When should I formalize my business? Requirements to establish a company.

Alejandra Castillo

acastillo@romeropineda.com

For our society and for government institutions, the formalization of micro, small and medium-sized businesses is one of the fundamental pillars to establish a structure that helps economic growth and the improvement of working conditions in the country.

Among the advantages of business formalization are:

1. Sort income: Allows entrepreneurs to separate their business income from their personal income.
2. Protection of its assets: creates protection for the shares and contributions of the partners and their assets, creating its own assets such as the registration of trademarks and commercial badges used by the company,
3. Access to the financial system: Due to the order of income and assets, you can access financial products that you could not possibly access individually, obtaining competitive advantages both in quality or access to exclusive products with better rates.
4. Tax Efficiency: By separating income and assets, the way companies are taxed makes more transparent the expenses and costs that can be tax deductible and the income that can be taxed.
5. Participation in public or private tenders: Allows participation in public tenders or provides the power to act as retail suppliers to larger companies and even government institutions.

From a legal point of view, a business must be formalized when fixed or uniform income is being generated or when you want to access a higher level of clients. This generally happens when over time you can have income projections month to month. month and work has begun on an orderly business structure, slowly the idea that has required so much work and effort is beginning to take shape, to the point that other people have had to be hired to help with this purpose, so suggests that a venture should be formalized when:

1. There are several people involved in the development of the business
2. You want to keep formal accounting with separation of income from the people who run the business.
3. Have the possibility of selling wholesale or opening an establishment for customer service.
4. Among others.

The question isWhat do I need to formalize my business??

There are several ways to formalize a venture, such as becoming an independent businessman, or through the creation of a company; Below, you will be able to know the basic requirements to establish a company in our country and requirements to formalize my venture:

• Think of a name that identifies my venture that will become the denomination of my society.
• To define who will be the shareholders and administrators of the Company, the law requires at least two people.
• To define the capital with which the Company will be established, the law requires a minimum capital of US $2,000.00 of which at least US $100.00 dollars must be paid at the time of its incorporation.
• Legally advise me to be able to carry out the Constitution of my company: the Deed of Constitution of a company is a legal document that must be formalized in front of an authorized Notary of the Republic, in which all the clauses that will govern the company will be gathered. .
• Register with the tax authorities, obtain the Tax Identification Number (NIT) and Taxpayer Registration Number (NRC) cards, as well as with the Mayor's Office of the Municipality or Municipalities where the business will operate.
• Register my brand, logo, in some cases patents, to protect myself from plagiarism and unfair competition.
• Sign Individual Employment Contracts if you have formal employees; if so, these employees must register with the ISSS and the AFP and make legal withholdings.
• Have a formal accounting system to be able to file and pay taxes.

Taking the leap to formalizing a business or company is not easy, sometimes it can take longer than expected, however, the benefits of doing so are greater than they might commonly seem, which is why at Romero Pineda & Asociados we accompany you. to our valuable clients from the moment they decide to start a project or undertaking, advising them in each of the stages of this process, guaranteeing the protection of their assets and thus contributing to the economic growth of our country.