How to start a LLC in puerto rico [FAQs]

Last updated : Sept 16, 2022

How much does it cost to open an LLC in Puerto Rico?

Filing and forming an LLC in Puerto Rico requires a $250 filing fee. Under Puerto Rico law, an LLC uses a limited liability company agreement, or LLCA, to govern the internal affairs and administration of the LLC.

Can you have an LLC in Puerto Rico?

Limited liability companies (LLCs) are becoming the preferred method of doing business in Puerto Rico. LLCs may be organized by any natural or legal person by filing articles of organization (also referred to as the certificate of formation) in the Puerto Rico State Department.

How much does it cost to start a business in Puerto Rico?

How much does it cost to start a Puerto Rico corporation? Puerto Rico charges a flat $150 to file a Certificate of Incorporation as a for-profit corporation. Hire us for a one-time fee of $375, including the Department of State filing fees, a year of registered agent service, and more.

How much money should you start with an LLC?

The main cost of forming a limited liability company (LLC) is the state filing fee. This fee ranges between $40 and $500, depending on your state.

Do LLC pay taxes in Puerto Rico?

Domestic Puerto Rico LLCs are taxed as corporations by default. However, LLCs can also elect to be taxed as a pass-through entity by filing a Classification Election with the Puerto Rico Department of the Treasury and a Federal Classification Election with the IRS.

Who qualifies for Puerto Rico Act 60?

The Tax Incentive Code, known as “Act 60”, provides tax exemptions to businesses and investors that relocate to, or are established in, Puerto Rico.

Is there business tax in Puerto Rico?

A domestic corporation is taxable in Puerto Rico on its worldwide income. A foreign corporation engaged in trade or business in Puerto Rico is taxed at the regular corporate tax rates on income from Puerto Rico sources that is effectively connected income.

Do I need to register to do business in Puerto Rico?

Business name and registration Register your business name with the local government where your business is located. If you are a corporation, you will also need to register with the Department of State in Puerto Rico, or with the Department of Corporations and Trademarks in the U.S. Virgin Islands.

Can I be my own registered agent in Puerto Rico?

Yes, you can be your own registered agent in Puerto Rico.

How do I get an EIN number in Puerto Rico?

Every entity engaged in business in Puerto Rico must obtain a federal Employer Identification Number (EIN) from the U.S. Internal Revenue Service (IRS) by filing Form SS-4. Upon obtaining an EIN, the entity must file a copy of the certificate of incorporation, and a copy of Form SS-4 at the P.R. Department of Treasury.

Is Puerto Rico a good place for business?

Puerto Rico offers businesses the security and stability to operate in a US jurisdiction, while providing an unmatched variety of tax incentives that make it an attractive destination for businesses, large and small.

Why entrepreneurs are moving to Puerto Rico?

Businesses receive a corporate tax rate of 4% on export services, and no taxes are owed on earnings and profits distributions. With these unprecedented incentives, Puerto Rico has set the stage for attracting world-class entrepreneurial talent.

How do LLC owners make money?

Getting paid as an owner of an LLC * Instead, a single-member LLC's owner is treated as a sole proprietor for tax purposes, and owners of a multi-member LLC are treated as partners in a general partnership. To get paid by the business, LLC members take money out of their share of the company's profits.

What can I write off with an LLC?

What expenses can you write off as an LLC? There is a long list of expenses that you can deduct as an LLC. Some of the main operating costs that can be deducted include startup costs, supplies, business taxes, office costs, salaries, travel costs, and rent costs.

What if your LLC does not make money?

If an LLC elects to be treated as a partnership for tax purposes, and the business did not generate any income during the taxable year, it is generally not necessary to file a tax return, unless there are business expenses to be treated as credits or deductions.

How do I avoid taxes in Puerto Rico?

If you move to the island, you can legally pay none. There's also no capital gains tax. You just have to give 4 percent of your income to Puerto Rico. The tax break was started by a Puerto Rican politician who'd watched years of high taxes fail to improve life on the island.

Do U.S. citizens living in Puerto Rico pay taxes?

Further, U.S. citizens and resident aliens living in Puerto Rico are generally subject to U.S. tax on worldwide income. However, a bona fide resident of Puerto Rico for an entire taxable year may exclude income from sources within Puerto Rico for U.S. federal income tax purposes.

Who must file a tax return in Puerto Rico?

Who must file an income tax return in Puerto Rico? Every individual who during the taxable year has net income subject to alternate basic tax of $150,000 or more.

