Your obligations in Colombia

• Company Creation and Registration: In Colombia, companies must be legally registered with the Chamber of Commerce and DIAN (Dirección de Impuestos y Aduanas Nacionales). This process involves registering your business name, legal structure, and tax identification. Failure to do so can result in legal and financial penalties.

• Submit VAT Declarations: Pay and report VAT bimonthly or quarterly to DIAN, collected from sales and services.

• Withhold and Report Taxes: Make monthly withholding tax payments to DIAN, applied to certain transactions.

• Annual Tax Declarations: Submit income tax declarations annually, along with exogenous information or magnetic media reports to DIAN.

• Exogenous Information: Provide detailed financial information as required by DIAN.

• Issue Electronic Invoices: Sales invoices, payroll, and supporting documents for service providers must be issued electronically and sent directly to DIAN. This requires the use of compliant accounting software.

• Electronic Documents Compliance: Ensure all electronic documents, including invoices, payroll, supporting documents, and POS, comply with DIAN’s electronic invoicing regulations.

• Maintain Accounting Records: Accurate and timely accounting is essential to understand the company's financial situation. Companies must keep detailed records of transactions such as sales invoices, payroll, and supporting documents for those providing services to the company without electronic invoicing.

• Digitalization of Accounting Documents: Keep digital records of all accounting documents, including purchases, expenses, sales, and income, facilitating audits and compliance with regulatory requirements.

• Monthly Bank Reconciliation: Reconcile the company's financial records with bank statements monthly to detect and correct discrepancies.

• Preparation of Financial Statements: Regularly prepare financial statements, including balance sheets, income statements, cash flow statements, and bank reconciliations, according to the International Financial Reporting Standards (IFRS). These reports must be submitted to regulatory bodies.

• Conversion to IFRS: Convert financial statements to International Financial Reporting Standards (IFRS) as required.

• Renew Commercial Registration: Annually renew the commercial registration with the Chamber of Commerce and industry and commerce licenses to maintain legal operation and compliance with local regulations.

• Social Security Contributions: Calculate and pay social security contributions, including health, pension, and labor risks, for employees. This is crucial for legal compliance and employee benefits.

If you're not familiar with some of the terms used in the explanation above, please visit our “Tax & Accounting Terms” section where you can find a glossary of the different terms and definitions, or you can contact us for a free consultation.