Written by Sara Chaca, Attorney – Abogada
January 3rd, 2023
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 $450 USD 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, that can be done if they invest at least approximately $45,000 in their business itself as an initial buy-in/start-up in Ecuador. As well, so as to buy property in Ecuador in association with securing your residency in Ecuador (if other than most simply investing approximately $45,000 into an Ecuadorian Bank Certificate of Deposit since investing in a business or company in Ecuador is far more technically difficult than alternatively just making the investment in either an Ecuadorian Bank Certificate of Deposit or in any Ecuadorian Real Estate Property), see as follows for three separate (though related) articles which I wrote and published on “CuencaHighLife” covering all aspects of purchasing Real Estate in Ecuador and the Investor Visa in either that such Real Estate Property or again instead within an Ecuadorian Bank Certificate of Deposit: https://cuencahighlife.com/buying-property-in-ecuador-heres-what-you-need-to-know/ AND https://cuencahighlife.com/ecuadors-new-investor-visa-now-travel-as-often-as-you-like/ AND https://cuencahighlife.com/power-of-attorney-documents-in-ecuador-best-reasons-uses-of-them-plus-how-how-not-to-do-so/.
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 for Visa and Legal matter purposes, as her Expat clients begin their new lives here in her beautiful country. Sara resides in Cuenca with her family, and when not working, she enjoys spending time with her family in Cuenca’s majestic Cajas Mountains, including the many local parks & fairs of Cuenca, plus visiting the coast as well as many gem towns of Ecuador. Sara’s personal email address is firstname.lastname@example.org and her law office’s fully informative website is www.ecuadorvisas.com – her Ecuadorian cell phone number is 099-296-2065 and her Toll Free “800” phone number for US & Canadian callers is 1-(800)-655-1581. 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 in 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. VIEW ATTORNEY SARA CHACA’S SELF-PUBLISHED “KINDLE” BOOK ON MOVING TO ECUADOR, THAT’S AVAILABLE FOR YOUR PERUSAL ON AMAZON.COM HERE.