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Do corporation set up soley for the purpose of owning property (i.e. liability protection) have to file annual tax return even if no income was produced — meaning now profit or loss? We set our S.A. in January 2006 …anyone have any advice of what we should be doing to ensure it remains a legal entity that’s not in violiation of tax or business laws while it sort of “just sits” until we make a move…thanks! Neil
Yes. In addition to filing at least annually (depending on the type of business), you must be sure to keep your books in order (and I don’t mean on the computer, I mean written PROPERLY in black ink pen in the official books you got stamped by the government when you created the S.A.). An accountant can handle all of thus for you at a small cost. I highly recommend you find someone immediately, as the penalties of non-compliance can be severe.
Gringo Tico raises a critically important point. Every corporation, no matter what its purpose, MUST have a complete set of books (six) which have been officially approved by the government. And every piece of business done by the corporation must be recorded in those books. It is not sufficient, for example, for the officers of a corporation to name other officers or issue shares of stock on stock certificates. If it’s not recorded in the books (correctly), it never happened.
We have two corporations and the attorney who created them told us we didn’t need books. Nothing could be further from the truth. When it came time to straighten out stock ownership and who the officers were, there was nowhere to record the changes until we got books issued.
Don’t overlook this!
Hi Neil:
I have similiar concerns as you do. I am relocating to CR early this year I will be formimg a Corporation to purchase my Condo as well as a couple of our items like my automobile. Based on that information I asked Scott Oliver if he could recommend how to handle my concerns Scott introduced me to;
Randall Zamora Hidalgo
http://www.CostaRicaABC.com
Accounting & Business Center
(506) 356-8992
(506) 261-4283I would suggest that you ask Scott to make an introduction on your behalf. Not that you couldn’t contact him on your own I believe you will see when Scott introduces you the response is quick and you are treated with a different value.
I hope that helps.
SteveUh-oh, I haven’t filed tax forms on my SA either, primarily because nobody ever mentioned it was necessary and partly because it never occurred to me. So now what? How do I get a get-out-of-jail card? There have been no transactions in my corporation other than to purchase the property … two years ago. .. so I am a year behind in filing. Help!!!!
Marvilla: I would sugestthat you contact your accountant and or attorney if you have one to bring you up to date. I don’t think you will be in any major trouble and will limit any issues using someone that is familiar with the system and can get you brought up to date with at most a minor fee. If you don’t have a local accountant & attorney I would suggest that you ask Scott Oliver to refer one to you with local experience & relationships. Good luck.
SteveI did send my lawyer and e-mail and asked him to help me clear this up when I get down there next week. I can’t imagine they are going to fine me very much, but who knows. UGH! One more bureaucratic nightmare to deal with.
I have your answer. Your lawyer should have set it up properly in the first place and you would not have to worry about filing a tax report.
Your corporation should be placed in “Inactive” status when forming. I do believe that you can have your lawyer change this for you after the formation.
That will solve the on going problem of filing… unless you are active with the corporation, then you do need to file.
Snow and Cold in Colorado
Bill MaesGetting your books and filings up to date, even if you’ve missed a deadline or two, is no big deal (for your accountant). The big deal comes if a tax agent from the Ministerio de Hacienda knocks on your door and demands to see your books. These are essentially surprise audits, and they happen all the time to business establishments. Probably pretty unlikely for an unknown S.A. who’s only asset is a house though. Still, you’ll sleep better if you know your accountant is handling it all.
I believe these books must remain at the “casa matriz”, or business headquarters (i.e. your house) at all times. Keep using your computer software to keep track of everything. Your accountant can work off the reports to get the data necessary for updating the physical books.
It’s hard to imagine that an S.A. established to hold a residential property could be inactive. Even if it’s vacant for a whole year, you’ve still got expenses – taxes, electric, phone, water, lawn care, fixing the damage done after break-ins…
Edited on Jan 15, 2007 05:11
Oh boy, I guess I have some accounting to do if I have to log in all the water and electric bills into my ledger. UGH! Who knew? Anyway, I’ve been told that if my SA is “inactive” there is no need to file anything, and supposedly my SA was set up like that, but just to be on the safe side, I’ve contacted the lawyer who did my corporation and asked him to make sure that it’s “inactive” and I guess I will be lugging those 6 books down there with me and this time I’ll leave them.
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