If you want to start a business in Ecuador, then you should know that starting a business in this Country is not as complex as you might at first imagine, check out all this information!
Currently, Ecuador is known for being the eighth largest economy in Latin America. Within its records, it has a GDP of $107.44 billion (according to what is reflected by the official statistics of the year 2019).
This country has large oil reserves (40% of its income comes from there) and thanks to its economic agreements with the United States. It promises to be a country to invest capital with a view to the future.
How to Establish a Company in Ecuador
If you are looking to raise capital to create a company in Ecuador, we tell you that it is quite simple, or at least more than many people may think.
First of all, you should initially hire the advice of a lawyer who has knowledge of Ecuadorian laws, since this way you will be able to avoid any type of bureaucratic hurdle.
You must understand that there are two ways to invest from Ecuador. There are foreign companies that are limited to generate income derived from imports into the country, so they do not have to worry about paying legal requirements.
Now, if you are interested in setting up a foreign company or your own investment, you will have to comply with each of the obligations required by the laws established by the Ecuadorian state.
In the search of investors for the country, we tell you that in Ecuador there are many facilities with respect to other countries. A foreigner can own 100% of an Ecuadorian company. Of course, he/she must comply with all the requirements demanded by law.
Types of companies I can start in Ecuador
To establish an organization or starting a business in Ecuador, it is possible to find companies with different characteristics. Below, we present several of them:
- The limited liability company.
- General partnership
- Mixed economy Company.
Each of these companies are registered and controlled by the Superintendence of Companies.
The process is not too complex, however; it is usually quite slow due to the amount of bureaucratic elements that are located in it.
In order to keep your company afloat, we remind you that you must pay your taxes up to date. Therefore, it is important to have a reliable legal representative or lawyer in Ecuador, since it will allow you to work in the best possible way.
Register a business in Ecuador
In case you want to create a company, we tell you that since 1998 in Ecuador there is an Intellectual Property Law. This law prevents the names of new companies from being different from those of existing companies.
As a matter of fact, since 1999 there is the Ecuadorian Institute of Intellectual Property (IEPI) to manage the rights of patents, trademarks and copyrights.
Likewise, you should take into account the cost or investment you will make on your own, as this could make things easier for you in the future, and also analyze whether it is viable or not to incorporate a company.
The costs of setting up a company in Ecuador vary substantially depending on the size of the company.
Benefits that favor Ecuadorian companies
In the interest of making the various private sector companies grow, since 2018 there is a $10.2 billion budget that was generated with the International Monetary Fund. This with the intention of improving the efficiency of public finances.
To achieve this agreement, from Ecuador the requirements that foreigners need to comply with to create a company were made more flexible. Among some of the benefits we can mention the following:
- Simplification of the processes to open a company.
- Digitalization of the processes to establish a company.
- Improving the connection in the mercantile registries.
- Making the procedures and tax requirements necessary to create a company more flexible.
Tips for starting a business in Ecuador
If at this moment you are looking for alternatives to create a business in Ecuador that is really worthwhile, pay close attention to the following lines:
- Choose very well the function of your company. Take into account the commercial needs that may exist in the country. Remember that, although it is true that in the United States any type of trademark can work, this is not the case in Ecuador.
- Have a reliable legal representative. Otherwise you will be completely isolated in Ecuador; you have to find a person to be the legal representative. He/she will be in charge of keeping the company afloat. He/she must live in Ecuador.
- Generate registration with the tax authority. Companies in Ecuador must be registered with the Internal Revenue Service (SRI) to pay their taxes on a monthly or semi-annual basis.
- Labor regulations. Monthly and annual obligations in Ecuador may differ slightly from those in the United States. Take into account the process of days off, accrued days, vacations and bonuses that exist in that country.
- Protection of intellectual assets. Beyond the capital, you must do your best to protect the name of your company, as well as its logo.
Do not forget to take all these considerations into account, since only in this way you will be able to make your company really take off and remain safe and reliable in Ecuador.
What are the areas of greatest investment in Ecuador?
Of course, any investment will depend on the idea you have in mind and the business you have tried. However, check out which activities tend to be successful in this country.
Ecuadorian products are highly valued. The fact that Ecuador is a dollarized economy is an advantage in trade negotiations. It also facilitates the transfer of payments to the United States.
Foreign investment in Ecuador tends to develop as follows:
- Mining and quarrying (44%).
- Manufacturing (11%).
- Agriculture (10%).
- Transportation and storage (10%).
In Ecuador, fiscal and economic policies tend to be a bit changeable. That is why it is recommended to generate long-term plans, since, in this way; they will be able to shield themselves against possible changes and thus, try to collect as much profit as possible in the different economic scenarios of the country.
Reasons for an American starting a business in Ecuador
In the case that a company is interested in exporting products or a business to Ecuador, we tell you to pay attention to the following motivations:
- The United States is considered as the main commercial partner and investor of Ecuador.
- A U.S. company has the possibility of owning 100% of its business as a foreigner in Ecuador.
- There are no limits on royalties or profits. All profits are taxed at different rates, but without specific limitations.
- Since the year 2000 the US dollar was introduced in the country. Therefore, you will not have to make any calculations or currency conversion.
- In Ecuador, products of U.S. origin are very well received. They are one of the most sought after in each of the markets.
There are many reasons to start a business in Ecuador. However, analyze very well what could work in the region where you are going to invest.
