In this article, we’ll explore the most common types of companies in El Salvador. It includes the number of shareholders required and the process for setting up each type. We’ll also provide some insights into the advantages and disadvantages of each business structure to help you make an informed decision.

1. Sole proprietorship (‘Empresario individual’)

A sole proprietorship is the simplest and most common type of business in El Salvador. As the name suggests, the business is owned and operated by one person. This structure is ideal for small businesses and self-employed professionals who want to have full control over their businesses and are comfortable assuming all the risks and responsibilities.

The process of starting a sole proprietorship is relatively easy and doesn’t require any formal registration with the government. However, you’ll need to obtain a business license from the local government and register with the tax authorities. There are no specific capital requirements for a sole proprietorship, and the owner is personally liable for all the business’s debts and obligations.

Advantages: Easy to set up and manage, no separate legal entity, full control over the business, low administrative costs.

Disadvantages: Unlimited personal liability, difficulty to raise capital, limited growth potential, lack of credibility with customers and suppliers.

2. Partnership (‘Sociedad’)

A Partnership is a business owned by two or more individuals. There are two types of partnerships in El Salvador: general partnerships (‘Sociedades Generales’) and limited partnerships (‘Sociedades en Comandita’). In a general partnership, all partners share equally in the profits and losses of the business. Furthermore, they are joined together and severally liable for their debts and obligations. In a limited partnership, there are two types of partners: general partners who are responsible for managing the business and are personally liable for its debts and obligations, and limited partners who are passive investors and have limited liability.

To set up a partnership in El Salvador, you’ll need to register with the Ministry of Economy and provide a copy of the partnership agreement. The minimum capital required for a partnership is $2,000, and there must be at least two partners.

Advantages: Shared management and responsibility, easier to raise capital, flexibility in profit-sharing, and low administrative costs.

Disadvantages: Joint and several liabilities in a general partnership, limited liability for limited partners only, potential conflicts among partners, limited growth potential.

3. Limited liability company (LLC) (‘Sociedad de Responsabilidad Limitada’)

A Limited Liability Company (LLC) is a popular business structure in El Salvador because it offers limited liability protection to its owners. This means that the owners are not personally liable for the company’s debts and obligations. An LLC is a separate legal entity from its owners. This means it can enter into contracts, sue and get sued, and own property in its own name.

To set up an LLC in El Salvador, you’ll need to register with the Ministry of Economy and provide a copy of the company’s articles of association. The minimum capital required for an LLC is $2,000, and there must be at least two shareholders. However, the shareholders’ liability is limited to the amount of capital they have invested in the company.

Advantages: Limited liability protection, separate legal entity, easier to raise capital, flexible management structure.

Disadvantages: Higher administrative costs, more formalities, and regulations, and limited growth potential in some industries.

4. Corporation (‘Sociedad Anónima’)

A Corporation is a complex business structure that offers limited liability protection to its shareholders. It’s a separate legal entity from its owners, which means it can enter into contracts, sue and be sued, and own property in its own name. A corporation is owned by its shareholders, who elect a board of directors to manage the company’s affairs.

First, to set up a corporation in El Salvador, you’ll need to register with the Ministry of Economy and provide a copy of the company’s articles of incorporation. The minimum capital required for a corporation is $30,000, and there must be at least two shareholders. The shareholders’ liability is limited to the amount of capital they have invested in the company.

Advantages: Limited liability protection, separate legal entity, easier to raise capital, flexible management structure, greater credibility with customers and suppliers.

Disadvantages: Higher administrative costs, more formalities, and regulations, limited growth potential in some industries, and potential conflicts among shareholders and directors.

Choosing the right business structure is essential for the success of your business in El Salvador. Each structure has its advantages and disadvantages, and it’s important to consider your business goals, size, industry, and risk tolerance when making your decision. Consult with a lawyer or accountant to help you navigate the legal and tax requirements of each structure and make an informed decision. With the right structure in place, you’ll be well on your way to building a successful business in El Salvador.

