The incorporation of a company in El Salvador is a formal contract entered into by two or more individuals who agree to pool their resources or industries with the purpose of sharing the profits derived from their business activities.
In El Salvador, companies are a legal structure for operating a business with a legal entity. According to our associate in charge of the Corporate Department at Torres Legal, Rebeca Galdámez, the process of incorporating a company in El Salvador is a straightforward procedure when accompanied by the necessary guidance.
"The process of incorporating a company in El Salvador is quick and easy to do. Certain legal considerations must be taken into account; for example, sole proprietorships do not exist in El Salvador," she explains.
Our specialist explains that the creation of a company requires at least 2 shareholders, and the minimum required capital is $2,000.00, where 5% of the capital ($100) must be paid at the time of incorporation through a certified check from a Salvadoran bank made payable to the new company.
"If the shareholders are unable to contribute the $2,000.00 at the time, the law allows for up to one year to complete that contribution. This allows us to facilitate the incorporation without losing liquidity in our business," Galdámez adds.
After defining the name of the company, its shareholders, and the capital, Galdámez indicates that it is necessary to request the Tax Identification Number (NIT), define the bylaws, and determine the company's social purpose related to its main activity.
The future company must obtain municipal clearance from the municipality where the company is domiciled. Once these documents are collected, the interested parties must engage the services of a notary to prepare the Public Deed of Company Incorporation.
With the deed prepared, the shareholders initiate the registration and legalization process of the company at the Commercial Registry of the National Registry Center (CNR). The shareholders must pay the corresponding fees and be attentive to possible observations.
At the same time, the company must begin the process of obtaining the Commercial Registration with the CNR. This registration determines the ownership of the company and its ability to engage in commercial activities.
Galdámez also recommends implementing a formal accounting system to facilitate tax reporting and payment. Additionally, the company will need to create invoices for record-keeping purposes and register with the Social Security system and pension fund administrators.
For further inquiries, please contact us through our social media channels or at our Corporate Department offices.
-Written by the Torres Legal Team.