How long do I have to live in Puerto Rico to avoid taxes?

Establishing bona fide Puerto Rican residency requires being physically present in Puerto Rico at least 183 days during the tax year, not having a tax home outside Puerto Rico during the taxable year, and not having a closer connection to the United States or any other foreign country than to Puerto Rico.

What is the law 22 in Puerto Rico?

As has been widely reported, Puerto Rico's Act #20 and Act #22 provides incentives for high net worth U.S. citizens to move to Puerto Rico and potentially reduce their 39.6% federal income tax (plus any applicable state tax) to a 0% – 4% Puerto Rico income tax rate.

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five reasons why puerto rico is a great place to start a business right now this year number one puerto rico had been in an over 10 year recession starting in 2008 when the rest of the country went into recession puerto rico went right there with him only when the rest of the country came out of the recession puerto rico continued to go further down into full-on depression hurricane maria was the catalyst to get puerto rico out of a nearly decade long recession or depression so prior to maria unemployment was through the roof high unemployment jobs were difficult to come by locals had to leave the island in order to go find jobs there just wasn't enough here to do so post maria anybody who wants work has work the island's in full recovery at this point number two the sheer volume of money that's coming to the island post maria so you've got insurance money you've got bailout funds from the government you've got money because there were earthquakes and you've got money because of the big flu it's all come here you've got you've got money to improve the roads you've got money to improve the power grid money money money money everywhere it improves the economy it's a great time to start a business in puerto rico with all of this money coming to the island and oh by the way not to mention all of these people who are fleeing oppressive states like california and new york and see puerto rico as their little slice of heaven and they bring those dollars here to invest in this economy to create high-paying jobs it's just a beautiful time to start a business number three starting a business in a down economy is a proven way for great growth actually more than half of the fortune 100 companies start in a recession or start in a down economy so if you can start a business while the economy is just beginning to rise up which is where we're at in puerto rico i mean we just came off the bottom a year and a half ago two years tops so we're right at the start of this uptick in a in the economy we've got positive growth we've got positive wage growth the economy is strong the infrastructure is improving all of these things are a catalyst for why starting a business in puerto rico right now is a really great idea imagine if you can start a successful business in a down economy how you can ride the wave up into a great economy we believe puerto rico is at the beginning of this upswing so now is a great time to start a business and ride the wave up number four puerto rico offers multiple tax saving benefits when you're starting a business taxes are not your friend puerto rico is they have multiple ways for young entrepreneurs to start a business or for older entrepreneurs to start a business and pay either zero tax or low tax let's talk about the young entrepreneurs act the entrepreneurs act allows anyone who's 35 years of age or younger to start a brand new business and make their first half a million dollars over a four-year period of time i believe it is tax-free so this is just simply amazing this is a one of those only in puerto rico things you can't do that in florida where i'm from but you can do that here this is for locals this is for people who are moving to the island all you've got to do to qualify is be under 35 be willing to take a risk and start a business it's there the other one that's a great way to start a business is to start an export services business so that's formerly act 20 and it's now in act 60 export services it's a four percent corporate tax so you start a company a c corp that corporation exports goods or services or both the combination or manages properties back in the states employs people here in the island and you pay a four percent corporate tax so this is a great great benefit to being on the island to living here and starting a business right now number five opportunity zones we talk about them often on this channel but 98 of the island is an opportunity zone which means that when you're starting your brand new business you can grow it inside of these opportunity zones you can use capital gains money to start the business and as it grows for the next 10 years when you liquidate it you'll have a zero tax zero zero zero it's powerful guys not only that not only can you use your own capital gains money to start your own business but because 98 of the island is an opportunity zone you will be able to attract capital that would not not otherwise come to a young startup business but if you're a dynamic entrepreneur with a good business plan there's money here there are there are funds that have come to puerto rico with the intent of just investing in startup businesses on the island all over the island this is next level so those are five reasons why puerto rico is the best place to start a business right now today thanks for watching the videos leave a comment tell us what you want to talk about next time

Thanks for your comment Irena Eckhardt, have a nice day.
- Coy Chorney, Staff Member

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About the author

Coy Chorney

I've studied teleology at San Joaquin College of Law in Clovis and I am an expert in sociology of law. I usually feel thankful. My previous job was glass blower I held this position for 30 years, I love talking about hydroponics and geography. Huge fan of Lili Reinhart I practice still rings and collect books and periodicals.