How to Set Up an Entity in Guatemala

Setting up a legal entity in Guatemala can be a strategic move for companies expanding into Central America. The country provides access to a growing regional market, competitive labor costs, and strong trade links through agreements such as CAFTA-DR (the Dominican Republic–Central America Free Trade Agreement, which facilitates tariff-free trade and investment between the US, Central America, and the Dominican Republic). Together, these factors make Guatemala an attractive base for manufacturing, services, and nearshoring operations.

While the process is relatively well-defined, it can feel bureaucratic for foreign businesses due to formal notarization requirements, multiple registrations, and Spanish-language documentation. The main challenges include coordinating with local authorities, completing tax and social security registrations, and navigating ongoing compliance obligations. In return, establishing an entity provides long-term flexibility, full operational control, and the ability to hire employees directly under Guatemalan law.

Disclaimer: This content is for informational purposes only and does not constitute legal, tax, or financial advice. Always consult official sources before acting.

What does “opening an entity” mean in Guatemala?

Opening an entity in Guatemala means formally incorporating a legal presence with the country’s commercial registry, obtaining tax and social security registrations, and complying with local corporate and labor laws. This process grants the company legal personality, allowing it to operate, contract, invoice, and hire employees in Guatemala. Foreign companies typically choose between incorporating a local company and registering a branch of a foreign entity.

Entity overview in Guatemala

Here is a summary of the key features of company formation in Guatemala:

Step-by-step guide: How to open an entity in Guatemala

Step 1: Choose the right structure

The most common structure for foreign companies is a Sociedad Anónima (S.A.), which offers limited liability, flexible share ownership, and ease of transferability. An S.R.L. is often used by smaller businesses with fewer shareholders, while a branch may suit companies that want to operate directly under a foreign parent but accept broader liability exposure.

Step 2: Verify business name availability

Business name availability is checked through Registro Mercantil’s records in your jurisdiction. The proposed name must be unique and comply with naming rules, including the mandatory inclusion of the entity type (such as “S.A.”). Name reservation requests are submitted through the registry’s online system.

Step 3: Prepare incorporation documents

Incorporation requires notarized documents prepared in Spanish. Key documents include:

• Articles of incorporation (public deed)
• Identification and details of shareholders and directors
• Appointment of a legal representative with powers of attorney
• Registered office address in Guatemala

Standard templates and guidance are available through the Mercantile Registry, and notarization must be completed by a Guatemalan notary public.

Step 4: Register with the Mercantile Registry

A licensed Guatemalan notary submits the notarized incorporation deed to the Mercantile Registry of Guatemala, using the registry’s online system and supporting physical documentation where required. Once the registration is approved, the company receives its commercial registration certificate and is formally recognized as a legal entity authorized to operate in Guatemala.

Step 5: Register for tax and social security

After incorporation, the company must register with the Superintendence of Tax Administration (SAT) to obtain a tax identification number (NIT) and VAT registration if applicable. Employers must also register with the Guatemalan Social Security Institute (IGSS) for employee social security coverage.

Step 6: Open a corporate bank account

Opening a corporate bank account requires in-person or enhanced due diligence with a local bank. Banks typically request incorporation documents, NIT registration, identification of shareholders and legal representatives, and proof of address. Timelines vary, but KYC reviews often take several weeks.

Step 7: Set up payroll and employment compliance

Before hiring, employers must ensure payroll systems comply with Guatemalan labor law, including compliant employment contracts, minimum wage rules, and statutory benefits. Employers are responsible for withholding income tax and making social security contributions through IGSS.

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Post-registration obligations

After incorporation, companies in Guatemala must stay compliant with local governance, tax, and employment laws. Typical requirements include:

• Tax and financial reporting: File corporate income tax returns and VAT filings according to the schedule set by the SAT, generally monthly for VAT and annually for corporate income tax, under Guatemalan accounting standards aligned with IFRS
• Corporate registers: Maintain up-to-date records of directors, shareholders, and beneficial owners and report changes to the Mercantile Registry within the legally required timeframe
• Compliance tracking: Monitor all tax, licensing, and corporate filing deadlines through a compliance calendar or service provider to avoid penalties
• Licenses and renewals: Renew municipal business licenses and operating permits with the relevant municipality on an annual basis
• Recordkeeping: Retain accounting, payroll, HR, and transaction records for at least five years, ensuring availability for audits or inspections
• Employment law compliance: Adhere to labor, benefits, social security, and data-protection regulations, including compliant employment contracts, payroll reporting, benefits contributions, and insurance coverage as required by Guatemalan labor authorities

Taxes and financial considerations

Key obligations include:

• Corporate income tax: 25%, filed annually with advance payments depending on the chosen tax regime
• VAT/GST: 12%, with monthly filings once registered
• Payroll/social contributions: Employer contributions to IGSS of approximately 12.67% of salary, plus employee contributions withheld at source
• Accounting standards: IFRS-based local accounting standards apply

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Expand internationally with Deel

Whether you’re hiring through an EOR or establishing your own local entity, Deel’s all-in-one platform gives you everything you need to expand into the United Kingdom—quickly, compliantly, and with confidence. From market entry to ongoing operations, Deel helps you hire, onboard, and manage teams seamlessly from day one.

With Deel, you can:

• Test new regions using Deel’s local entities through our Employer of Record service—hire employees compliantly, delegate payroll and taxes, and access localized employment contracts.
• Open entities with Deel Entity Setup, where our team manages everything—from incorporation and tax registration to coordination with local experts.
• Centralize your compliance and records with Deel Entity Management, including automated filings, calendar reminders, and visibility across all entities.
• Integrate with Deel Payroll and Deel HR for compliant payments, benefits, and workforce oversight—all in one platform.

For companies transitioning from the EOR model to owned entities, Deel ensures a smooth handover and consistent compliance every step of the way. Enter new markets, onboard talent, and manage your global workforce—all through one unified platform.

FAQs

How long does it take to open an entity in Guatemala?
Typically 4–6 weeks. Find out how long setup takes with our Entity Setup Calculator.

What is the minimum capital required?
There is no statutory minimum capital requirement in Guatemala.

Can foreign companies own 100 % of an entity in Guatemala?
Yes. Foreign companies can own 100% of a Guatemalan entity with no local shareholder requirement.

Do I need a local director or representative?
A legal representative is required, but there is no residency requirement.

How much does it cost to register an entity?
Average setup costs, including notary fees and government charges, range from GTQ 8,000 to 15,000 (≈ USD 1,040–1,950). Find out the setup cost with our Entity Setup Calculator.

Can I hire employees before the entity is fully registered?
Typically, no. However, Deel’s Employer of Record (EOR) lets you hire and pay talent immediately while your entity setup is in progress.

Can Deel help me open an entity in Guatemala?
Yes. Deel Entity Setup manages the end-to-end process — from registration to payroll compliance—in over 100 countries. Deel’s local experts handle documentation, filings, and legal requirements on your behalf.

Does Deel offer ongoing compliance and payroll support?
Yes. Deel offers both managed services and self-service tools to help you stay compliant.

If you’re using Deel Entity Management, Maintenance, EOR, or Payroll, our team handles payroll, benefits, filings, and compliance obligations on your behalf.

For teams managing their own entities, Deel Compliance Hub makes staying compliant simple by providing real-time regulatory updates, risk alerts, and workforce insights across 150+ countries. Proactively manage compliance with our Compliance Monitor, Workforce Insights, and an AI-powered Worker Classifier, staying ahead of changing employment laws.

Can I switch from Deel EOR to my own entity later?
Yes. Deel supports seamless transitions when you’re ready.