How to Start A Business in Costa Rica as an American

If you are an American entrepreneur looking to launch your own business in Costa Rica, you have a great opportunity to enter a thriving and expanding industry. This beautiful country in Latin America is an ideal place for international investment opportunities thanks to its hospitable corporate environment, economic stability, and advantageous position in Central America. 

A solid grasp of the necessary procedures—from legal requirements to establishing operations and cultivating a local network—is critical for success when starting a business in Costa Rica that is why our comprehensive guide will walk you through this process, ensuring you are well-prepared to launch and grow your business activities in this dynamic country.

#1

Understanding Legal Requirements

Navigating the legal requirements to start a business or obtain a business license in Costa Rica as an American is a crucial first step in ensuring your venture is compliant and aligned with this welcoming and vibrant market.

The number one step is to obtain the appropriate visa according to your business needs, following the registering of your business with the National Registry and securing a Tax Identification Number (TIN).

#2

Visas Available for Foreign Investment

The two types of visas you can apply for to open a business in Costa Rica are the Investor Visa and Rentista Visa.

Investor Visa (Inversionista)

Costa Rica offers a temporary residency visa for foreign nationals who have invested US$200,000 in business, real estate, stocks, securities, or forest plantations. The visa is valid for 2 years and can be renewed if the investment is maintained. Permanent residency allows working as an employee for a Costa Rican employer, with a minimum annual stay of 72 hours and it must be renewed every 5 years. Citizenship by naturalization is granted after 7 years of living legally with a temporary or permanent residency visa, and it requires knowledge of Spanish, a test about Costa Rican history, and two witnesses.

Generally, project investments fall under one of four categories to be eligible:

1. New Companies

You need to put $150,000 into starting a new company. Be aware that getting permission for this route might be difficult.

2. Existing Business

You must spend $150,000 to buy the whole company or a portion of an already-existing firm.

3. Real Estate and Automobiles

You have to invest $150,000 in either. The purchase price of several houses and/or cars might be combined.

4. Forestry Initiatives

It calls for contributing with $100,000 to the eligible local municipality and SETENA (environmental agency) forestry projects.

To know the different requirements for each category, click here.

Rentista Visa

Those who can prove they have a steady income that matches the required monthly criteria or who have enough money in a bank account back home are eligible for Costa Rica’s Rentista Visa, which allows for temporary residency. If you have enough money in a bank account back home and are not eligible for either the Pensionado or Inversionista visas, the Rentista Visa is an excellent choice.

To apply for a Rentista Visa in Costa Rica, candidates must meet financial conditions, either with $60,000 or a reliable passive income source of $2,500 per month. These funds can come from investments or rental properties. Monthly deposits must be made into an approved Costa Rican account, and foreign banks must sign a letter confirming funds availability and payment terms.

#3

Business Registration

The business registration process in Costa Rica involves the following steps:

1. Choose a Business or Company Name: Ensure the legal name is unique by checking with the National Public Registry (Registro Nacional).
2. Draft the Articles of Incorporation: These must be notarized and include details about the business, its owners, and its structure.
3. Register the Business: File the notarized articles with the National Registry.
4. Obtain a Tax Identification Number (TIN): Register with the Tax Department (Tributación Directa) to get a TIN.

#4

Selecting a Business Structure

Choosing the right business structure when starting a business in Costa Rica is a critical decision that can greatly influence your company’s operations, legal requirements, and tax obligations. Costa Rica offers several business structures or legal entities:

• Corporation/Joint Stock Company – Sociedad Anonima (SA): This type of legal entity structure is the most predominant in Costa Rica. This legal entity structure’s main characteristics are having at least two stockholders and creating a public document that the company’s shareholders and the public notary must sign. No minimum capital investment is required, and a controlling agent and three board members must be nominated.
• Limited Liability Company (Sociedad de Responsabilidad Limitada – SRL): A popular choice due to its flexibility and limited liability.
• Branches: By use of a public deed incorporation, which has to be signed by the foreign company’s power of attorney and a public notary, foreign corporations can open branch offices in Costa Rica.

