Guatemala is the biggest economy in Central America, and among the top ten economies in Latin America.
The government of Guatemala had created favorable conditions for foreign investors and entrepreneurs seeking to register a company in Guatemala.
In addition to the favorable conditions provided by the government of Guatemala, the country offers more competitive advantages to investors and entrepreneurs looking for locations to expand their operations, these advantages include investment-friendly administration, stable macroeconomy, and regionally competitive structure to access markets such as the United States, Mexico and the rest of Latin America.
Are you interested in starting a business in Guatemala? Outlined below are the points to consider and the steps involved.
Select the right type of company for your business in Guatemala
The first in registering a company in Guatemala is to decide on the type of business structure that best suits your needs. Choose the type of entity based on your needs and the way you intend to structure your business. Depending on the nature of the business, some of the most likely options include the following:
- Limited Liability Company (Sociedad de Responsabilidad Limitada or SRL): an SRL in Guatemala requires a minimum of two partners and a maximum of twenty at the moment of incorporation. With an SRL, participation is not gauged in shares, but in contributions from partners, with each partner’s liability restricted to the capital they have contributed to the company.
- Corporation (Sociedad anónima or S.A): for a corporation in Guatemala, participation is based on shares, with shareholder liability restricted according to the number of shares they hold. A corporation’s general liability is also limited to the assets it holds.
- Sociedad Colectiva (Ltda.): in a Ltda., the partners have unlimited liability, meaning they are responsible for all the company’s responsibilities and obligations with tax and other governmental authorities.
- Branch of a foreign company: a Branch of a company can also be established in Guatemala. You just need to prove the existence of the primary company. You also need to assign a legal representative in Guatemala, who is a citizen or legal resident based in the country, and who will have legal permission to act on the company’s behalf.
Assign a legal representative
If the company shareholders are not present in Guatemala, a Power of Attorney will be required that allows a legal representative to carry out the company formation process locally. This Power of Attorney must be signed by the corresponding party. Also, note that for foreign shareholders additional documentation will be required.
Choose the name of the company
In Guatemala, it is significant to consider that the name of the company has to indicate the nature of the business and the company’s commercial objective. You need to undertake a study to guarantee that the company name you choose is not already in use. The name should also include the entity type.
Prepare the company’s Articles of Incorporation
Once the company name is chosen, it is time to prepare the Articles of Incorporation. This document must include all the information about the business.
The Articles of Incorporation must include the name of the company, the legal representative information, share capital information, registered office address, management structure, and liquidation detail plan
The Articles of Incorporation should also be reviewed by a local lawyer to make sure the information is detailed and ready to be submitted to a Public Notary.
Once the Articles of Incorporation are notarized, they have to be submitted to the Mercantile Registry for the incorporation of the company.
Submit the company’s registration form and documents
The company’s registration form and documents must be submitted to the Mercantile Registry of Guatemala, which is the government’s office in charge of regulating all commercial activities in the country. A file with the documentation required to register the company must be submitted to their office, and if all the documentation is correct and the company is registered, the Mercantile Registry will assign the company an identification number, known as Commercial Patent or ‘Patente de Commercio.
Acquire a tax identification number
Once the company is registered at the Mercantile Registry, you can apply to the Superintendency of Tax Administration to obtain a tax identification number, called Registro Tributario Único (RTU).
And finally, to start operations in Guatemala, the company needs to open a corporate bank account.
As a foreigner, if you choose to establish a company in Guatemala, it will be as legitimate as a company with resident investments.
Are you interested in registering your company in Guatemala? Let’s go ahead and contact your Damalion expert now.
