Choosing to expand to Guatemala will provide many benefits to your company — you can form new business relationships, add talented employees to your team, and begin global operations. However, you need to learn how to set up a Guatemala subsidiary, hire employees, and give out compensation and benefits to ensure a successful expansion.
G-P makes it easier to expand quickly and compliantly to Guatemala. As a global Employer of Record (EOR), we take on all matters of compliance, so you can run your company without worrying about Guatemala subsidiary laws and employment regulations.
How to set up a Guatemala subsidiary
The Guatemala subsidiary setup process will depend on a variety of business and location factors. First, you need to consider a physical location for your office and research the area. Some regions or cities may have separate or additional Guatemala subsidiary laws that impact incorporation.
You should also think about how you want to operate your business. Guatemala offers several different entities you can incorporate as, including a limited liability company (LLC), public limited company, branch, and representative office. Each option will either encourage or limit your activity, so it’s important to choose the best entity for your business goals.
Many companies choose to incorporate as an LLC because of the limited liability nature between the parent company and subsidiary. The steps to set up a Guatemala subsidiary as an LLC include:
- Choosing 2 people to appear before a lawyer and execute the articles of incorporation.
- Depositing a minimum initial investment of GTQ 5,000 in a local bank linked to the national financial system.
- Ensuring each shareholder owns at least 1 share of stock.
- Registering the company with the Registro Mercantil General de la República (National Mercantile Registry).
- Receiving company credentials and a tax ID number (NIT).
- Issuing and legalizing your company’s books for accounting and legal issues and shareholders’ meetings.
- Submitting books to the Superintendencia de Administración Tributaria (SAT) for review and legalization.
Guatemala subsidiary laws
The Guatemala subsidiary laws you must follow depend on the entity you choose. LLCs need 2 shareholders who must invest GTQ 2,000 in the company’s paid-up capital. You also need 1 director to help run the company. These individuals can all be international workers, but you have to appoint a resident legal representative if your director does not reside in Guatemala.
LLCs also need to submit annual audited financial statements to the Register of Commercial Entities. You’ll need to pay a corporate tax rate of 25% to stay compliant. Finally, your company must register with the local tax administration and the Social Security Authority as soon as you start operations.
Benefits of setting up a Guatemala subsidiary
Once you complete the Guatemala subsidiary setup process, you’ll be free to operate in the country. Operating an LLC will bring even more benefits to your parent company and subsidiary. The parent company has limited liability in the case of any litigation related to the subsidiary, and the subsidiary can operate under its own company culture and process.
The entire incorporation process can take anywhere from a few weeks to a few months, and that’s before you can hire employees and get your company off the ground. Fortunately, G-P can help you start working in a few days instead. Through our Employer of Record (EOR) model, we can hire employees who work on your behalf. Instead of worrying about Guatemala’s subsidiary laws, you can feel confident knowing that we will manage all compliance matters and instead use the time to run your company.
Other important considerations
Since learning how to set up a Guatemala subsidiary can take up a large portion of your time, we recommend setting aside the time needed to incorporate before you begin. You can start by clearing your schedule for a few weeks to focus on the expansion and travel back and forth to Guatemala.
Next, you should set aside all the money you’ll need to incorporate. Guatemala subsidiary laws may include certain fees throughout the process, so we recommend working with your finance department to make sure you have the means for the expansion.
Enter new markets with G-P — no new entities required.
Beat the competition and enter new markets in minutes, not months, with G-P. We’ve paired our industry-leading team of in-region HR and legal experts with our #1 Global Growth Platform™ to help you hire compliantly in 180+ countries, eliminating the need to set up local entities or subsidiaries.
Get in touch today to learn more about how we can streamline the global growth process.