How to register an LLC or corporation in Puerto Rico

Registering an LLC (limited liability company) or a corporation means creating a legal person separate from you. From that point the entity can hold its own name, its own accounts and its own obligations, and it generally separates the business’s assets from the owners’ personal assets. The filing is made with the Department of State, which maintains the registry of corporations and entities. An LLC and a corporation are not the same thing: they are governed differently and taxed differently, and that decision is worth discussing with a CPA or an attorney before you file, because changing it later is more work than choosing well up front.

Any adult can organize an entity in Puerto Rico, and you do not need to be a resident or a U.S. citizen to be an owner. What the registry does require is that the entity have a resident agent in Puerto Rico with a physical address on the island, who receives legal notices on the entity’s behalf. Entities already organized outside Puerto Rico that want to operate here do not organize again: they register as a foreign entity, which is a separate filing within the same registry.

• A name for the entity that is available in the corporate registry and not confusingly similar to one already registered.
• If you are incorporating, the name must include “Corporación” or “Incorporada”, or the abbreviations Corp. or Inc.: the Department of State states this is a legal requirement and that both terms mean the same thing.Verified against the official source
• A purpose the entity may lawfully have. The Department of State notes that the Constitution (Article 6, Section 14) bars a corporation from engaging in the purchase and sale of real estate, and caps agricultural corporations’ landholding at 500 acres.Verified against the official source
• If the main purpose is providing a professional service, registering under the professional-corporation provisions: the Department of State states it should not be registered any other way.Verified against the official source
• A resident agent in Puerto Rico with a physical address on the island, authorized to receive legal notices for the entity.
• A physical address and a mailing address for the entity.
• Information about the organizers, and about the members, managers or directors depending on the entity type.
• An account in the Department of State online system to file and track the application.
• A payment method accepted by the system for the applicable filing fees.

• Certificate of organization (LLC) or certificate of incorporation (corporation), which is the document being filed. The Department of State explains that the certificate of organization carries all the components of a certificate of incorporation except the authorized capital stock.
• Current photo identification of the person filing.
• Consent or designation of the resident agent, when the system requires it.
• For foreign corporations, the Department of State asks that you file with the registry: a certificate of existence or its equivalent from the home jurisdiction, recent — no more than three months old; the name and address of the resident agent in Puerto Rico; the amount of the corporation’s assets and liabilities; its business purpose in Puerto Rico; and the names and business addresses of its current directors.

1. 1

   Step 1: Decide which entity type fits you

   LLCs and corporations are managed and taxed differently, and there are variants (a nonprofit corporation, for instance) with their own rules. This decision affects your taxes from day one, so it is worth discussing with a CPA or an attorney before filing rather than after.

2. 2

   Step 2: Check that the name is available

   Search the name in the corporate registry before committing to it. A name too similar to one already registered gets rejected, which sends you back to the start after you have printed signage or bought a domain. Also remember that being available in the registry is not the same as being free of registered trademarks. If you are not ready to file yet but do not want to lose the name, the Department of State has a corporate name reservation request: $75.00 for an LLC, $10.00 for a corporation.

3. 3

   Step 3: Designate a resident agent

   The resident agent receives legal notices on the entity’s behalf and must have a physical address in Puerto Rico; a P.O. box does not work. You can serve as your own if you live on the island, or you can hire a third party. If that address stops being good and you do not update it, the entity stops receiving important notices.

4. 4

   Step 4: File the certificate in the online system

   Create your account in the Department of State system, complete the certificate of organization or incorporation, and pay the applicable fees. Review every field before submitting: misspelled names, addresses and identification numbers carry over into every later filing, and fixing them requires an amendment.

5. 5

   Step 5: Save your registration proof

   When the registry accepts the filing, the entity is registered and you receive proof with its registration number. Keep it: you will need it to open a bank account, for the Registro de Comerciante, and for nearly any permit.

6. 6

   Step 6: Continue with what comes next

   Registering the entity does not authorize you to operate. What usually follows is a federal employer identification number (EIN) from the IRS, the Registro de Comerciante with Hacienda if you will sell goods or services, and the municipal and OGPe permits your location requires. The entity is also left with an annual obligation to the Department of State, and which one depends on what you registered: corporations file an annual report on or before April 15, while LLCs file no annual report and instead pay a $150.00 annual fee on that same date. Either way, missing it brings penalties and, if repeated, cancellation of the entity.

Online, through the Puerto Rico Department of State registry of corporations and entities. The official site hosts the filing system, the name search and the current forms.

• Buying a domain, printing signage and ordering cards before confirming the name is available in the registry.
• Using a P.O. box as the resident agent’s address, when the registry requires a physical address in Puerto Rico.
• Believing that registering the entity is enough to start selling, without the Registro de Comerciante or the applicable permits.
• Choosing between an LLC and a corporation based on hearsay, without reviewing the tax implications with a CPA.
• Owning an LLC and waiting for an annual-report notice that never comes: an LLC files no report, it pays a $150.00 annual fee before April 15, and missing it brings penalties.

These are the government pages this guide is based on.

• Departamento de Estado de Puerto Rico

  Departamento de Estado

  www.estado.pr.gov

• Corporate forms and fee schedule

  Departamento de Estado

  www.estado.pr.gov

• Registration of legal entities

  Departamento de Estado

  www.statedepartment.pr.gov