If you want to start a business in Ecuador, there are couple of things that you need to understand. In general, the process is usually the same whether you are a foreigner or local. This is how the government is making sure that investing will be easy for foreigners. They do not add additional steps nor do they make it hard for expats to start their own business in this country. The more foreign investors come in, the more jobs will be generated for the locals. This is good for the local economy.
This is why Ecuador is one of the top picks of investors looking to do business in this region. The currency, business laws and processes all work in the favor of the investors. But despite the ease in setting up a business in Ecuador, you need to know a couple of facts before you start.
What you should know before you start a company in Ecuador
Starting a company anywhere in the world is not without risks and difficulties. You need to be aware of the possible bumps and hiccups along the way so you can prepare for them. Not only should you consider the business laws in the country, you also have to think about the culture of the Ecuadorians who will be working with you. This knowledge will allow you to create a company that can properly maximize the resources and manpower available in Ecuador.
Here are 7 things that you need to know before starting a business in Ecuador.
Consider taking on an Ecuadorian partner. It is possible for you to start a company and make the decision by yourself. However, you will get a lot of benefits when you partner with an Ecuadorian. They know the people who you will be hiring for the various tasks that the business will need to function. Not only that, they will help you understand the culture of the Ecuadorians. You can also benefit from their own networks to help the business take off.
Try not to rush into the hiring process. As mentioned, you do not know the people of Ecuador since you probably have been here a couple of months. Try to widen your search for the best talent for your business in Ecuador by posting a job ad both online and in newspapers. Go through as many candidates as you can. You may think that your gut feeling will tell you to pick the right person but your lack of knowledge about Ecuadorians might lead to failure. It might be best to ask your Ecuadorian partner to do the hiring for you. It is a bit hard to get rid of incompetent people once you hire them.
Know your responsibilities as an employer. This means understanding what your responsibilities are – especially when it comes to the compensation of your employees. For instance, you need to pay a portion of their Social Security. Your employees are also entitled to an extra month’s salary in December and another half month in August. So if you are giving them $1,000 each month, they will receive $13,500 each year.
Choose the right legal structure for the business. This will depend on what your company will need in order to function well. If you need the ability to hold government contracts or issue work visas, then you need a Sociedad Anonima – or a corporation. There are varying legal implications depending on the type of structure your business will have.
Hire the right legal representatives and attorney. This will help you process a lot of documents and make sure that you will be staying on the good side of the law. An English speaking professional should be a great idea so they can explain to you the details of the documents you will encounter. Although a lot of business may be conducted in English, the government only recognizes documents in Spanish. You may need a lot of help in this area if you will be doing business in Ecuador and your Spanish is not that good.
Do not obsess too much about time. If you have read a lot of articles about Ecuadorians, you should know that they have a different perception of time. They do not rush into things like other cultures do. Accept that your business meetings (at least those with other companies) will start late. Even the documents that you need to process for the business might take some time to finish. Try not to stress yourself out with deadlines because the people here are not as obsessed about it as you are.
Collections may be a problem. This is another cultural trait that might make you feel frustrated about doing business in this country. Some locals have a habit of not paying their dues until it is ready to be disconnected. Make sure to set collection rules upfront so you can control how you will get your receivables.
As you go along and build up your business in Ecuador, you will realize that things will get easier as you settle in the country. The more you know about the culture of this country, the easier it will be to use the resources that is available to you.
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