Post Number: 11
|Posted on Tuesday, July 17, 2007 - 6:19 pm: |
hi, i´m living in BA and i´ve been told thats its very complicated to start a business/company of my own. Regardless of the business i would be doing and with or without employees, is this a matter of fact or are there anything you need to know that would make it easier for a foreigner. I would love if someone could explain the steps how to go ahead?
Post Number: 1207
|Posted on Tuesday, July 17, 2007 - 8:45 pm: |
Patrick, the steps to open a business or form a corporation vary depending on what is what you will be doing or how you will operate so it is difficult to describe them in detail.
But briefly, yes, it is quite difficult to start anything because of the paperwork. A typical example involves creating a "sociedad anonima" that will provide you with the legal structure needed. Just the creation of the company is cumbersome as you need tax numbers(many depending on your business), a physical location, a deed/title/lease that proves location, a warranty (seguro de caucion) and I am probably forgetting a couple of things.
All of the above can be done by an "escribano". Suffice to say that completing just one of the mentioned requirements, say taxes, can take weeks and even become a headache. There are additional hurdles. As opposed to what happens in the US where if you do not operate for the fiscal year all you need to do is fill up a little card saying so, in Argentina you must carry books and have an annual balance sheet certified by an accountant regardless whether your business is open or not.
Opening a bank account can be a hurdle upon itself and if you ever need to close up shop, better do this by the book or you will incur in new taxing issues. In general, operating a business -not to mention opening one- is a bit hard and requires patience. This is why many have chosen shortcuts even if this collides with laws and regulations. Whatever youd decide, I would say find the proper "escribano" that will guide you through the process and have usd $2 to $5k ready. You must pay an accountant every month to maintain a corporation or keep up with the books.
Post Number: 176
|Posted on Tuesday, July 17, 2007 - 9:02 pm: |
As usual you are spot on target. You are just scratching the surface here. This poster should probably get professional assistance with a lawyer or an accountant or probably both. I have 4 corporations in Argentina (3 SRL's and 1 S.A). One of which precisely helps people with consulting starting a company here.
I won't go into the specifics but in addition to what you posted which is correct, there are other hurdles. One of which is for an S.A. and an SRL the majority of your board of directors or managers has to be citizens of Argentina. You need more than 1 person to form a corporation here (SRL or SA). You can set up a monotributo but it's really not ideal as the limitations are vast.
The paperwork will KILL you here in Argentina. I've never seen anything like it here. What you are saying is also correct with leases that show you are renting and also AFIP can come and check to make sure it's accurate. There are various insurances that are required. We must pay an accounting firm a monthly fee to be on retainer. It got so cumbersome in paperwork that I ended up hiring an in-house accountant about 2 years ago. And last year I added a 2nd in-house accountant so I have 2 in-house accountants for a company with only 40 employees.
The paperwork as mentioned is horrible. You should have a good Escribano as well as a good lawyer as well. I also had to hire an in-house attorney this year as well as well as having a law firm on retainer here.
I'm not sure why Argentina makes it so inefficient. In the USA you can start a corporation with a few forms and less than $250. Here it's a total nightmare.
I'm not saying it can't be done. It certainly can but just make sure you have good accountants and lawyers and come to Argentina with some significant savings as you can easily blow through money here setting things up and various bills.
Post Number: 39
|Posted on Wednesday, July 18, 2007 - 4:13 am: |
Patrick - the principles of starting a corporation in Argentina is much like starting a corporation in most countries, only the process is a lot more bureaucratic. According to the current legislation concerning company formation in Buenos Aires the following fifteen distinct steps are needed:
i). Getting the name verified by the Office of Corporations (Inspección General de Justicia - IGJ).
ii). Certifying signatures of quota (stock) holders by a notary public
iii). Obtaining a bank account in the name of the company to certify that 25% of the subscribed capital is paid-in.
iv). Publishing the new company's notice in the official paper (Boletín Oficial).
v). Payment of the incorporation fee
vi). Registration at the Registro Público de Comercio at the Inspection General de Justicia (IGJ).
vii). Purchase of special books.
viii). Submission of special books by a notary public for rubrication (i.e. to have the pages legally stamped in official red ink) by the IGJ.
ix). Obtaining a tax identification number (CUIT) from the National Tax Office (Administración Federal de Ingresos Públicos, AFIP).
x). Obtaining a social security number from AFIP.
xi). Registration of turnover tax at local level at the Dirección General de Rentas (DGR), in the City of Buenos Aires.
xii). Registration with the Unified System for Labor Registration (USLR).
xiii) Contraction of insurance for employees with a Risk Labor Company (Aseguradora de Riesgos del Trabajo - ART).
xiv). Registration with AFJPs (Aseguradoras de Fondos de Jubilaciones y Pensiones)
xv). Rubrication of wage books in the Ministerio de Trabajo (Ministry of Labor)
Some of these latter steps may well be irrelevant to a small corporation (e.g. if it doesn’t employ staff), however the bureaucracy dictates that the relevant paperwork must still be filed. Company formation is not so much difficult as time consuming. It is estimated that on average it takes about a month to create a company, at a total cost of about US$1,000. If you are going to form one I recommend that you hire a local lawyer (abogado) with experience in company formation to create it for you, as they will take care of all the details and ensure the correct procedures are followed.
