Your Guide to Company Incorporate in Puerto Rico

Thinking of starting a business in Puerto Rico? Company incorporate in Puerto Rico is on the rise, thanks to its strategic position in the Caribbean.

But that is not the only reason Puerto Rico is growing in popularity. An ideal gateway for companies targeting both North and South American markets, investors are starting a business here for the following reasons.

 

Why Choose Puerto Rico to Start Your Business?

For one thing, the Government has worked hard to make it a business-friendly environment. The most notable incentive is Act 60, the Puerto Rico Incentives Code or the Export Services Act, which offers significant tax benefits for companies engaged in eligible export services. This is a big deal for businesses, mainly when it includes a 4% corporate tax rate and exemptions from federal taxes on Puerto Rico-sourced income.

Puerto Rico also has an Economic Development Incentive as part of its efforts to promote economic growth and attract investment. These initiatives include grants, low-interest loans, subsidies, and other financial incentives. Ask our 3E Accounting experts about which incentives may be applicable to your business.

 

What Business Structure Should I Choose?

You have many options for business structure when incorporating a company in Puerto Rico.

Sole Proprietorship

A Sole Proprietorship is the simplest business structure form you can choose. It is owned and operated by a single individual with complete control and responsibility for the business. However, remember that you will be personally liable for all business debts and obligations.

C-Corporation or S-Corporation

You could also choose a C-Corporation or S-Corporation business structure. A C-Corporation is a separate legal entity with limited shareholder liability protection. This means that any personal assets you (or the shareholders have) are generally protected from the debts and liabilities of the corporation. An S-Corporation is recognised by the United States Internal Revenue Service (IRS), which is useful if you’re planning to conduct business in the US.

Limited Liability Company (LLC)

The standard Limited Liability Company (LLC) option is the next business structure. An LLC combines elements of both a corporation and a partnership. It provides limited liability protection to its owners while offering greater flexibility in management and taxation. This makes it the most popular business structure option foreign investors tend to pursue.

 

What Comes Next?

After selecting a business entity, the process of registering the business officially starts. Here’s how you can proceed:

Choosing Your Unique Business Name

You must choose a unique name for your company that complies with Puerto Rico’s naming rules. Ensure that the name is not already used by another Puerto Rico registered entity. You will then need a registered agent like 3E Accounting who will be responsible for receiving official communications and legal notices on behalf of your company.

File Articles of Incorporation

Once that is done, you must prepare to file your articles of incorporation. This is done with the Puerto Rico Department of State, Corporations and Trademarks Office (DDEC). Be sure to include details like your company name, purpose, registered agent details, initial directors or officers, and share structure.

Obtain a Tax Identification Number

You then need to get a Tax Identification Number. Obtain an Employer Identification Number (EIN) from the U.S. Internal Revenue Service (IRS). Additionally, you’ll need to obtain a Merchant Registration Number (MRN) from the Puerto Rico Treasury Department. Depending on your business activities, you will also need to get your licenses and permits (you may need to obtain specific licenses or permits at the municipal or state level).

Opening Open a Bank Account in Puerto Rico

Finally, the last step of the Company Incorporate in Puerto Rico process is to open a business bank account to handle your company’s financial transactions. To do this, you must provide the official document certifying your corporation’s legal existence in Puerto Rico. You must also provide valid proof of identity using your passports or driver’s licenses. Additionally, some banks will ask for proof of the physical address of the corporation, such as utility bills or lease agreements.

 

Need Help? Reach Out to Us

It’s recommended to consult with a professional service provider experienced in Puerto Rican company incorporation to ensure compliance with all legal and regulatory obligations. 3E Accounting is just the one you need. We can guide you through the specific requirements for your business type and help streamline the incorporation process.

For more information on getting started, contact the 3E Accounting team today.