Practical Tips on Banking and Accounting for Chilean Companies
We recently wrote on the practical aspects of incorporating a company in Chile. See here.
Getting a company incorporated in Chile is only half the journey. Once the company is legally set up there are several things that needs to be done so that the local entity is functional and operating.
Ax Legal Practical Tips and Advice
- Banks will take between 2 and 4 weeks to have the account open. They will open a USD and Chilean peso account for foreign companies.
- Foreign companies will often need to provide a letter of recommendation from their home bank and their financial information from the previous year.
- Foreign companies will need to be aware who is the legal representative of the new entity when applying. Since the shareholders will not have a credit history in Chile, the bank will rely on the credit history and relationship of the legal representative.
- The only one with access when the bank account is opened will be the legal representative making it even more imperative that you have chosen someone of trust.
- Access can be provided to the head office, but it will require sending power of attorneys and documentation to the bank and it can only be started once the account has been approved. This can take 1 or 2 months for the whole process.
- Companies who would like to provide credit cards to their employees will need to provide a bank guarantee for the same amount of the credit cards. That is, if you want a USD$2000 limit then the company will need to deposit USD$2000 into a long-term account with the bank to secure the credit card.
- We have relationships with several well-known international banks and can help companies get their accounts opened faster and with less stress. We will assist with everything that is needed to get the banking operational.
- Having Ax Legal as your legal representative will minimize risk since it is the legal rep who will need to help you with the banking while you set up other users. We have a team that works with our clients doing payments, exchanging funds, and anything else that is needed related to banking.
Hiring an Accountant
- Finding an accountant that speaks English, responds quickly, and understands international reporting requirements can be a challenge. It may seem obvious but make the effort to find someone with good references.
- The extra cost and time spent searching for a good accountant will save you money overall. A bad accountant will not respond to your questions or requests in a timely manner making it frustrating for companies managing them from afar.
- A good accountant will be a little more expensive than a cheap “bookkeeper” but well worth the investment for foreign companies who will need the guidance and service level.
- It is important to remember that companies are required to declare their taxes monthly and then again in April of each year.
- Companies that have employees will require someone to do their payroll each month. Social security and employment taxes will need to be calculated each month and paid by specific dates.
- In contrast with Western Countries, all invoices in Chile must be issued through the electronic invoicing system. All companies must be set up to provide electronic invoices which is connected with the tax office website. There is a basic system offered for free by the tax office or you can pay a small fee to have a more complete program.
- It is important to understand what can be expensed and what is required to prove expenses. Rejected expenses carry large penalties in Chile.
- Accounting is done in Chilean pesos. This can make it more complex for multinational companies who generally report in dollars. A good accountant will provide monthly reports to the head office in dollars so that the information can be uploaded to the companies accounting system.
Ax Legal and Business Consultancy is located in Chile with partners throughout the Latin American Region. Our team of legal and commercial advisors have a distinguished track record of helping foreign technology and services companies with their growth and operations in Latin America.
To better understand how we can support you in the Region, please contact Cody Mcfarlane at firstname.lastname@example.org