I hope this helps.
Author, The Complete Guide To Real Estate Investment in Argentina, ISBN 1430303980, http://www.amazon.com/exec/obidos/ASIN/1430303980
Post Number: 177
|Posted on Wednesday, July 18, 2007 - 8:54 am: |
Great post Simon. Also, something else to note since you noted the ART is having employees here there are many taxes and required insurance on top of the salaries. Granted the salaries here are cheap compared to the USA, UK or Europe however you shouldn't discount alll the taxes and fees on top of the salary. I'm not sure % wise what it is but I'd say probably 40% or so if you are working 100% in the "white".
Also, 2 times a year you have to pay the employees a higher salary basically 1.5 times their normal salary. It took me longer than a month to set it up. Really other countries in South America are no better. Setting up my S.A. in Uruguay has been a bit easier but still takes quite a bit of time and money if you do it properly. Good luck.
Post Number: 3
|Posted on Monday, July 30, 2007 - 5:00 pm: |
Is it possible to export jewelry made in Argentina to the States for resale? I hear they have lovely jewelry and I have never seen any in the stores or on the television shopping networks? Would this be difficult to do if you have a connection in Argentina?
Thanks for any info.
Post Number: 1226
|Posted on Monday, July 30, 2007 - 10:39 pm: |
This can be done but you need to consider a couple of factors.
First, is this fantasy jewelry or precious stones/metals? In all cases, medium size importers in the US will want assurance of supply and will stress this over price. This could be a problem if dealing with fantasy jewelry as manufacturers are probably less than reliable. Second, if you are considering distribution chanels as HSN you may be surprised at the minimum volumes they may require just to get started. I once cooked an award-winning candy made by hand and offered it to many brokers throughout the US. One such distributor loved it and was ready to place an order for 20,000 cases until I informed him I could only cook up to 20 cases a day. I can only guess TV networks' volumes are going to be massive.
Most important points > make sure your argentine contact can:
1. deliver on time (critical).
2. deliver more than enough over an extended period of time.
All else being equal, pricing is not a consideration. And I am assuming your argentine contact is either an exporter or is in contact with an exporter who is familiar with foreign trade.
Post Number: 11
|Posted on Monday, August 13, 2007 - 10:16 am: |
I would be interested in your opinion on doing business on a small scale working as a monotributo.
As I understand it, the monotributo is a simplified regime that was introduced to help legalize the large informal economy in Argentina. It seems you need little more than a tax number to register with AFIP as monotributo, and then you pay small monthly contributions. Then there is no need for keeping books and having an accountant. No need to pay value added tax (IVA) and taxes on earnings either, this is included in your monthly payments. It is possible to have employees, and it seem there is little additional cost on top of salaries.
The main limitation is probably that your gross annual income must be below 72000 pesos when working as monotributo. You are also fully liable for your business with all your personal assets.
So for doing "real" business the monotributo is probably not suitable, but maybe for someone who is just starting and testing his business model. You dont want to spend a fortune on setting up a SRL or SA only to find out that your business plan does not work.
When your business is growing you then start a real company, find a partner for an SRL or SA to limit your liability, pay lawyers and accountants and so on.
What do you think? Anyone out there with experience as monotributo? Are there other limitations to be aware of?
Post Number: 1242
|Posted on Monday, August 13, 2007 - 2:13 pm: |
This sounds like a good plan but I can't confirm everything you posted (my information is slightly out of date). One thing I would be *very* careful...
"It is possible to have employees"
I am surprised you can hire full time employees without running a SA or an SRL. Even if you could, you are looking at enormous headaches and would thread cautiously.
Post Number: 181
|Posted on Monday, August 13, 2007 - 8:20 pm: |
Doing business as a monotributo only makes sense for a few people that make VERY limited amounts of money. There are severe caps on the amount of money you can make. I'm not going to list an amount as the amount changes occassionally. Check with your accountant here.
Benco, as you noted, "for doing real business" it's not suitable. Also, keep in mind that if you have plans to grow in the future you will want to convert to an S.A. or SRL anyway but this option might be good for someone starting out that doesn't want to deal with setting up a corporation here, having a retainer with an accountant to run your books, etc.
It's very easy to set up a monotributo. I remember when I first moved to Argentina I sat down with my accountant and they went over all the options. I was very tempted at first but then I saw the severe income restrictions and it simply didn't make sense as I would have had to convert ASAP to a corporation.
Just keep in mind what some of us and Roberto go over and over on this board. It is NOT easy dealing with all the paperwork, laws, etc. It will indeed make your hair turn grey dealing with all of this.