How to register a company in El Salvador?

1. Decide what’s the best type of company for your business
2. Check for the company’s name availability at the Mercantile Registry
3. Obtain the Tax ID Number for each of the Shareholders
4. Draft the company’s bylaws
5. Pay the incorporation fees
6. Submit the documents to the Mercantile Registry
7. Obtain a Tax ID Number for the company
8. Register the company’s books
9. Open a corporate bank account
10. Register the company at the local Municipality

Get Assistance from Easyco Experts!

El Salvador is the perfect country for your company formation! To make sure you register your company in the right way, you can get in touch with us. Our team of experts will ensure your business registration process complies with all Salvadorian laws.

At Easyco, we make company formation in El Salvador easy. Our corporate experts have vast experience helping companies and individuals register their businesses in El Salvador. We have a proven track record of success across all our services. Easyco aims to tackle the complex company formation processes across LATAM. We make business registration easy by providing an easy online company registration experience. Start your company in Brazil today!

Furthermore, Easyco also provides additional services to guarantee your company’s compliance. In summary, they include:

• Appointment of legal representation,
• Providing a registered office address
• Handling tax and accounting
• Hassle-free Payroll Services
• Manage your company bank account opening
• Manage your Trademark Registration
• Recruiting and Hiring Talent

The post What are the Most Common Types of Companies in El Salvador? appeared first on EasyCo.

Eligibility for a TIN in El Salvador

In El Salvador, both individuals and businesses need to have Tax IDs. Any person or company that conducts financial transactions in the country must have a Tax ID.

How to Obtain a Tax ID in El Salvador?

1. Gather the necessary documents: Firstly, to apply for a Tax ID in El Salvador, you will need to provide a copy of your ID (such as a passport or national identification card) and proof of address (such as a utility bill). Additionally, businesses need to provide documents such as articles of incorporation and a list of shareholders.
2. Register online: El Salvador has an online registration system for Tax IDs. You can access the system on the website of the Salvadoran Revenue Service (SAR).
3. Submit the application: After completing the online registration, you will need to submit your application and the required documents to the nearest office of the SAR.
4. Receive your Tax ID: Finally, once processed and approved, you will receive your Tax ID in the mail.

Note: It is important to keep your Tax ID up to date by informing the SAR of any changes in your personal or business information.

A Tax Identification Number (TIN), also known as a Tax ID, is a unique number assigned to individuals and businesses by the government for tax purposes. In El Salvador, Tax IDs are known as «Número de Identificación Tributaria» (NIT) and are required for a variety of financial transactions. If you plan on living or conducting business in El Salvador, it is important to obtain a Tax Identification Number. The process is relatively easy. It is done online by registering on the website of the Salvadoran Revenue Service and submitting the necessary documents.

Remember that keeping your Tax ID up-to-date is important to avoid any inconvenience in your financial transactions.

Get Assistance from Easyco Experts!

El Salvador is an interesting country in Central America in constant growth and a very popular destination for investors from all around the world. However, registering a company in a Latin American country can still be very challenging and may take some time. To make sure you register your company in the right way, you can get in touch with us. Our team of experts is going to make sure it complies with all Salvatorian laws.

At Easyco, we make company formation in El Salvador easy. Our team of corporate experts has vast experience helping companies and individuals register their businesses in El Salvador. We have a proven track record of success across all of our services. Easyco aims to tackle the complex company formation processes across LATAM. We make business registration easy by providing a hassle-free online company registration experience. Start your company in El Salvador today!

Easyco also provides additional services to guarantee your company’s compliance, which includes:

• Appointment of legal representation,
• Providing a registered office address
• Handling tax and accounting
• Hassle-free Payroll Services
• Manage your Company bank account opening
• Manage your Trademark Registration
• Recruiting and Hiring Talent
• Corporate Legal Services.

The post Tax ID in El Salvador: Everything You Need to Know appeared first on EasyCo.

