How to Start a Corporation in Puerto Rico
A Puerto Rico corporation is a type of business entity with a legal existence that is separate from its owners (shareholders). This separation means that the personal assets of its owners (apart from investments in company stock) aren’t usually on the line if the corporation gets sued or can’t pay its debts. If properly maintained, a corporation can conduct business in its own name and has many of the rights and obligations of a natural person, including the ability to enter into contracts, sue and be sued, hold assets, and pay taxes in its own name.
To start a corporation in Puerto Rico, you’ll need to do three things: appoint a registered agent, choose a name for your business, and file Certificate of Incorporation with the Department of State. You can file online or by mail. The certificate costs $150 to file. Once filed, this document formally creates your Puerto Rico corporation.
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1. Name Your Corporation
If you’re starting a new business, you probably already know what you want to name your corporation. But you’ll need to know if your preferred name is available. To find out, visit the Puerto Rico DOS Corporations Search and browse until you find the perfect name for your corporation. Your corporate name also needs to follow Puerto Rico law. This means the name you choose must:
- Contain the words “Incorporation,” “Corporation,” “Inc.,” “Corp.,” or other acceptable word or abbreviation.
- Not be similar to other registered Puerto Rico businesses.
- Not include a word that makes it seem your business is engaged in an industry that it is not.
Yes. If you want to make sure no other business claims your name while you’re preparing to file, you can reserve a business name for 120 days by filing an Application for Reservation of Corporate Name and paying the $75 filing fee.
Your official business name is the one written on your Certificate of Incorporation. If your corporation uses another name to do business, that name is called an assumed business name. An assumed business name is also sometimes called a trade name or doing business as name (DBA).
For example, Happy Kid Toys, Inc. might expand its products and start going by Happy Toy Emporium. Happy Kid Toys, Inc. would remain the business’s legal name, and Happy Toy Emporium would be an assumed business name.
To register an assumed business name in Puerto Rico, you must file a Trade Name Application with the Department of State and pay the $150 fee.
Learn more about how to get a trade name in Puerto Rico.
2. Designate a Registered Agent
Next, you need to appoint a Puerto Rico registered agent. Your registered agent (also called a resident agent) will be the person or company you designate to accept important notices from the Department of State on your business’s behalf. According to PR Laws Title 14 § 3954, every Puerto Rico corporation must maintain a registered agent. You can serve as your own registered agent, or you can appoint another person or a registered agent service.
Learn why the pros use a registered agent service.
The basic duties of a registered agent in Puerto Rico are to:
- Maintain a physical address (not a PO box) in Puerto Rico.
- Be available during regular business hours.
- Accept legal mail on behalf of your business and forward it to you—fast.
Yes. If you are your own registered agent, you will need to put your name and address on the public record. You will also need to maintain regular business hours to accept service of process in person.
To avoid taking a hit to personal privacy or missing a legal summons while on vacation, many business owners hire a registered agent service. A good registered agent will be there to handle your service of process—a great one will let you list their business address on your Certificate of Formation. We’ll bet you can guess what kind of registered agent we are.
Yes. You can change your registered agent in Puerto Rico at any time either by going in person to the Department of State to file a Certificate of Change of Resident Agent form or by creating an account on the Department of State website and filing an amendment online. There is no option to change your registered agent by mail. The fee to change your registered agent in Puerto Rico is $60 for corporations.
3. Submit Certificate of Incorporation
Once you’re ready to officially start your Puerto Rico corporation, you’ll need to complete a form called the Certificate of Incorporation and submit it to the Puerto Rico Department of State online, by mail, or in person. The filing fee is $150.
The Certificate of Formation requires the following information about your corporation:
- Corporation name. Your name must include one of the following words or abbreviations: Incorporado, Corporación, Incorporated, Corporation, Corp. or Inc. Tip: Most businesses keep it simple with “Corp” or “Inc.”
- Designated office. List your corporation’s physical Puerto Rico address (and mailing address if different).
- Resident agent and address. Your Puerto Rico registered agent must be available to accept legal notifications on behalf of your business at a physical address in Puerto Rico. Tip: When you hire Northwest, our information will go here.
- Purpose. Your purpose is the primary business activity you plan to engage in. You can simply state that the purpose is to “engage in any lawful acts or businesses for which corporations may be established pursuant to 14 L.P.R.A. § 3502.”
- Authorized shares. For each class, list the number and par value of each share. Par value (or “face value”) is the value listed on stock certificates—typically the lowest value at which the share will be sold. If you have multiple classes of shares, also indicate the total shares of all classes.
- Share rights and limitations. Explain any conditions, preferences, rights, restrictions or limitations for each share type.
- Puerto Rico incorporator. Your incorporator signs and submits your Certificate of Incorporation. Incorporators must include their names and addresses. Tip: We’ll be your incorporator when you hire Northwest.
