Your starting point for an expansion to El Salvador is setting up a subsidiary. Your company’s subsidiary will give you the legal authority to work in the country and begin operations. However, the setup process can take weeks or months and a significant amount of money.
Instead, you can work with a global EOR such as G-P. We know your time is valuable, which is why we can help you start working in a fraction of the time. As the Employer of Record (EOR), we’ll manage the entire employee lifecycle, so you can focus on building a profitable and active company.
How to set up an El Salvador subsidiary
Your location and business structure impact how you can set up your El Salvador subsidiary. We recommend reviewing a city or region’s laws before picking a place for your headquarters. Different areas within the country can have different El Salvador subsidiary laws that may make it easier or more difficult to incorporate. A lawyer or consultant can also help you find the right location.
You can choose from several different subsidiary structure options. Each entity has its own advantages and disadvantages, and the one you choose should depend on your specific business circumstances and needs. El Salvador’s different business entities include a limited liability company (LLC), public limited company, branch, and representative office.
Many companies incorporate as an LLC because it gives the most freedom in El Salvador. If you decide to set your company up as an LLC, you must follow these steps:
- Sign a deed of incorporation with a notary public.
- Register at the Registry of Commerce (must renew every year).
- Register with the local city hall.
- Register with the Internal Tax Office.
- Register with the Pension Fund Administrator.
- Register with the Ministry of Labor.
- Register with the Salvadoran Social Security Institute.
- Set up a local corporate bank account.
El Salvador subsidiary laws
If you choose to set up your El Salvador subsidiary as an LLC, you’ll need at least 2 shareholders and 1 director. Shareholders are limited in liability based on the amount of capital they contribute. All 3 individuals can be nationals from other countries, but you’ll need at least 1 director, known as the legal representative, who normally lives in El Salvador.
Minimum issued share capital is USD 2,000, and 5% must be paid up at incorporation. If your company is controlled by a board of directors or a sole administrator, they must have a formal reelection no more than 7 years after holding the position. You’ll also need to appoint an auditor and submit audited financial reports each year.
Benefits of setting up a El Salvador subsidiary
A major benefit of incorporating in El Salvador is being able to legally work in the country. Your parent company can benefit from the LLC structure, as your different locations will not share liability. Plus, your subsidiary can operate using a different structure than your parent company.
Working with a global EOR will give you all the benefits of a subsidiary without having to go through the lengthy setup process. When you partner with G-P, will use our registered entity to hire employees for you, manage payroll, and distribute compensation and benefits.
Other important considerations
If you still decide to expand on your own, you’ll need to set aside time and money. Delegate tasks to other key members of your company so that you can focus on core initiatives. Also, talk to your accounting department about how much money you’ll require and how to set up an international bank account.
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 employment 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.