How to register a Trademark in El Salvador?

The Intellectual Property Registry is the government’s agency in charge of this process. The process can be either carried out online or in person. For the first phase of the registration process, they usually request information about the company or person responsible, as well as application forms (depending on the class) and pictures of the logo, names, etc.

1. Research for other similar trademarks already registered. You can do these online for free at the virtual platform of the Intellectual Property Registry.

2. Submit your application file to the Intellectual Property Registry.

3. Publish the registration notice in the Official Gazette of El Salvador. The notice must be published for around 2 months

4. Request the second revision of the trademark to the Intellectual Property Registry.

5. Approval and registration of your trademark in El Salvador.

How to choose a suitable class?

The class depends on the product, goods, or services that are going to be trademarked. The NICE Classification is a list used by countries all around the world since 2013, that contains all different types of categories that can be registered as a trademark all around the world. The list is updated every five years, but a new version is published every year on the platform designated by the World Intellectual Property Organization (WIPO).

What can be registered?

The NICE Classification has more than 30 classes, with subcategories being updated and added every 5 years. The most important thing is to evaluate how the desired trademark is related to the company or product/service. When talking about sounds, smells, and colors, it is necessary that the public already associates it with a brand and that they’re not generic.

• Products

• Services

• Production establishment

• Commercial establishment

• Advertising phrase (slogan)

• Sounds

• Smells

• Colors

• Collective mark

• Certification mark

Get Assistance from Easyco Experts!

El Salvador is an interesting country in Central America in constant growth and a very popular destination for investors from all around the world. However, registering a company in a Latin American country can still be very challenging and may take some time. To make sure you register your company in the right way, you can get in touch with us, and our team of experts is going to make sure it complies with all Salvatorian laws.

At Easyco, we make company formation in El Salvador easy; our team of corporate experts has vast experience helping companies and individuals register their business in El Salvador, with a proven track record of success across all of our services. Easyco aims to tackle the complex company formation processes across LATAM and makes business registration easy by providing a hassle-free online company registration experience. Start your company in El Salvador today!

Easyco also provides additional services to guarantee your company’s compliance, which includes:

• Appointment of legal representation,

• Providing a registered office address

• Handling tax and accounting

• Hassle-free Payroll Services

• Manage your Company bank account opening

• Manage your Trademark Registration

• Recruiting and Hiring Talent

• Corporate Legal Services.

The post How to Register a Trademark in El Salvador? appeared first on EasyCo.

El Salvador is one of the smallest countries in Central America, but also the one with the highest population density, with around 6 million people. This makes it the perfect destination for lots of new and growing industries. As well as businesses looking for qualified, young, and skilled professionals and technicians.

Tourism is one of the most important sources of income in the country, its amazing waterfalls, mountains, beaches, and volcanoes attract European and American tourists, who want to escape the routine and enjoy nature.

What are the steps to incorporating a business in El Salvador? Would you like to open a company in 2022? At Easyco, we give you a step-by-step guide on how you can successfully register a company in El Salvador.

1. Decide which type of company suits your business needs the best

   Selecting the right type of company in El Salvador is the first and one of the most important steps in order to open a business. There are some advantages and disadvantages to each type. To choose one, it is necessary to think about the objectives and goals of the company, as well as the requirements.

   It is also important to keep in mind what is the type of business the company is pursuing.

   These are some of the most common types of companies in El Salvador:

   • Limited Liability Company or Sociedad de Responsabilidad Limitada (SRL): In an SRL, the partners can also be the legal representatives of the company. They have limited liability over the company’s capital or Social Participation.

   • Public Limited Company or Sociedad Anónima (SA): The SA is the most common type of company in El Salvador since it can be incorporated with only one shareholder, or with a Board of Directors.

2. Check for the company’s name availability at the Mercantile Registry

   Check the availability of the desired name for your company at the online platform ‘Mi Empresa’ of the Mercantile Registry. It is important to remember that the name of the company is not required to be the same as the name of the brand, product, or service offered to the market.

