Starting a Business in Costa Rica

Starting a business in a foreign country requires careful planning, strategic decision-making, and a clear understanding of the legal and regulatory environment. Whether you are looking to establish your own business from the ground up or expand your existing operations, one of the most critical steps is choosing the right business location. This decision can significantly impact your tax obligations, operational efficiency, and long-term success in the market.

How to Start a Business in Costa Rica

Setting up a company in Costa Rica requires a clear understanding of legal requirements and local market conditions. Below are the key steps to consider:

• Define the business structure that best suits your operations and long-term goals. Most companies in Costa Rica require at least two shareholders for incorporation.

• Obtain the necessary business license to operate legally within the country.

• Collaborate with trusted local partners to simplify the registration process and gain insights into regulatory and cultural aspects.

• Conduct detailed market research to understand the competitive landscape and identify potential opportunities.

• Open a business bank account, which is mandatory for managing your company's financial operations.

• Ensure full compliance with income tax regulations to avoid legal issues and maintain your company’s good standing.

Each of these steps is essential to successfully establishing your own business in Costa Rica and building a solid foundation for growth.

Business Structures and Permits Available in Costa Rica

Costa Rica offers a variety of legal entities and permits to accommodate both local entrepreneurs and international investors. Selecting the right structure is essential to meet your business objectives and comply with local regulations.

The most common business structures include:

1. Sole Proprietorship: This is the most straightforward business structure, where a single individual owns and manages the business. While it is easy to establish, it offers no separation between personal and business liability, meaning personal assets may be used to cover business obligations. All business income is reported and taxed as the owner's income.
2. Partnership: In a partnership, two or more individuals share ownership and management responsibilities. In a general partnership, all partners share liability for the business. In a limited partnership, liability is divided, with some partners enjoying limited liability protection based on their level of involvement.
3. Sociedad de Responsabilidad Limitada (S.R.L.): Commonly chosen by small and medium-sized businesses, an S.R.L. requires a minimum of two partners. This structure provides limited liability protection, with each partner's obligations linked to their capital contribution. Business profits are subject to corporate income tax rates.
4. Sociedad Anónima (S.A.): Designed for larger businesses and international investors, an S.A. requires at least two shareholders, who can be foreign individuals or entities. This structure offers limited liability protection, facilitates the transfer of shares, and is often preferred for its flexible corporate governance model. 

In addition to selecting a structure, companies must comply with specific regulatory requirements, including:

• Registering the ultimate beneficial owner (UBO) to ensure transparency in line with anti-money laundering regulations.

• Obtaining the necessary operating permits from the local municipality may vary depending on the type and location of the business.

Choosing the appropriate structure and securing the correct permits are critical steps to operating legally and efficiently in Costa Rica.

>> Read International Entity Annual Filing and Reporting

Opening a Business Bank Account in Costa Rica: Basic Steps

Opening a bank account is a mandatory step when starting a business in Costa Rica, as it allows you to manage company funds, pay taxes, and conduct daily operations. Below are the basic steps to successfully open a corporate account:

1. Select a local bank that meets your business needs and offers suitable international banking services, if required.

2. Submit the company’s incorporation documents, including proof of registration and details of shareholders and directors.

3. Provide information about the company’s assets, anticipated financial activity, and business purpose.

4. Pay the applicable registration fee, which varies depending on the bank and account type.

5. Fulfill any additional requirements, such as providing identification for all legal representatives and disclosing the ultimate beneficial owner (UBO). Some banks may also request a local address or proof of tax compliance.

Opening a business bank account in Costa Rica can be a straightforward process when companies prepare the required documentation in advance and work with banking institutions familiar with international operations.

>> Read Cross-Border Business Banking Services by Entity Management Service

How can we help

At H&CO, we understand that starting a business in Costa Rica can be complex, especially for foreign investors navigating local regulations and procedures for the first time. Our team of experienced professionals provides comprehensive support to simplify every step of the process. 

With over 30 years of experience supporting businesses across Latin America, we are your trusted partner for expansion in Costa Rica.