- Directors. If your incorporator’s powers terminate upon filing (i.e. if your incorporator isn’t a director), list the names and addresses of who will serve as directors at the first annual meeting.
- Term of existence. How long do you want your corporation to exist? Your can choose “perpetual” (unlimited), “indefinite” (existing until a particular event) or “specific date” (which you’ll have to enter). Most corporations are perpetual.
- Effective date. When do you want your corporation to start? You can either start on the date of filing or choose a specific date up to 90 days in the future—for example, to line up with the start of a tax period.
- Email addresses. Like all the information in your Certificate of Incorporation, the email you list will become part of the public record. Tip: Avoid an inbox full of spam, hire Northwest, and you can list our email address here.
The names and addresses on your Certificate of Incorporation will go on Puerto Rico’s public record. So if you share your own address on this document, marketers are likely to find it and bombard you with junk mail. Then they’ll sell your information to someone else.
To keep your personal information private, the best strategy is to hire a registered agent (like Northwest) who will list their business address in all address fields on the Certificate of Incorporation instead of yours.
You can file the Puerto Rico Certificate of Incorporation online, by mail, or in person.
By mail or in person:
Departamento de Estado de Puerto Rico
Calle San José
San Juan, PR 00901
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4. Get an EIN
Your federal employer identification number (commonly known as an EIN or FEIN) is similar to a social security number for your business. The IRS assigns these numbers and uses them to easily identify individual corporations on tax filings, including federal corporate income tax returns.
The IRS requires corporations to get an EIN for their federal tax filings, and the Puerto Rico Department of Treasury requires an EIN for their business registration. You may also be asked for your EIN when opening a bank account, securing a loan, or applying for local business permits and licenses.
You can get an EIN directly from the IRS. The application is free, and most businesses can apply online. However, if you don’t have a social security number, you’ll need to submit a paper application form. Can’t bear to fill out yet another application? Hire Northwest to get your EIN for you. Just add on EIN service during checkout when you sign up for our incorporation service.
5. File the Beneficial Ownership Information Report
Most corporations operating in the US and its territories are required to file a Beneficial Ownership Information (BOI) Report with the Financial Crimes Enforcement Network (FinCEN). On this report, you’ll need to provide some information about your corporation, its beneficial owners, and (for new corporations) the company applicant.
- Beneficial Owner: Anyone with at least 25% ownership stake in your company. Plus, anyone with significant control over company operations, such as your CEO, CFO, or General Counsel.
- Company Applicant: The individual who filed your Puerto Rico Certificate of Incorporation with the Department of State. (Note: Corporations formed prior to 2024 don’t need to include company applicant information.)
You can file the BOI Report online via FinCEN’s E-filing system or hire us to handle it for you.
The deadline for your first BOI Report varies based on when you incorporated:
- Corporations formed before 2024 must file by January 1, 2025.
- Corporations formed in 2024 will need to file within 90 days of incorporation.
- Corporations formed in 2025 or later will be required to file within 30 days of incorporation.
New corporations must provide information about each beneficial owner and their company applicant. (Corporations formed before 2024 don’t need to give company applicant information.) You’ll also need to provide some basic company information.
Beneficial owner and company applicant information:
- Full name
- Date of birth
- Residential or business street address
- Personal identification document (such as a driver’s license or passport), including the ID number
Company information:
- Legal business name
- Any trade names/DBAs
- Business street address
- State of incorporation
- Employer Identification Number (EIN)
Yes, you’ll need to file an updated BOI Report any time the information provided in the report changes, such as if your corporation changes owners or gets a new CEO. You have 30 days after the change occurs to file your updated report through FinCEN’s E-filing system.
No. Unlike the information on your Puerto Rico Certificate of Incorporation, the BOI Report isn’t available to the public. The information on your report will only be accessible by government agencies and law enforcement. Financial institutions will only be able to access the information when confirming customer identity.
Yes, there are 23 classes of exemption from the BOI Report. The most common exemptions include:
- Large operating companies
- Most financial companies, such as banks and credit unions
- Investment companies registered with the Securities and Exchange Commission (SEC)
- Insurance companies registered with a state or federal agency
- Public utilities companies registered with a state or federal agency
- Tax-exempt entities
6. Write Corporate Bylaws
Bylaws are the internal rules you set for your business. They put into writing how decisions will be made and who gets to make those decisions. All the major organizational processes and procedures for your corporation will go in your bylaws.
For more on Puerto Rico Corporate Bylaws (including a free Puerto Rico Corporate Bylaws template), see our resources for Puerto Rico Corporate Bylaws and Puerto Rico Nonprofit Bylaws.
