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I’ve searched as best I can for past postings thinking that many must have asked about this. But I couldn’t find it.
Scott. If it’s in there kindly point me to it. Otherwise here goes.
What papers are needed to start a business? I’m actually thinking of a small sandwich shop with salads, deserts etc. Do you have to be a citizen or resident? What would taxes be on something like this? Is there a licence? If so how much? I assume you would have to have it passed by a health inspector too. What would that cost? In the U.S. you would probably have to have segregated bathrooms and wheelchair access. Is this a factor in CR?
I’m sure others here may have experience with one or more of the questions you are asking. A good first step is to get the book “The Legal Guide to Costa Rica” by Roger A. Petersen It covers residency, and very importantly covers the laws pertaining to employee, employer requirements. My understanding is you do not have to be a resident to own a business, but you can not work in that business yourself, it has to be staffed with Tico’s. Jenny runs a well established B&B and I’m sure will have some good input. Good luck.
You have indeed chosen a business idea that would involved all sorts of wonderful government agencies and a zillion different legal requirements.
You would be best advised to speak to a qualified attorney about this and should you need one, I would be happy to recommend one.
As far as handicapped requirements are concerned, it’s not quite like the USA but they are catching on here and making buses more handicapped friendly for example…
I remember reading about a lawsuit in Massachusetts in the US where people who were travelling around the USA with a mock-up of a slave ship to show how horrible the conditions were that the slaves had to endure and they were sued because the slave ships were not considered to be “wheelchair accessible.”
I was then, and am now speechless.
Scott Oliver – Founder
WeLoveCostaRica.comIf you’ve searched through the postings in this site, you surely have come across the many trials and tribulations of gringos who try to start small businesses in CR. Personally, I made a vow to myself that the only way I would do that again is if it were more of a hobby, rather than something to fund my life there. Costa Rica is a terrific place to visit and retire, but making a living there is a completely different story.
That said, once you decide to take the dive, the first thing you need to do is establish the legal entity, called a “Sociedad Anónima” or S.A. This is similar to an LLC. The S.A. must be comprised of several people, including President, Vice President, Treasurer, Secretary and possibly Sergeant at Arms if my memory serves me. It is customary for a single Tico entrepreneur to have his relatives sign off on the positions below President, and then simply forget about it.
Only an attorney can create such an S.A., and this act must be recorded in the attorney’s “protocolo” (legally registered book with page numbers, line numbers, and official, royal-looking squiggly lines at the top of each page, black ink only, all numerics must be spelled out including dates, all persons mentioned must be accompanied by cédula (State-mandated ID card) or passport number, address of residency, and marital status, if you’re a gringo with only one last name, it must state this fact…)
All companies must “keep the books”, but in Costa Rica this is an actual official book with page numbers and line numbers on each page. Books must be pre-registered and stamped by the authorities, and handwritten in black ink only, just like the attorney’s “protocolo”. Annual reports are required as well.
In other words, there is a plethora of arcane rules and regulations which must be followed to a T, or some government clerk will gladly take the opportunity to exercise what little power he/she has to put the kybosh on your entrepreneurial aspirations. Use an attorney and an accountant.
An S.A. is not required to have employees, but you’ll need them for your business. You’re also desirous of a storefront operation for walk-in clientele. You’ll be collecting cash and transporting it to a bank. You want to hawk food.
You’d get it over with quicker and less painfully if you just hit yourself over the head with a sledgehammer.
You’re a foreigner living in Tiquicia. Leverage your resources (i.e. find a way to EARN your money in dollars and SPEND them in colones). Use the “kiss” method (Keep It Simple Stupid) – avoid the need for employees if at all possible, as well as storefront operations, regularly carrying large amounts of cash, and food service.
I have Tico friends who do what you’re proposing, but they’re Tico, they know the language and the culture, they have “patas” (connections), they’re properly paranoid about being assaulted because they’re known to carry cash to the bank, they can tell the difference between a police officer and an impersonator, they keep a gun in the drawer, etc. Keep in mind, gringos are targets – easy prey. Again, if you don’t need the money and you just want to have fun, go for it (though my definition of “fun” is somewhat different). If not, consider yourself forewarned.
Sorry to pour cold water on your idea, but it’s tough love.
Edited on Aug 24, 2006 22:57
My thanks to all who contributed but particularly to Gringo Tico for such a lengthy and informative treatise on the subject.
The truth is that I am not looking to make a living from this. I would like to help the small town to which I am moving to have the opportunity to experience a little of other food cultures, although I do not want at all the change the character of the town in so doing. I do also want to employ some of the locals if possible just because I care about them and the town. My wife and I also would like to take some of the English Language students and perfect their pronunciation and grammar in order to help them do something with their abilities.
I have a Tico friend who already has a business in town so it seems sensible based on your observations to put him in as President and let me just show the employees how to make a little café work.
On the other hand, if there is too much red-tape involved I might just shelve the idea because at 66 I do not relish fighting City Hall to provide a service for the locals.
Just want to stay busy and do some good.
