Having have one of the biggest economic growth rates in Latin America over the past few years, Honduras is a country of choice among entrepreneurs.
Government policies in Honduras have been friendly towards foreign private investment, and foreign investment is naturally accorded the same rights as domestic investment.
In addition, Honduras has several special regimes that allow foreign investors to benefit from tax benefits. Due to all this, doing business in Honduras is an increasingly desirable prospect.
With company formation in Honduras also being of the quickest entity setup processes in Latin America, entrepreneurs are increasingly looking at this nation as a good option for incorporation.
Business entities in Honduras
To start a business in Honduras, the first major step is choosing the type of entity you would like the company to be. The most common business entities under Honduran law are the Sociedad Anónima (S.A.) and the Sociedad de Responsabilidad Limitada (S.R.L.).
- Corporation (Sociedad Anónima or S.A.)
The S.A. in Honduras can have one or more members or shareholders, or a legal representative domiciled in Honduras. The creation of an S.A. in Honduras requires a minimum capital amount without a maximum. An S.A. in Honduras must have an administrator, a board of directors, or other supervisory body domiciled in Honduras. The incorporation time including its registration before the Mercantile Registry and the Chamber of Commerce is quite fast. The essential operating permits must be acquired before the deadlines established in the institutions to which it is necessary to apply, and the number of licenses will depend on the type of company.
- Limited Liability Company (Sociedad de Responsabilidad Limitada)
The S.R.L. restricts the liability of social partners to the amount of their capital contribution. The shares are not securities and by law, they are not voluntarily transferable. The transfer of shares imposes the approval of 100% of the equity holders. There is a preferential right to subscribe to the new capital in proportion to the capital stock.
The Honduras S.R.L. is managed by one or more managers with the authority approved by the equity holders. It does not require a Board of Directors, but it does impose supervision by a statutory auditor.
Foreign companies may also conduct business in Honduras through branches of their parent company.
Company formation process in Honduras
After choosing the entity type, there are a few steps required to start a business in Honduras. The steps involve the following:
- Acquire the deeds of business: the incorporator needs to register with a notary public and have the organizational paperwork drawn to sign by the notary.
- Register with the Chamber of Commerce: using a notary, the incorporator needs to prepare and register the company articles of incorporation with the Chamber of Commerce, which will include the likes of the company name, its registered address, its structure, and its purpose.
- Get a tax ID number: a tax ID can be procured via the Servicio de Administracion de Rentas (SAR) / Ministry of Finance. This process can take up to a month.
- Apply for mandated zoning certificate and operational permit: company formation process in Honduras employs both a zoning certificate and an operational permit to be obtained. The zoning certificate will establish the location of the business activities, confirming that it is authorized to undertake such activities in that location, while the operational permit will demonstrate the company’s permission to undertake those activities.
- Employees hiring obligations: if the company owner plan to have employees in Honduras, he/she needs to register with the Social Fund for Housing, Social Security Institute, and the Hand Labor Training Institute (Instituto Nacional de Formación Profesional – INFOP).
And finally opening a corporate bank account is highly recommended to keep the business finance in order.
These processes might look intricate so having an expert to help can remove some of the complexity surrounding these steps. In other words, let’s go ahead and contact your Damalion expert now to register your company in Honduras.
