Setting up a Nicaragua subsidiary is the first of many necessary steps to begin operations in the country. Once you have a legal entity established in Nicaragua, you can hire employees, set up your payroll, and more. But you won’t start to realize the benefits of expansion until after the months it takes to incorporate.
G-P can help you expand without the need to set up a subsidiary in Nicaragua. This means you can begin compliant business operations in the country starting in just minutes instead of months.
How to set up a Nicaragua subsidiary
Setting up a Nicaragua subsidiary requires a significant amount of planning before you can start the process. First, you have to find the right location within Nicaragua that’s most friendly to international investment. Different regions and cities can have their own Nicaragua laws that will impact how to set up your Nicaragua subsidiary. If you’re not sure which location is best for your subsidiary, it’s best to turn to the expertise of a local lawyer, consultant, or accountant who can help.
Next, you should focus on choosing the right entity. When you set up your Nicaragua subsidiary, you can choose between a variety of subsidiary structures, such as a corporation or branch. It’s important to choose one that meets your business goals, as your entity details what actions you can perform in the country. Many companies choose to incorporate as a corporation because they can work almost like a resident company. However, the most common option is establishing as a limited liability company (LLC).
Setting up your Nicaragua subsidiary as an LLC includes the following steps:
- Drafting acts of incorporation
- Acquiring accounting and corporate books at a local bookstore
- Submitting acts of incorporation at the VUI
- Registering as a trader
- Registering accounting books
- Obtaining a single registration document and submitting at the VUI
- Obtaining an international investor certificate, if applicable
Nicaragua subsidiary laws
Nicaragua’s subsidiary laws dictate everything you need to make sure your company stays compliant. You’ll have to have one director, two shareholders, and an auditor for the Nicaragua subsidiary setup process. The Ministry of Development, Industry, and Trade regulates all corporations in the country and will require you to complete all transactions in person. You’ll also need a tax identification code before you officially start operations.
All companies, whether they’re a corporation or branch, need a commercial bank account that takes about 4 to 6 weeks to establish. Keep in mind that you’ll also need at least 10,000 Nicaraguan cordobas. The process will require you to appoint a legal representative with Nicaraguan residency to draft an act of incorporation.
Benefits of setting up a Nicaragua subsidiary
Finally setting up your Nicaragua subsidiary means you can start hiring employees, paying them, and getting your business up and running. Choosing to incorporate as a corporation can provide even more benefits if you limit shareholders’ liability to what they contribute. This setup will keep your parent company safe from any litigation or other issues from the subsidiary, and the subsidiary can choose its own company culture and working environment.
Other important considerations
If you don’t work with an Employer of Record (EOR), you’ll need to hire a compliance expert who can make sure you won’t face any fines or delays. If no one in your company is an expert in Nicaragua’s subsidiary laws, a good alternative could be hiring a consultant or a lawyer who has helped other companies expand in the country.
You’ll also need the time and money to travel back and forth to Nicaragua frequently since the country requires for all transactions to happen in person. You should also work with your accounting department to make sure your company has the required budget for this.
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