How to set up a business in Chile

Santiago earned its nickname as the Chilecon Valley when, in 2010, Start-Up Chile began. With this program, millions have dollars have been invested in well over a thousand start-up companies. Whether you participate in Start-Up Chile or not, here's what you need to know.

Different types of companies in Chile

The first step in starting a business is not only claiming a name for your new business but deciding which type of company will be the best fit for your mission. There are many sub-categories of company types in Chile, but the three main categories are corporations, simplified corporations, and limited liability companies.

The first type is a corporation or sociedad anónima, which is a commercial legal entity. A corporation's capital is divided into shares that may be closely-held or publicly-traded. There needs to be at least two shareholders (individuals or legal entities), and the company is subject to outside regulation from the Comisión para el Mercado Financiero (CMF). Additionally, financial records must be published each year.

The second type is a simplified corporation, or S.p.A. This new legal structure was introduced in 2007 as a way to attract more investors with its less complicated business structure. Unlike a corporation, a S.p.A. does not need to publish their financial records annually. A S.p.A. requires at least one shareholder and three directors.

The third type is a limited liability company, or S.R.L. Commonly referred to as an LLC in English, this is one of the most popular options to start a business in Chile. Between 2 to 50 partners can establish a limited liability company and the name of the company must include the name of the shareholders and/or the purpose of the company and end with the word “limitada.” This type of company is not under the supervision of the CMF nor do financial records need to be published. Shares can only be transferred if all partners unanimously agree.

Requirements and steps to set up a business in Chile

There are a few essential requirements and steps to take in order to set up a business in Chile.

First, you need to obtain legal status to live and work in Chile. A one-year temporary residency visa can and should be obtained from a consulate abroad, prior to arrival. This is what you will apply for if you participate in Start-Up Chile. Otherwise, after one year in the country, you can apply for permanent residency. After five years in the country, you can apply for citizenship. Being a permanent resident or citizen in Chile will give you many more rights than a temporary residency visa, including opening a local bank account. Therefore it is recommended to have this status before starting a company.

Once you have residency, you will need to register your business' name, ensuring that it is a unique name. This process and more can be done online as of 2013 with the government program called Your Business in One day or Tu empresa en un día. Alternatively, you will need to hire legal representant to assist you in doing the process. After you register your business name, you will receive an authentication that you will use to notarize the deeds of the company. You must also designate a director.

The next step is to obtain a RUT (tax identification number) from the internal revenue service known as SII or servicios de impuestos internos. With this number, you need to present your accounting books and financial records as well as several other documents to SII for them to review and approve. In terms of starting capital, it is important to note that you only need to have a minimum of USD 1 invested in the case of a S.p.A. or LLC. Once SII approves the documents submitted, you will need to get a patente municipal that is a legal license from the municipal level allowing you to operate your business.

 Useful links:

Your Business in One Day
Start Up Chile
SII - internal revenue service