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Should I choose a Corporation or a Limited Liability Company?

In order to choose between a corporation or a limited liability company, it is first important to know the differences. In this article you will get enough information to be able to compare both options.

It is common that when starting a business, many people first choose the figure of the Commercial Company and sole trader and leave as a last option, the figure of the Corporation.

Usually this is due to the fact that the registration of the corporation is more expensive and for this reason the figure of the commercial company may seem more attractive.

This does not imply that a corporation is the best option. However, it is important to evaluate the legal, administrative, financial and business benefits offered by each of the options.

Likewise, it is important to have effective legal advice from lawyers in Guatemala to help you evaluate which is the best option and consequently give you the ability to make the best decision.

The procedure and requirements for each are detailed below:

How to create a company in Guatemala.

The application for registration of a commercial company and sole trader is filed with the Commercial Registry.

The process can take from 1 to 2 weeks, which ends with the issuance of a company trade patent in which one or more persons may appear as co-owners of the same company.


Requirements and steps to register a Trading Company as a Sole Trader :

  1. Fill out the Individual Merchant and Commercial Company registration form provided by the Commercial Registry.

  2. Pay in a Banrural agency the fees corresponding to Sole Proprietorship and Sole Trader (only if you are not yet registered as a sole trader).

  3. To present the following at the Mercantile Registry Office:

    • Printed and signed form.
    • Proof of payment.
    • Photocopy of the Personal Identification Document -DPI- of the owner and invoice that supports the location of the company.
  4. Pick up the patent or download it from the web page of the Mercantile Registry and add Q.50.00 in Tax Stamps.


Unlike the Corporation, in this process the only document issued by the Mercantile Registry is the Company's Patent of Commerce, and does not require a public deed, legal representative, shares, initial capital, assembly, among others.



How to create a corporation in Guatemala.

The corporation in Guatemala is constituted by means of a public deed of incorporation (escritura constitutiva de Sociedad Mercantil) which must be authorized by a Guatemalan lawyer and notary. The registration in the Mercantile Registry can take from 2 to 3 weeks. For the Sociedad Anónima, as opposed to the Empresa Mercantil de Comerciante Individual, 2 patents will be issued:

  1. A company trading patent
  2. And a corporation trading patent. The Corporation will be the owner of the company and not individual persons as in the case of the Trading Company as Sole Trader.

TheArticles of Incorporation of a corporation will establish different stipulations or clauses such as:

  • Name of the founding partners.
  • Name of the corporation.
  • Commercial Name.
  • Object (line of business).
  • Address.
  • Capital contributed by each shareholder.
  • Appointment of legal representative.
  • Among others.

Requirements and steps to register a corporation:

  1. Fill out the application form for registration of commercial companies: This form is provided by the Commercial Registrar.

  2. Make the following fee payments at a Banrural agency:

    Edict, publication of edict of the corporation, payment of book clearance. If the authorized capital exceeds Q500,000.00 the corresponding fee must be paid.

  3. The file is reviewed by the Legal Department of the Commercial Registry and by an official of the Superintendence of Tax Administration (SAT).

    If the file submitted meets all the requirements, the corporation will be registered and a Tax Identification Number will be assigned.

  4. Submit the following documents at the New Companies Window or digitally:

    Application form, original payment vouchers, testimony of the articles of incorporation, notarial deed of appointment of the legal representative, personal identification document (DPI) of each partner, water, electricity or telephone bill that supports the address of the corporation, notarized bill of the legal representative or of the authorizing notary.

  5. Once the process is completed, the Mercantile Registry will deliver the following documents:

    -Certificate of incorporation of the company, certificate of appointment of the legal representative, company trade license (Q200.00 in tax stamps), company trade license (Q50.00 in tax stamps), stickers of the book clearance.

Frequently Asked Questions:

What is the minimum capital to incorporate a corporation?

The minimum capital that can be paid and subscribed is Q200.00 ≈ US$ 25.00.

What is the minimum number of people required to found a corporation?

Two or more. Both may be legal or natural persons.

If the founders are foreigners, do they need residency?

It is not necessary. Shareholders and founding partners may be foreigners and/or legal representatives. The latter must have a Tax Identification Number (NIT) before the Superintendence of Tax Administration (SAT).

Is the physical presence of the founders in Guatemala necessary to found a company?

The articles of incorporation must be signed by the founding partners. However, if necessary, a power of attorney can be granted for a third person to sign on behalf of the absent founding partner.

How long does the registration process take?

The process may take 2 to 3 weeks.

Important aspects of a corporation.

The corporation is a type of commercial company that is constituted with a capital divided and represented by shares. Thus, the liability of each partner is limited to the payment of the shares he/she has subscribed and subscribed.

Corporations are formed with at least two or more partners, which may be individuals (natural persons) or legal entities, either domestic or foreign.

In order to incorporate a company, it is important to take into account the following elements:


The corporation is identified by a name that may be freely chosen with the obligatory addition of the legend "Sociedad Anónima", which may be abbreviated to S. A.


The capital of a corporation is divided into three:

  • AUTHORIZED CAPITAL: is the maximum amount that the company may issue in shares.
  • SUCREDITED CAPITAL: is the amount that each shareholder agrees to pay (it is essential that each shareholder pay at least 25% of the nominal value of each share).
  • PAID-IN CAPITAL: is the amount that each partner effectively pays of the subscribed capital (when the corporation is incorporated, the amount of its initial capital shall be at least Q.200.00).


It refers to the set of economic activities that the company will develop and for which it was constituted. They must be legal and must not violate the country's legal system.

Superior Organ.

Every corporation will have a superior body, which is in charge of directing and making decisions on the operation of the corporation. In this case, it refers to the General Assembly, which is formed by the shareholders legally summoned and assembled.

The call for the meetings must be made by the administrators or by the company's supervisory body.


According to our legislation, the administration may be carried out by a sole administrator or by several administrators, who may act jointly as a board of directors and will be in charge of the management of the company's business.

Legal Representation.

The legal representative is an individual (natural) person who may, on behalf of a corporation, acquire rights and incur obligations binding on the corporation, as well as act before courts and other authorities on behalf of the corporation.

In a corporation, the sole director or the board of directors, as the case may be, shall have the legal representation of the corporation in and out of court and the use of the corporate name, unless otherwise provided in the articles of incorporation.

Audit Body.

The purpose of this body within the corporation is to control the administrative function, as well as to guarantee and offer security in the good management of the company so that the shareholders have confidence when investing their capital in the acquisition of shares.