Sole Proprietorship in Uruguay: A Comprehensive Guide

Uruguay is a small country located in the southeastern region of South America, bordered by Brazil to the north and Argentina to the west.

Uruguay has a population of approximately 3.5 million people and is known for its high standards of living, social policies, and political stability. One of Uruguay’s well-known characteristics is its reputation for being one of Latin America’s most democratic and peaceful countries. Uruguay’s strong stability and legal security have established it as a safe and secure environment for setting up a sole proprietorship in Uruguay.

The following article will guide you on how to register a sole proprietorship in Uruguay, its laws, and taxes.

Who can be a Sole Proprietor in Uruguay?

A sole proprietorship is a form of business ownership where one individual owns and operates the business. The owner can single-handedly manage the business’s operation, finances, and decision-making.

The simplest structure to set up a sole proprietorship in Uruguay is a Unipersonal (Empresas Unipersonales). Any individual who is a legal resident or citizen of Uruguay, or a foreigner with a valid Uruguayan work visa, can set up a sole proprietorship in Uruguay. No specific requirements or restrictions are based on nationality, gender, or age. However, it is important to comply with the legal and tax regulations of the country. 

Benefits of Sole Proprietorship in Uruguay

Setting up a sole proprietorship in Uruguay offers numerous advantages. They are as follows:

• Flexibility: A sole proprietorship can be easily modified or dissolved as per the needs of the owner.
• Sole proprietors in Uruguay have access to social security benefits such as healthcare, pension, and disability insurance.
• Setting up a sole proprietorship in Uruguay is hassle-free because the administrative work is minimal compared to other forms of business entities like corporations or LLCs.
• No minimum capital is required to register a sole proprietorship in Uruguay.
• Foreign nationals can acquire property in Uruguay without any limitations.
• Both foreign and domestic businesspersons are entitled to equal treatment from government agencies.
• Foreign entrepreneurs can enter and exit the country without any restrictions from authorities.
• There is no limit on the endowment of foreign capital into the company.
• Foreign currencies such as Dollar, Euro, and Pound are widely accepted.
• The cost of setting up a sole proprietorship in Uruguay is minimal compared to other commercial companies. It costs about $500, including notary fees, stamps, and other certifications.
• A sole proprietorship entity can be ready and operated in 48 hours.
• There is no specific limitation to the hiring of employees. The owner can have no employees or can hire many of them.
• The investment promotion law of Uruguay offers tax incentive schemes for those who want to set up their business in the country.
• The payment of taxes covers the healthcare of the proprietor.
• Uruguay’s agreements with countries like Argentina, Brazil, and Paraguay (commonly known as Southern Common Market or Mercosur) and its free trade agreement with Mexico offer businesses to expand their operational area in this region.

Document Required for Registering Your Business in Uruguay

The new businesses must consider the sole proprietorship Uruguay law. This law requires the necessary documents to register your business. They are:

• Two copies of identification proof
• Tax ID number
• Business name registration
• Social security registration
• Business License
• Notary certificate

The notary certificate must include the following:

• Signature of the proprietor
• Proprietor’s details
• Identification proof
• Nationality
• Marital status
• Registered home address
• Legal capacity of the owner
• Tax domicile certificate of the business’s address

Other Criteria for Registering a Sole Proprietorship in Uruguay

There are some additional criteria to start a sole proprietorship in Uruguay:

• You have to pick a name for your business and get it trademarked.
• You need to register with the tax administration office, DGI (Direction General Impositiva). DGI has its requirements to register the business entity:

1. 1.  The owner must have to be above 18 years of age.
   2. The proprietor must possess valid legal identity proof. For foreigners, it can be a passport.
   3. Some documents to prove the fiscal objective of the company, the DGI can accept receipts of electricity, water, or telephone departments only if they are in the name of the owner of the venture. If these documents are unavailable, then a notarized certificate is needed by mentioning the company’s address.

• If you want to hire an employee, register them with the BPS or Banco de Prevision Social (social security bank). The BPS checks the company’s establishment date and its registration with the DGI. Every month the owner has to file a return that shows the wages paid to the employees and the taxes paid by the employer on behalf of the employees.

How to Register a Sole Proprietorship in Uruguay?

Setting up a sole proprietorship in Uruguay is a hassle-free process. There are a few simple steps to register as a sole proprietor. They are mentioned below:

• Registration in the DGI (Direction General Impositiva): You must first set up as a sole proprietor in Uruguay to register the company in the tax registry. Then you must fill out form 351 and submit it to the DGI.
• Registration with the BPS (Banco de Prevision Social): After registering with the DGI, the owner has to report this new company to the BPS by submitting form 205. It needs to be done within a period of ten-day, failing which a penalty must be paid.
• Registration with the MTSS (Ministry of Labor and Social Security): For this final step, the owner has to buy a work folder in the company’s name and submit it to the ministry to authorize it. Along with this, the receipts of the DGI and BPS have to be submitted. The sole proprietorship law of Uruguay has made it obligatory for sole proprietors to register with social security.

Conclusion

Setting up a sole proprietorship in Uruguay is relatively easy for domestic and foreign business ventures. Uruguay’s investor-friendly policies and its strategic location for maritime trade will open new avenues for investors to expand their business in this country.

However, with the help of Multiplier, you can expedite setting up a sole proprietorship in Uruguay. Our professional experts will help you by creating contracts, hiring employees, managing their wage processing, and benefits with the compliance of domestic laws. Multiplier provides reliable EOR solutions to easily tackle all kinds of cross-border challenges.

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