file an annual report, but must pay $150 annually to continue operating in the market.
Reserve a company name
Following this, securing a unique business name through the Puerto Rico Department of State’s Corporations Registry is essential.
Prepare the required documents
With the chosen structure and name, you need to prepare the required documentation, including articles of incorporation or organization, and bylaws or operating agreements, meticulously.
The documents include:
- Business authorization.
- Federal employer identification number.
- Puerto Rico Department of Treasury Notification.
- Municipal license tax.
- Unemployment and disability identification number.
- Workers’ compensation fund.
- Manufacturer’s excise tax identification number.
Register with the Department of State
Subsequently, formal registration with the Department of State involves submitting these documents and remitting the necessary fees, culminating in the issuance of a certificate of incorporation or organization.
Register for taxes
Tax registration is a critical next step. Start by applying for a federal Employer Identification Number (EIN) with the IRS. Then, register with Puerto Rico Department of Treasury (Hacienda) through the SURI portal to meet local tax obligations.
If your sales exceed $100,000 or you have 200 sales transactions during the accounting year in Puerto Rico, you must register for a sales tax permit or Impuesto de ventas y uso (IVU).
The SURI is the Puerto Rico treasury department’s official online portal for tax collection. Familiarize yourself with this system as it plays a critical role in managing tax obligations in Puerto Rico.
Open a corporate bank account.
Setting up a corporate bank account in Puerto Rico and depositing any required initial capital helps establish a strong financial footing for your business and demonstrates operational readiness.
Register employees
If employees are hired, registration with the Puerto Rico Department of Labor and Human Resources is mandatory to ensure compliance with local labor laws.
But what does it cost to go through with company registration? Let’s break down the actual expenses involved in registering and operating a business in Puerto Rico.
The real cost of registering a business in Puerto Rico
Planning your expansion into Puerto Rico requires a clear understanding of the associated costs. From company formation fees to ongoing compliance and operational expenses, accurate budgeting is essential to avoid unforeseen financial setbacks. Here’s a breakdown of key cost considerations:
Registration costs
Initial registration expenses—including company formation, notarization, and related fees—typically start around $150. However, the total cost can rise significantly depending on the business structure, jurisdiction, and additional legal requirements.
Legal services
Engaging legal counsel is strongly recommended to ensure regulatory compliance and mitigate future legal risks. Costs can vary widely based on the complexity of your business needs and the jurisdiction in which you operate.
Annual maintenance
Sustaining your business in Puerto Rico entails ongoing expenses, including accounting, tax preparation, registered agent fees, and permit renewals. These costs can vary widely based on the business’s size and industry, going up to several thousand dollars, depending on the scale and complexity of your operations.
Cost comparison: Standard registration vs. EOR
To provide a clearer perspective, here’s a comparative analysis of standard registration versus utilizing an EOR:
Cost category | Standard registration | EOR |
Setup costs | Approx. $150 for basic registration; additional costs for notarization, municipal permits, employer identification, and enrollment in local benefit systems | Low upfront; typically bundled into service fees |
Compliance | Ongoing, complex, requiring in-house or external expertise | Fully managed by EOR, including labor law compliance and reporting |
Accounting | Ongoing, depends on complexity | Included in EOR services |
Payroll | Ongoing, separate fees, requiring in-house or outsourced management | Included |
Time to market | Weeks to months due to registration, compliance, and setup | Days to weeks as EOR enables rapid onboarding |
Note: The cost comparison above is a general overview. Though most estimates align with typical costs, actual expenses can vary based on factors such as the country of operation, industry, and specific services required. Talk to our team at Multiplier for a clear comparison of costs tailored to your specific business needs.
Take the stress out of your Puerto Rico expansion with Multiplier
Puerto Rico has unique employment laws that differ from the mainland US including compliance with Puerto Rico’s labor laws (e.g., Law 4-2017, Christmas Bonus Act), dual tax systems (federal + Puerto Rico income tax), and mandatory benefits (e.g., vacation, sick leave, local retirement rules. But adhering to these laws need not be complicated.
Multiplier keeps you compliant and efficient. It reduces your administrative burdens and reduces your legal exposure, so you can expand confidently in Puerto Rico.
Why choose Multiplier’s EOR?
- Local hiring expertise. Hire employees in Puerto Rico with confidence, without setting up a local entity or navigating jurisdiction-specific employment frameworks.
- Simplified payroll. Ensure accurate, on-time payroll that complies with both US federal and Puerto Rico’s unique income tax and labor requirements.
- Unified HR platform. Manage onboarding, time-off, expenses, and documentation from one integrated platform designed for global teams.
- Full compliance support. Our legal and HR experts manage local labor laws, statutory contributions, and constantly evolving Puerto Rican employment regulations.
- Locally competitive benefits. Offer attractive benefits aligned with Puerto Rican standards to attract and retain high-quality talent.
- Trusted support and security. Enjoy dedicated support and enterprise-grade data protection backed by global certifications.
Discover how Multiplier makes your Puerto Rican expansion seamless by booking a demo today!
