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Having enjoyed stable development for over a decade, the small country of El Salvador has been seeing a lot of investments from the government and foreign entrepreneurs, which in turn keeps fueling the country’s growth. 

There are several reasons why investors prefer El Salvador as an investment destination, but the primary ones include the easy incorporation process, El Salvador‘s free zones whereby foreign investors have the freedom to start manufacturing companies with free income tax and VAT, and the lack of restrictions on foreign trade. 

What’s more, the Government of El Salvador understands that attracting foreign direct investments is important to improving the economy, so El Salvador does not have laws or practices that discriminate against foreign investors, and foreign citizens and private companies can freely establish companies in El Salvador

El Salvador company registration process 

El Salvador is an attractive commercial jurisdiction that offers valuable opportunities for international investors and entrepreneurs. 

Are you interested in registering your company in El Salvador? Outlined next, are the process involved 

Choosing an excellent business structure 

Choosing the right type of company in El Salvador is the first and one of the most important steps to opening a company in El Salvador. The most common types of commercial companies by which entrepreneurs can start a business in El Salvador are the following: 

  • Limited Liability Company (Sociedad de Responsabilidad Limitada or S.R.L): in an El Salvador SRL, the partners of the company can also be the legal representatives of the company. Also, they have limited liability over the company’s capital or Social Participation. The main differentiating characteristic of this company structure is that capital investment is not reliant on stocks, but rather on well-established membership interests. 
  • Corporation (Sociedad Anónima or S.A.): this is the most prevalent form of business in El Salvador. As such shareholders are common in this structure, and the company capital is based on stocks. A board of directors or independent management is responsible for the legal representation of this company form. 

Choose the company name and check for availability 

The next step is defining the company’s name. The name must be different and not already in use by any entity in the country. The name search can be conducted at the online platform ‘Mi Empresa’ of the Mercantile Registry

Obtain a tax ID number (NIT) for each of the company shareholders 

Before registering a company in El Salvador, all of the shareholders or partners of the company must have a tax ID number or NIT (Número de Identificación Tributaria). This is important because it must be included in the company’s bylaws. 

Draft the company’s bylaws and pay the registration fee. 

The bylaws are a crucial document required for the company incorporation process in El Salvador. The company’s bylaws must be written and legalized by a public notary and must include the following information: 

  • ID number and NIT of the shareholders or partners 
  • The Company name 
  • Share capital information 
  • The company registered office address, and 
  • Management structure 

To be able to continue with the registration process, the founder must pay the incorporation fees at the bank or the online platform ‘Pagadito’. 

Submit the registration document to register the company 

Once all the required incorporation fees are paid, the incorporation documents will then be submitted to the Mercantile Registry offices in El Salvador. Once the registration is completed, the company will receive these documents: 

  • Testimonio de Escritura de Constitución Inscrita en el Registro de Comercio
  • Constancia de Matrícula de Empresa Inscrita and
  • Constancia de registro de Locales.

All these documents are proof of the successful registration of the company and are essential to to the company post-incorporation process. 

Company post-incorporation process in El Salvador 

  • Open a corporate bank account: the first requirement after registering the company is opening a corporate bank account with a Salvadoran bank. 

After the company’s formation and opening a bank account, other necessary procedures are required for starting a business in El Salvador and for the company to begin operating the following: 

  • Within 15 days after the registration at the Mercantile Registry, the company has to be registered at the Ministry of Finance (Ministerio de Hacienda) to acquire an NIT (Número de Identificación Tributaria) and RNC (Número de Registro del Contribuyente). 
  • The company must register in the municipality where the company is incorporated. 
  • The company must register with the Salvadoran Trade Registry. 

Finally, it is also essential to establish the company’s accounting system, which must be approved by a public accountant that is duly registered. 

If you are eager to register your company in El Salvador, let’s go ahead and contact your Damalion expert now to get started.