14 L.P.R.A. § 3508 (2019) notes that bylaws may be adopted by the incorporators, initial directors of a corporation, or by the board if no payment for shares has yet been received. The statutes, however, don’t specifically require the adoption of bylaws.
However, corporate bylaws are important internal documents, and most corporations draft bylaws and keep them with other corporate records, such as meeting minutes and resolutions.
Corporate bylaws cover basic policies and procedures for issues such as company finances and management. Bylaws should cover a range of topics, answering key questions like those below:
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Meetings: When and where will meetings for shareholders and directors be held? How many attendees are required to transact business? What are the procedures for voting or proxy voting? How do you call a special meeting? What actions canCorporate Guides be taken without a meeting?
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Stock: How are stock certificates issued and transferred? How is voting affected by issues such as corporate stock owners or fractional shares?
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Directors and officers: How many directors must there be? Which officer positions are required? What powers do they have? How do you fill a vacancy or remove a director or officer?
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Finances: What are the procedures for retaining profits, issuing dividends, and paying bills? Who can withdraw money from the corporate bank account or sign checks?
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Records: Where is the corporate book to be kept? What information will be maintained? How are requests for review or access honored? Can records or copies be kept or distributed digitally?
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Amendments and emergencies: Who can amend bylaws and how? Can emergency bylaws be adopted in the case of disaster?
Puerto Rico bylaws can make other provisions as well, assuming additions are in accordance with local laws. For example, 14 L.P.R.A. § 3562 (2019) states that bylaws can specify the qualifications required for corporate officers.
Creating bylaws can be overwhelming—where do you start? Northwest can help. We give you free corporate bylaws when you hire us to form your Puerto Rico corporation. We know what kinds of topics and questions corporations need to address, and we’ve spent years refining and improving our forms. We offer many other free corporate forms as well, including templates for resolutions and meeting minutes.
7. Hold an Organizational Meeting
An organizational meeting is the first official meeting of the corporation after the business is legally formed with the commonwealth. At this meeting, bylaws are adopted, officers are appointed, and any other initial business is conducted. The first meeting minutes should also be recorded and added to your corporate record book.
You’re required to give a minimum of two days notice before holding the meeting. Attendees can, however, waive their required notice in writing. The meeting doesn’t have to be held in Puerto Rico.
8. Open a Corporate Bank Account
Businesses that mix personal and business finances together risk losing their liability protections, so your corporation will need its own bank account. In addition, a corporate bank account is essential for easily accepting payments, paying bills and holding funds.
To open a corporate bank account in Puerto Rico, you’ll need to bring the following with you to the bank:
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A copy of the Puerto Rico corporation’s Certificate of Incorporation
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The corporation’s bylaws
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The corporation’s EIN
If your bylaws don’t specifically assign the power to open a bank account, you may also want to bring a corporate resolution to open a bank account. The resolution would state that the person going to the bank is authorized by the business to open the account in the name of the corporation. At Northwest, we provide free corporate bank resolutions, along with many other free corporate forms, to help you get started fast.
9. File Reports & Taxes
In Puerto Rico, corporations file an annual report each year. Tax-wise, as a U.S. territory, the commonwealth handles things differently than most states, and corporate tax rates depend on a variety of factors.
The Puerto Rico Annual Report is a filing you must submit each year. The territory requires more information for an annual report than most states. In addition to updating information on directors, officers, registered agent and shares, you must also provide a statement detailing the financial condition of your corporation for the previous year.
If your total revenue is less than $3 million, this financial statement can be prepared by someone with general accounting knowledge. However, businesses with revenue over $3 million must have their report audited by a certified public accountant licensed in Puerto Rico.
$150.
The filing is due no later than April 15. For-profit corporations that miss that deadline without filing for an extension can suffer considerable fines at the Department of State’s discretion, ranging from $750 up to $2000. Repeated failure to file annual reports can lead to administrative dissolution for your corporation.
These filings can be easy to forget—which is why we send our clients automatic reminders for your Puerto Rico Annual Report filings. Or better yet, let us file for you. With our business renewal service, we can complete and submit your annual report for you for $100, plus the $150 Department of State fee.
Because Puerto Rico is a US territory, corporate taxes are a little different, and the taxes you pay depend on residency, business activities, income sources, and more. Some corporations pay as a little as 4%, and others pay much more. For an overview of Puerto Rico business taxes, check out our Puerto Rico Tax Advantage page.
The total Puerto Rico sales tax is 11.5%, 10.5% for the commonwealth and 1% for municipalities.
Yes, if you will be a taxpaying employer in Puerto Rico, you’re required to register with the Puerto Rico Department of Treasury (Departamento de Hacienda). You can register via the Treasury’s online portal SURI. Note: You’ll need your EIN before you can register.
Ready to Start a Corporation in Puerto Rico?
