How do you start a business in Costa Rica? Is it possible for a non-citizen to do so? These questions are commonly asked by those who would like to move to Costa Rica but need some additional income in order to make it work. Or, maybe you have the entrepreneurial spirit, and your idea of an enjoyable retirement is to watch your idea grow into a profitable enterprise. A motive for others is to give back to the community by starting a business that will provide quality jobs that support their neighbors.
Whatever your circumstances, you’ll be glad to know that it is possible to legally start your own business in Costa Rica. And you don’t have to be a permanent resident of Costa Rica to do so. Even those visiting as tourists can start a business. However, you need to be aware of the requirements that the government imposes. Costa Rica welcomes foreign investment but, like most countries, it is protective of its labor force. In other words, the government wants you to start a business or invest capital in an existing business, especially if it creates jobs for Ticos. On the other hand, it doesn’t want foreigners to fill jobs that Costa Ricans can perform. So while you are allowed to own and manage a business, you may not be able to perform the work yourself. Those are the underlying principles for many of the rules regarding foreigners and commerce.
The key to a successful startup is finding the right people. In Costa Rica. The first person you will need on your team is a knowledgeable lawyer. Your attorney will guide you through the process of legally registering your company. The most common business structure is the Sociedad Anónima, often referred to by its initials SA. It is popular because it protects the personal income and assets of its shareholders from liability. The other option is the Sociedad de Responsabilidad Limitada (SRL). It can be composed of just one member, so it’s even simpler than the SA which requires at least four persons to make up the board of directors (junta directiva). You may also need a permit, or license, depending on the nature of the business. Attorneys fees and registration is typically between $800 and $1200 depending on the Law firm.
After registering your business, you will need a competent accountant. Costa Rican tax laws and accounting practices are very different than in North America, so a local accountant is essential to ensure that you are in compliance. Costa Rican businesses are responsible for the following taxes: Social Security for employees (14.5% of salary), corporate income tax (10-30% depending on gross revenue), property tax (0.25% of the appraised value), and annual corporation fee (around $250). A qualified account will not only keep your books balanced but will also keep you on the right side of the law.
You might think your profits will be substantial in Costa Rica because wages are lower than you would pay employees in the US, but Costa Rican employees have a lot of rights and benefits that may cut into your bottom line. It is very important to look into that before hiring employees. Your lawyer and accountant will be excellent resources.
Another important step for your startup is to open a bank account. Banco de Costa Rica, a state-owned bank, allows non-residents to open an account using their passport as identification. The minimum initial deposit is ¢50,000 colones, $500 dollars or €100 euros. Another bank requirement is a minimum monthly income of $1000. The bank may require documentation–bank statements or certified accounting reports–to verify the amount and source of income. Once your bank account is opened and funded, you’ll be able to do most transactions online from wherever you are.
Many that have made the move have decided to become legal residents of Costa Rica. One of the ways to obtain residency is by means of an investment of $200,000 or more in a business or property. So starting your own business in Costa Rica can produce multiple benefits: income, supporting the economy of the community, and permanent residency status.
I know this because I have been through the whole process of starting a business in Costa Rica. Can it be trying? Of course, any startup is, but the rewards are unending, and what a great place to be.
With the onset of COVID-19, unfortunately there will be many small businesses that won’t make it through the crisis. It is a sad situation. However, on the other hand it can be a great opportunity for the person that wants to move to Costa Rica and start a business. Take a look at some of the businesses for sale in our area.
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