¡Hola! If you are a business owner based in Colombia but operating in the USA, you may already be familiar with the unique challenges that come with navigating compliance, legal, and beneficial ownership reporting requirements in both countries. From dealing with the intricacies of the Colombian tax system to understanding the regulations set forth by the US government, staying on top of these requirements is crucial for the success of your business.

As a fellow empresario colombiano, I understand the importance of ensuring that your business is in full compliance with all relevant laws and regulations. In this blog, we will explore the key differences between Colombian and US reporting requirements, as well as provide practical tips and advice on how to effectively manage your business operations in both countries. So sit back, grab a tinto, and let’s dive into the world of compliance and legal requirements for businesses operating in Colombia and the USA. ¡Vamos!

Registration Requirements

The United States consists of 50 states and 5 territories, each with its own set of business regulations. To operate legally, businesses must adhere to both state-specific rules and federal laws.

State-Level Registration:

When establishing a business presence in the United States, businesses from Colombia must complete state-level registration in any state where significant business activities occur. This requirement typically applies if your company:

• Has a physical presence in the state
• Frequently meets with clients in the state
• Derives a significant portion of revenue from the state
• Has employees working in the state

Incorporating your Colombian Company in the US

Even if none of the specific criteria apply, a Colombian company must still choose a home state for registration when conducting business in the US. This involves forming a U.S. entity, such as a corporation, LLC, or other business structure, in that state. This registration ensures that the company is officially recognized and compliant with US regulations, regardless of its level of business activity in any individual state.

The newly formed U.S. entity will operate as a subsidiary of the foreign company. This means that while the U.S. entity is legally independent, it remains under the ownership and control of the parent company based in Colombia. This structure allows the company to conduct business in the US while maintaining its international headquarters.

We recommend using Northwest Registered Agent if your foreign company needs to incorporate. They offer expert guidance and can serve as a reliable registered agent for your business, ensuring compliance and smooth operations.

Federal Requirements

In addition to state requirements, Colombian companies must also comply with federal regulations:

• Federal Tax ID: Obtain an Employer Identification Number (EIN) from the IRS. This number is essential for tax reporting and opening U.S. bank accounts.
• Industry Regulations: Companies may need to follow specific federal regulations depending on the industry. For example:
• Import/Export Laws: If the company is involved in importing or exporting goods, it must meet U.S. customs regulations. This includes adhering to rules for tariffs, duties, and necessary documentation.

Beneficial Ownership Information Reporting Requirements

For Colombian businesses conducting operations in the U.S., adhering to Beneficial Ownership Information Reporting (BOIR) requirements is crucial. The Corporate Transparency Act mandates that companies disclose the individuals who own or control them. This applies to most entities, including those that are incorporated or registered in any U.S. state. The goal is to enhance transparency and combat illicit activities such as money laundering and terrorism financing.

A beneficial owner is an individual who controls the company or owns 25% or more of its shares, either directly or indirectly. For compliance with BOIR requirements, businesses must report information about these individuals, including their names, addresses, and identification details. Failure to file this report can result in significant penalties and legal consequences. Therefore, companies from Colombia need to ensure they meet these reporting obligations promptly and accurately.

For your convenience, you can file your Beneficial Ownership Information Report directly on our website. Click here to complete the process in just a few minutes and ensure your business complies with U.S. regulations.

Additional Considerations for Colombian Businesses:

Tax Treaties

As a Colombian business operating in the United States, it’s crucial to understand that there is no tax treaty between Colombia and the USA. This absence of a tax treaty means that your company may face double taxation on income earned in the United States. You’ll likely be required to pay taxes on your US-sourced income to both the US government and the Colombian government, potentially reducing your overall profits. To navigate this complex situation, it’s advisable to consult with tax professionals who specialize in international taxation to explore strategies for minimizing your tax burden.

Trade Considerations

When conducting business with the USA, Colombian companies should be aware of the United States-Colombia Trade Promotion Agreement (CTPA), which has been in effect since 2012. This agreement eliminates tariffs on many goods and services, facilitates trade, and promotes investment between the two countries. However, it’s crucial for Colombian businesses to thoroughly research and understand any industry-specific regulations that may apply to their particular sector. This includes compliance with US safety standards, labeling requirements, and import/export documentation. Additionally, they should familiarize themselves with any quotas, licensing requirements, or restrictions that may be in place for certain products. Consulting with trade experts or legal professionals specializing in international trade can help ensure compliance with all relevant regulations and maximize the benefits of the CTPA.

Your Path to Compliance: Key Takeaways for Colombian Businesses in the U.S.

Operating a Colombian business within the USA requires careful attention to legal obligations, from establishing your home state to incorporating and filing a beneficial ownership report. Meeting these requirements is essential for ensuring compliance and securing your business’s success in the American market. By understanding and adhering to these steps, you can confidently navigate the complexities of doing business in the U.S. and focus on growing your enterprise.

Ready to get started? Click here to file your BOIR in just a few short minutes. We make the process easy, fast, and secure so you can focus on what matters—your business.