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Establishing a Sole Trader in Argentina

Establishing a Sole Trader in Argentina

Sole Shareholder Corporation in Argentina is what we know elsewhere as Sole Trader and it is perfect for individuals who want to go into business all by themselves. However, the process of company formation in Argentina is not as simple as in other countries. So having the right type of company will be crucial for you to navigate your way through the laws and paperwork. You can get in touch with our company formation agents for assistance.

How complicated is it to open a sole trader in Argentina?

You have to follow the same steps to open a sole trader as for a company in Argentina. The main difference is in the integration of the capital: if you incorporate a sole proprietorship, the capital stock must be fully integrated at the time of incorporation. For example, if the company will have a capital of ARS$100, that money must be deposited in the Banco de la Nación Argentina at the time of incorporation.

The documentation you will need for the incorporation of a sole trader in Argentina is as follows:

  • The incorporation form;
  • A form issued by the Argentine tax authority;
  • Incorporation agreement;
  • Accreditation of capital contributions;
  • Proof of publication of edicts;
  • Professional prequalification opinion;
  • Documentation that accredits the constitution of the guarantee of the administrators.

If you need to know the details and the rest of the documentation you need to set up a company in Argentina, we can clarify your doubts and accompany you through the whole process

Sole proprietorship’s role in Argentina 

The quickest and easiest way to start a firm with just one owner is through a sole proprietorship. As soon as you start operating your business, you become a sole proprietor. It is the proper approach for newly self-employed individuals to get started because it has fewer regulatory constraints. Sole trader differs significantly from the structures of corporation (corp.), limited liability company (LLC), or limited liability partnership (LLP). However, a sole proprietorship’s owner is not immune from the obligations taken on by the business.

You can get information from our company incorporation experts regarding the obligations if you are planning to set up a sole trader in Argentina. In addition to this, you are also welcome to get practical assistance from our agents if you want to open a branch in Argentina. 

Who can set up a sole proprietorship in Argentina?

It is significant to emphasize at this point that you cannot operate as a sole proprietorship if you are not a legal resident of Argentina. You need to have a DNI (national identity document) in order to set up a sole trader in Argentina. Please find below a general guide about the paperwork you need to submit to get an Argentinian DNI. Or you are also welcome to get in touch with our experts who can provide you with all the required information. For a DNI, you are required to submit:

  • Original birth certificate, legalized by the Argentine consulate in your home country or with an apostille if your home country is a signatory to the Hague Convention for the Suppression of Legalization on Foreign Public Documents;
  • A certified legal translator must translate the birth certificate into Spanish;
  • A residency permit from the DNM (National Directorate for Migration), either permanent or temporary, is also necessary;
  • Provable residence through a utility bill on your name, or domicile certificate issued by the corresponding Police Office;
  • You must bring two recent photographs;

For foreigners, the cost of issuing the DNI is AR$15.00. After getting your Argentine DNI, you will be eligible for starting a business in this country. You are also welcome to get assistance from our company incorporation consultants, they can provide you with comprehensive consultation in this matter. You can set up a sole proprietorship in Argentina without much hassle with the assistance of our company formation agents

Unlimited liability of a sole trader in Argentina 

Setting up a sole proprietorship in Argentina only requires one founder. Liability is unlimited, and the investor is accountable for all of the business’s debts and responsibilities. If you run your business as a sole proprietor, you have no personal debt protection and you are subject to unlimited liabilities. You must decide if the limited liability provided by a corporation justifies the additional cost and inconvenience of managing a business.

However, you can also get in touch with our company formation experts. They can suggest to you if you should choose a limited liability company or not. An expatriate who just moved to Argentina and keeps his/her assets abroad is pretty well immune to judgment. The worst that may happen to debtors in Argentina is that their reputation will be damaged with their suppliers and that they will be placed in the Veraz (the local credit bureau) because there is no debtor’s prison. So, it is recommended to get the assistance of our company incorporation experts. They can describe to you the advantages and disadvantages of a limited liability company and a sole trader. You can open a sole trader in Argentina efficiently with the help of our local experts. 

The pros of a Sole Shareholder in Argentina

This type of legal entity has not become a favorite of those who come to do business in Argentina. Once you finish setting up a sole proprietorship in Argentina, you start to discover the advantages it has:

  • This type of company allows any person to separate a part of his/her patrimony specifically to a commercial activity. There is no risks that the commercial activity will affect his/her entire patrimony because the liability is limited to that portion of the patrimony he/she designated for the company;
  • The capital stock required for the incorporation is just around US$620;
  • The government fee you must pay is less than US$75;
  • It can be created within 24 hours if all the necessary documentation is in order.

If you need more information about the advantages of this type of company or about anything about the company formation process in Argentina, we are here to help you. Our experts can also help you open a bank account for your sole trader.

Types of tax registration for sole traders in Argentina

If you want to open a sole trader in Argentina, you have two fundamental alternatives for your taxes:

  • Federal registration: You can sign up for VAT or, if your business is small and has few revenues, you can sign up for a parallel system called “monotributo” (or single tax).
  • Provincial registration: However, the majority of non-manufacturing activities are subject to provincial taxes. You must register with Rentas if your business is based in the city of Buenos Aires. Besides this, you must register with the provincial tax authorities if you are in one of Argentina’s provinces.

If you need any further assistance regarding tax registration, you can get help from our experts. Our company formation agents can also provide you with practical assistance to open a sole trader in Argentina. 

The cons of a Sole Shareholder in Argentina

Although this type of company is one of the most popular when we talk about company formation in Argentina, you should know that Sole Shareholders have a major weakness. You should pay special attention to avoiding complex problems to solve even with the best legal experts.

If you decide to open a sole trader in Argentina, you should know that you, as the sole shareholder, will face some possible difficulties. That means that if the company’s capital cannot cope with any debt, your company may go into insolvency very quickly if it is a complex problem. Moreover, Argentina is not the friendliest place to do business nor a particularly free economy.

To know what to do in case of any unforeseen event, you can talk to some experts in company formation in Argentina so that you can anticipate any unexpected event. Choosing which of the numerous company kinds and legal structures is the best one for your business, helping you satisfy all business needs, is crucial aspect in the company formation process in Argentina. If you want to set up a company in Argentina, you can get in touch with our company incorporation specialists. They can guide you on which company structure is suitable for your business plan.

How do individual taxes work in Argentina?

After you have gone through the process of company formation in Argentina, it is time to start the tax planning. There are four main issues you should know about taxes for individuals in Argentina.

  1. Argentinian residents are taxed on their global income;
  2. Non-residents and foreign beneficiaries are only taxed on their Argentine source income;
  3. Both residents and non-residents are taxed at rates ranging from 5% to 35%;
  4. There are special taxes applicable in securities, interest, and real estate gains.

The Argentine tax system is not very friendly for a layperson who wants to establish a sole trader in Argentina, so having the right advice becomes a necessity in this jurisdiction. Our experts can help you with everything you need to open a company in Argentina and tax planning afterward. Do not hesitate to contact us to clear out your doubts!