Business Entity Registration
The actual process of registering or incorporating a business in Puerto Rico is fairly straight-forward. Still, we recommend entrepreneurs talk to their CPA, attorney or business advisor to discuss which business entity options available to them. A Corporation might be right vehicle for two equal partners, but a Limited Liability Corporation might be the best option for two partners where one will put the money and the other will put the hours (or ‘sweat equity’).
The law governing business entities and its formation is Act. 164 of 2009, which delegates the administration to the Department of State. This is performed through their Online Registration Portal, where you can register or incorporate your business as a:
– Corporation (INC., CORP.)
– Limited Liability Company (LLC)
– Limited Liability Partnership (LLP)
– Professional Services Corporation (PSC)
– Private Corporation (INC., CORP.) also known as Family Corporation
Remember that once a year your annual fees are due. This payment is remitted to the Department of State, also performed online, a simple process once you have incorporated your business.
There is always another option to operate a business that does not involve the Department of State. You could operate your business under your name, commonly referred to as “sole proprietorship”, but you must understand that you will not have limitations on your liability over business activities. In that case, if you will be operating as a sole proprietor under a specific business name, it is recommended to register the name. This is known as a ‘doing business as’.
While the process can be done online, we recommend discussing your options with your CPA, attorney or business advisor prior to registering your business. More often than not, because the process seems easy, business owners select inappropriate vehicles that exposes them to liability, or requires bringing in advisors to fix problems due to inadequate registrations. Entrepreneurs and investors should weigh their options with a professional before moving forward with the registration of their business.
If you have questions regarding the formation of your business, be sure to get in contact to see if we can point you in the right direction. If you have a comment, feel free to contact me (info below).