Written by Sara Chaca, Attorney – Abogada
April 8th, 2018
For any new (or possibly not so new) Expat who has moved to Ecuador, the question that often arises, is what to do with one’s time, if one is not yet ready to hang up their apron or shoes so as to commence with a formal retirement of not ever working again. And so, unless one plans to devote their energy, time and investment towards a preexisting organization (i.e. a Charity or other Not for Profit Organization), the idea of opening a business in Ecuador becomes very appealing, especially with the costs of funding most startups in Ecuador being a very small fraction of what the same would otherwise cost in say, the US, Canada, Europe or Australia.
With that in mind, let us now examine the short version of what is involved in opening a company in Ecuador. Please note that in discussing how to register a company in Ecuador, one should be aware that there are many forms of businesses in Ecuador as well as Ecuador business opportunities, with a very common one being opening a restaurant in Ecuador – yet of course there are many ways to invest in Ecuador, so of course no need to fret if you don’t see your own Ecuador business idea mentioned in a Google search or article!
Please note that the opening of one’s company itself is necessarily a separate matter from that of obtaining any specific permits/registrations, such as for creating or registering a self-created product in Ecuador, obtaining any licenses to practice in one’s chosen field (i.e. as a Doctor, Engineer, Lawyer, Psychologist, etc.), or securing the authorization to import/export to or from Ecuador.
And so now, for you can open what is known as a “limited corporation” in Ecuador, which is generally the most common type of company in Ecuador for small business owners (besides otherwise opening a business as a natural person using one’s Ecuadorian Tax ID number), please see as follows for what you need in order to do so):
– The object of the Corporation, i.e. what services will the corporation offer.
– A minimum of 1% ownership must be granted to an Ecuadorian partner OR Foreigner who also like you has Residency in Ecuador (after some months or years you can of course enter into an “arms length” transaction to buy out your original partner if becomes desirable or necessary..).
– The company must be opened with a minimum of $400.00USD capital to be deposited in an Ecuadorian Bank account on behalf of the corporation (that is of course YOUR OWN money as capital of the corporation).
– To fully open a Corporation takes around 30 working days.
Another benefit (or opportunity) of opening/buying an Ecuadorian business, is that if someone isn’t already a Resident of Ecuador, but is interested in moving to Ecuador on the basis of owning or starting a company as their qualification for moving here, then that can also be done so if they invest at least $39,400 in their business itself as an initial buy in/start up here in Ecuador itself.
Regardless though, your company in Ecuador must also file monthly tax reports to Ecuador’s own Internal Revenue Service (“SRI”), in addition to certain other quarterly, semi-annual and/or annual tax requirements, plus comply with mandatory health insurance/pension requirements with the Ecuadorian Institute of Social Security (“IESS”) on behalf of any employees of the company.
The option also exists to pay certain persons as “Independent Contractors”, so long as the number of hours they work and/or the type of work they’re doing for your business is reasonably able to consider and label them as such.
Beyond certain other aspects and requirements related to the form of business one might wish to open, do please note that though one can attempt to go it alone in the process of starting a business in Ecuador, competent legal counsel is generally advisable, since your Attorney in Ecuador can assist you with opening up and registering any form of business in a fully legal and transparent way, of which naturally, certain business types are somewhat easier and require less legal work to do so (i.e. restaurants and hostels/hotels).
Finally, it is sincerely my hope as well as trust, that by reading this article, even more Expats will seize upon the opportunity to turn their foreigner dreams into an Ecuador reality, which can/will benefit both themselves as well as their fellow Expat and Ecuadorian brethren alike.
Sara Chaca (Attorney – Abogada) is a seasoned Ecuadorian Lawyer, who principally serves Expats in making their moves to Ecuador, as well as for any legal issues that arise or become actionable for her Expat clients to undertake in their new lives here in her beautiful country. Sara resides in Cuenca with her family, which consists of her American husband and 2 daughters (as well as her parents and siblings), and when not working, she enjoys spending time with her family in Cuenca’s majestic Cajas Mountains and local parks & fairs of Cuenca, plus visiting the coast as well as the many gem towns of Ecuador. Sara’s personal email address is email@example.com, and her personal cell phone number is 099.296.2065. Sara has a less than 24 hour first response policy, in that if you email or call her, she WILL return your first email or first phone call in less than 24 hours (more typically closer to 24 minutes). Most importantly, all first time consultations with Expats for any type Visa or Legal matter(s) are always FREE OF CHARGE.