In recent years, Guatemala has proven to be one of the fastest-growing economies in Central America. It attracts people from all over the world not only for recreational reasons but also because (as well as in many other countries in the region), it promotes foreign investment and the formation of companies that support the development of communities and creates job openings.
For new investors and business owners looking to expand their companies or start a new one in Guatemala, it is necessary to know and understand the different types of legal forms and structures there are. This will allow them to choose the right one according to their needs, type of business, and objectives.
What are the most common types of legal structures in Guatemala? Which one is the best for my business? How to set up a company in Guatemala?
Limited Liability Company or ‘Sociedad de Responsabilidad Limitada’ (S.R.L. or LLC)
A Limited Liability Company in Guatemala is similar to in other parts of the world since the liability of the partners is limited to their contributions.
The participation of each partner is divided into ‘Contributions’
It needs a minimum of 2 partners at the moment of incorporation and it can have a maximum of 20
All of the partners in this type of legal entity have to be natural
The name of the company must reflect the nature of the business or it can also be the full name or last names of one or two of the partners
‘Sociedad Colectiva’ (Ltda. or Cía Ltda.)
In a ‘Sociedad Colectiva’, the partners have unlimited liability, which means they are responsible for ll the company’s obligations and responsibilities with tax and other governmental authorities.
All the partners have unlimited liability for the obligations and responsibilities of the company
The company’s name must have the full name of one of the partners or the last names of two of them, followed by the abbreviation ‘Ltda.’ or ‘Cía Ltda.’
This type of company is used often in small businesses where there’s trust between the partners
It requires a minimum of two partners and can have a maximum of 20
Corporation or Sociedad Anónima (S.A.)
The ‘Sociedad Anónima’ or Corporation is Guatemala’s most common type of company. It is the favorite of business owners and entrepreneurs, but also for big companies because the information about the shareholders and their contributions can stay anonymous.
In Corporations, the capital is divided into ‘Shares’ or ‘Acciones’ in Spanish
The minimum initial capital has to be Q5,000.00 or around USD 640
The Shares can be transferred freely, but following the rules written in the Articles of Incorporation
It requires a minimum of 2 shareholders for the incorporation and there is no maximum
Foreign Branch Company
If you wish to open a Branch in Guatemala, you can also do it! All you need to do is prove the existence of the main company, and have a legal representative and registered office address in the country.
Foreign corporations must issue a bond of at least USD$ 50,000 as a guarantee
These are some of the steps you need to follow to register a company in Guatemala. Remember that these steps may be different depending on the type of legal structure you choose, the number of partners or shareholders, and more:
Decide which type of company that best suits your business needs
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