There are several people doing business illegally in Argentina that have no working visa or never set up an Argentina corporation. I have seen several companies that have attempted to copy my business model (which I find flattering actually) and I've researched and they have no corporation set up and some of them don't even have residency here so they are doing business illegally.
Also, if you are just moving to Argentina it's difficult unless you know trustworthy people here. An SRL or S.A. a majority of your board must be local residents of Argentina and have DNI numbers.
I don't know the monitrubuto laws well as I don't have any experience with it but like Roberto, I'd be very surprised if you could have many employees. I do think you can have employees but you should consult your lawyer and accountant. The laws here are extremely complex here. Even when you terminate an employee for cause they have all these advantages and you have to pay them money based on how long they worked at the company.
One example is an owner of a large construction company here I know. His employee was driving intoxicated during work and he got in an accident and was fired and the employee sued the employer and got some settlement. Another example is a doorman that has been working for a building many years. He got caught using some owners properties when they weren't home and having affairs with his mistresses in their apartments. They want to fire him but based on the # of years he has worked with the building they have a HUGE payout and now they are debating if they can "afford" to fire him or not.
Another example is in my own company. We caught an employee conspiring with another company that recruited her to steal our forms, information and was contacting our clients to try to steal them from our firm. We immediately fired her and she sued us so now we are dealing with that hassle and incurring legal costs. Here in Argentina the employees have rights over employers. Very frustrating.
The positive thing is that it's so complicated that I feel very confident I could go anywhere in the world (and I mean that quite literally) and start a successful business. China, India, UK, Africa, wherever. If you can make a successful business and stay in business several years in Argentina odds are you can probably do business anywhere in the world. Doing business in this society will give you the patience and know how to handle doing business in any country in the world. This has to be one of the more frustrating countries to do business in.
Post Number: 18
|Posted on Tuesday, February 24, 2009 - 5:02 am: |
wow, things sure sound quite complicated, and they are further complicated by my very limited understanding of business. I am an Argentine citizen and am hoping to move to Argentina with my wife next year (who is not Argentinian) and we are hoping to set up a small book company to sell books that some friends of ours have produced. How complicated would it be to set such a business up? And would that give us the option of adquiring working visas for people to come from overseas to help us promote the books?
Post Number: 393
|Posted on Tuesday, February 24, 2009 - 9:27 am: |
Hey Paco, did you indeed have dialogue with the Argentine consulate or embassy nearest you? This could prove to be crucial in your special situation - good luck.
Post Number: 3
|Posted on Wednesday, April 29, 2009 - 1:31 am: |
Ok, we have come very close to answering my exact question, both within this thread and in this forum. I just want a slightly more focused emphasis on it than anything I have read thus far (perhaps I missed something). Before one can start an S.A. or SRL, exactly what residency status must one have? For example, rare as this may be, some countries allow one to start a business without any fixed residency status (e.g., tourist visa would do). I recognize that Argentina is not one of these rare countries. So, do you require "temporary residency" or "permanent residency" before you can start the process towards a S.A. or SRL? This is aside from the need to have Argentine citizens on your Board and all else. That I understand...at least as well as anyone can understand the labyrinth that is anything in Argentina. Just need to know the minimum residency status before proceeding with all the other paperwork required for an S.A. or SRL.
Post Number: 64
|Posted on Wednesday, April 29, 2009 - 10:43 am: |
As far as I know you could start an SA without residency in Argentina, as long as you find two residents for your board of directors, since the majority (more than half) of the board members need to be residents. I think you can be president as a non-resident, and the "directores suplentes" (which are quite unimportant) count as board members. So it may be possible to set things up while limiting the potential damage your local partners could cause. And after setting up the company you could employ yourself and get a working visa and become a resident that way. But it would be quite a hassle to do so and I would still be careful with local partners unless you know them well.
My understanding is that there is no distinction between temporary and permanent residency, both give you the same legal status, equal to the locals. What is different though is a "transitory" visa (tourist visa, 3 months), which does not give you the status of a resident.
Post Number: 4
|Posted on Friday, May 01, 2009 - 12:57 am: |
Benco - appreciate the feedback. Obviously, I'm asking, because I had some doubt, but I always thought that if I wanted to take a minority stake with Argentine partners, no problem what my residency status might be (or might not be). However, I always thought for a controlling stake that I had to have some residency status that exceeded a "tourism" classification. Like temporary residency, on the path toward permanent residency. Your reply gives me something to further think about and explore. Thanks!
Post Number: 65
|Posted on Friday, May 01, 2009 - 2:42 pm: |
Hector, my understanding is that there are no limitations whatsoever for foreigners with respect to ownership, you can hold a controlling stake without ever setting a foot into Argentina.
There are limitations with respect to the administration (directores/gerentes) who represent the company and sign contracts etc., but these are simply managers who can be elected and replaced at shareholder meetings.