   However, you must choose a unique name and abbreviation.

3. Obtain a tax ID number or NIT for each of the shareholders

   Before registering a company in El Salvador, it is important that all of the shareholders or partners have a tax ID number or NIT. This step is mandatory, is important because it must be included in the company’s bylaws. NIT stands for ‘Número de Identificación Tributaria’ in Spanish, which is a Tax Identification Number.

4. Draft the company’s bylaws

   The bylaws are an important document required for the company incorporation process in El Salvador. In El Salvador, the company’s bylaws must be written and legalized by a public notary.

   The company’s bylaws must include this information:

   • ID number and NIT of the shareholders or partners

   • Company name

   • Share capital information

   • Registered office address

   • Management structure

5. Payment of the incorporation fees

   In order to be able to proceed with the registration process, you must pay the incorporation fees at the bank or the online platform ‘Pagadito’. The fees depend on the type of company you choose and also on the initial capital.

6. Submit the registration document to the Mercantile Registry

   Once you’ve paid all the incorporation fees required, you can finally submit the incorporation documents to the Mercantile Registry offices in San Salvador. Once the registration is completed, the company will receive a ‘Testimonio de Escritura de Constitución Inscrita en el Registro de Comercio’, ‘Constancia de Matrícula de Empresa Inscrita’, and ‘Constancia de Registro de Locales’.

   All these documents are proof of the successful registration of the company and are necessary to complete the following steps.

7. Obtain the company’s NIT and RNC

   Within 15 days after the registration at the Mercantile Registry, the company has to be registered at the Ministry of Finance (Ministerio de Hacienda) to obtain an NIT (Número de Identificación Tributaria) and RNC (Número de Registro del Contribuyente). In order to do so, the company must submit the documentation of the shareholders, their personal information, personal NIT, as well as proof of registration at the Mercantile Registry.

8. Register your company books

   A crucial step to complete once your company is registered in El Salvador is to register your company statutory books. This step must be done by a registered accountant and can take from 1 to 2 business days. The accounting system the company is going to use must be legalized and registered in the corresponding local agency.

9. Open a corporate bank account

   Once the company’s books are registered, it’s time time to open a corporate bank account in El Salvador. It is important to choose the right bank according to the company’s needs. Each bank offers different types of accounts with many benefits depending on the agreement and goals of the company. It is recommended that the bank offers good pricing structures for international transactions.

   Also, it is important to consider that some banks may have foreign transaction restrictions for companies that have foreign shareholders. It is crucial to take this into account as part of your company establishment strategy, as identifying a bank that has flexible policies will determine when your new company can start its operations.

10. Register the company at the Municipality

    Register the company with the local Municipality to obtain all the licenses and permits needed in order to start operations. The documents required depend on the nature of the business but in general, you should provide information about the company, NIT and RNC numbers, and office and business address.

Get Assistance from Easyco Experts!

El Salvador is an interesting country in Central America in constant growth and a very popular destination for investors from all around the world. However, registering a company in a Latin American country can still be very challenging and may take some time. To make sure you register your company in the right way, you can get in touch with us, and our team of experts is going to make sure it complies with all Salvatorian laws.

At Easyco, we make company formation in El Salvador easy; our team of corporate experts has vast experience helping companies and individuals register their business in El Salvador, with a proven track record of success across all of our services. Easyco aims to tackle the complex company formation processes across LATAM. We make business registration easy by providing a hassle-free online company registration experience. Start your company in El Salvador today!

Easyco also provides additional services to guarantee your company’s compliance, which include:

• Appointment of legal representation,

• Providing a registered office address

• Handling tax and accounting

• Hassle-free Payroll Services

• Manage your Company bank account opening

• Manage your Trademark Registration

• Recruiting and Hiring Talent

• Corporate Legal Services.

The post Company Formation in El Salvador appeared first on EasyCo.