Great advice by grongotico. I know more than one person that has gone through hell and back trying to do what you are purposing. It could definitely be rewarding, but as gringotico basically said, it might be more trouble than you are looking for. Drushton, you might consider working out an agreement with a Tico that would like to start a business but does not have the available funds. You invest as a silent partner, thus helping the local community and helping to employee as many locals as you would have if you were running the business your self. You would of course have to check with a qualified attorney to make sure it’s possible. Just a suggestion.
I’m glad you’re thinking of it more as a hobby, Also, my security concerns were more in relation to San Jose – a small town does sound much more inviting.
However, I would not recommend making your Tico friend President, letting him run it, and you fronting the money.
How about this – You and your wife offer English classes for a fee, and the sandwiches are free?
Jajajaj, if you want to give them other food cultures just go to San Jose at Cost Co and pick up the gringo food and hand it out for free.
My mother in-law buys some of her food there for her Soda!
Scott, it really does not matter what type of business you want to start here in c.R. First you must be legal. That is you must have a status which allows a person to work. The “real” fact is that if you were to start a sandwich shop for example the Government would consider you as a person taking a job away from a Costa Rican. Thus you woud never get permission to operate.
If you have enought money to invest then the Government will consider your obtaining a “resident investor” status. That is a US$50,000 minimum. Getting your status is your first step.
Being a Pensionado or Rentista DOES NOT allow you to work. Look up on the web for information of C.R. immigration. Really should be your first step. (I’ll have my sandwich well toasted please)gsekam – This is not quite true. Anyone can start, own, operate and (attempt to) profit from a business in Costa Rica, regardless of their residency status, or lack thereof. You cannot be “employed” by that business unless you have a legal status that permits employment (i.e. resident by virtue of family relation).
However, I completely agree that sandwiches are better toasted.
Thanks for taking the vote on toasted or not toasted. I see that the majority wants them toasted. I will keep that in mind if I can ever overcome the rest of it. But the matter of who, and how to open a business probably should come first.
To be honest, by the time you had all savaged (not sandwiched savaged) my idea I gave up on it and decided instead to concentrate on other things (one of which I will mention in a moment). But now that gsekam has breathed a breath of new life into it (not very sanitary I fear), I’m willing to give it another little try.
So, if I opened a little café with some sandwiches (untouched by gsekam’s breath), and a few light meals but did not actually take a profit, I could supervise it right? Now, if I had a big enough storefront I could put a little office in the back in which I could use my computers right? That would answer another problem because my home in the nearby mountains can’t get cable, but in the town my little office could have cable and I could deal with Emails etc. and I could also record worthy TV movies in that little office. Then the profits (if any) could go to a Costa Rican partner and perhaps some could be used for my project of helping the local English language students to speak The Queen’s English. If you do not know what that is Scott can help.
Now. As I said there is another little question of business.
First part. I have a small (very small) coffee plantation on which I will be building several homes for sale. I believe I am right in thinking this will present no problems right? I can build a house, mark off a three-acre tract and sell it as a package?Second part. If I build one of those houses as a guesthouse and advertise in the U.S. and Canada to have people stay there by the week, how would you recommend handling that?
For one thing would it make any sense to ask them to pay the deposit by credit card and the rest in cash or to pay part of it into a non-profit (either Costa Rican or U.S.)? I have the U.S. one already in place.
Thanks to you all for your great insight and thanks most of all to Scott for putting this great plan into operation. It’s just the best idea since toasted sandwiches.
By the way some have sagely advised getting the advice of an attorney. Believe me, I will, but I have already found that the attorneys can be about as good as you help them to be by having foreknowledge of the matter. That’s why I am geting all the good advice I can from you wonderful people.
With eternal gratitude
David
Hey! I ain’t no queen! Hee! 🙂 Hee!
I am going to make a suggestion…
I see many people coming down here with pre-conceived ideas about what businesses ‘might work and what might not work based on their personal experiences ‘back-home’ and not on their personal experiences here.
Come here! Live here for six months and let the people and the market tell you what it needs. Sounds like you’ll be building a home so it’s not as if you’ll have nothing to do.
As for renting out a place to tourists, that’s fine but to get it certified as a tourist type business would probably require more work than you would like to….
You did touch on something in your email that sounds like it may be in demand in that area – internet. Buy six cheap computers, hook’em all up and offer internet service by the hour with FREE coffee and forget the food.
Scott Oliver – Founder
WeLoveCostaRica.comPS. Being able to accept credit card payments from US clients for a Costa Rica B&B is considered ‘high-risk’ by the credit card companies and it may be difficult to arrange without anm official designation as a ‘tourism’ business.
Tread very carefully down the path of dividing up a larger property into saleable lots, building some houses and selling the packages. There’s no doubt it can be done, but there is also no doubt that there are many pitfalls. Before you commit to purchasing the property, be certain to consult at least an architect and a knowledgeable attorney about your plans.
Too, I always advise folks to obtain a new survey with obvious markings that you can see. That survey should be registered in the National Registry.
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