#5

Setting Up Operations

Setting up operations in Costa Rica requires a careful analysis to select a good location and premises according to the nature of your business, as well as ensuring access to reliable utilities and robust infrastructure.

Physical Location and Premises

Make sure you choose a strategic location based on your target market. San Jose, the capital city, is a hub for many businesses, while coastal areas may be better for tourism-related businesses. Consider factors such as rent, accessibility, and local regulations, as they will have a large impact on the future success of your business ventures.

Utilities and Infrastructure

Ensure access to essential services such as electricity, water, and internet. Costa Rica has a reliable infrastructure, but it’s advisable to confirm the availability of services in your chosen location in advance to prevent any potential delays.

#6

Hiring Employees

You must consider the following criteria to make sure that hiring a successful staff for your company goes smoothly.

Knowing the Local Labor Laws

It is critical to be fully aware, understand and comply with Costa Rica’s labor laws, which include:

• Minimum Wage: Varies by industry and job type. You can find more information here: https://wageindicator.org/salary/minimum-wage/costa-rica
• Work Hours: Costa Ricans typically work 40 hours per week.
• Employee Benefits: Mandatory or legal benefits include affiliation to the public social security (Caja Costarricense de Seguro Social – CCSS), 12 paid holidays per year, and a Christmas bonus (Aguinaldo), which is the equivalent of one month’s salary. Some companies offer perks such as private health insurance and access to different trainings or certifications, to name some.

Recruitment Resources

There are several resources that you can use to your advantage when recruiting in Costa Rica; some of these are:

• Job Portals: Websites like Computrabajo, LinkedIn, El Empleo, and Tecoloco are popular for job postings.
• Recruitment Agencies: Consider using local agencies to find qualified candidates.
• Networking: Leverage local business networks and events to find talent, such as job fairs.

#7

Financial Management

For American entrepreneurs launching a business in Costa Rica, efficient financial management is essential. It entails everything from opening a bank account to knowing local tax rules and ensuring that both Costa Rican and US financial laws are followed.

Opening a Bank Account for Your Business

To manage transactions, make payroll easier, and keep correct financial records, you must open a bank account for your business in Costa Rica. To accomplish this, you usually need to provide documents such as your business registration, identity, and proof of address.

Major banks in Costa Rica include Banco Nacional, Banco de Costa Rica, and private banks like BAC Credomatic, Promerica, Scotiabank, and others. Make sure you do proper research to find a bank that best suits your needs.

Bookkeeping and Taxes

Ensuring compliance with tax legislation and facilitating well-informed financial decision-making are achieved through accurate bookkeeping and comprehension of local tax needs. That is why it is key to:

• Hire a local accountant to help you navigate Costa Rica’s tax system.
• Understand the Costa Rican Tax Obligations, which include income tax, value-added tax (VAT), and social security contributions.

Networking Opportunities

Making the most of Costa Rica’s networking possibilities will greatly help your company by introducing you to regional business owners, professionals in the field, and possible customers. This can help you build important connections and collaborative efforts.

Events and Conferences

Attend relevant events like:

• Expo PYME: A trade show for small and medium-sized enterprises.
• Investment Forums: Organized by agencies like CINDE (Costa Rican Investment Promotion Agency).
• National job fairs where many people show up to get to know about different companies and its vacancies.

Starting a business in Costa Rica as a U.S. entrepreneur involves navigating the various topics outlined above, such as knowing the legal requirements, choosing the right company structure, setting up operations, hiring employees, managing finances, and taking advantage of networking opportunities. With its favorable business environment and supporting infrastructure, Costa Rica offers a promising outlook for business success. Make sure you get the right information and support from expert lawyers and accountants who can help you establish your business in Costa Rica in the best way possible.

Special Places of Costa Rica offers American entrepreneurs the chance to start a business in Costa Rica, offering vacation rentals and real estate options for a successful venture.