How to Register a Sole Proprietorship (Empresario Individual) in Chile

[CassyL]

Chile is situated along the western seaboard of South America, and it's famous for its long coastline and unusual shape. It is considered one of the best countries in the region to do business. An estimated one-seventh of the economically active population is employed in manufacturing, which accounts for about one-sixth of the gross domestic product. In this article, we will explain the easiest way to establish your sole proprietorship in this country.

Disclaimer: This article is not a substitute for legal advice. Please always check official websites or seek legal advice before you take action.

Sole proprietor in Chile

In Chile, any natural person who carries out a legal commercial activity is considered a micro or small company (Mipyme). It is called Empresario Individual (Individual or Unipersonal Company), because it is constituted by a single person. It is the most basic and simple type of business that exists in Chile, according to the Internal Revenue Service (Servicio de Impuestos Internos - SII).

As the only founder of a company, you are its sole owner, and you support the business with all your personal assets. You are the person legally responsible for all obligations and duties.

As an Individual Company,  you need to meet these characteristics:

• You have no partners
• Taxes as First Category based on income
• Your liability is unlimited

How to register Empresario Individual in Chile

There are two ways to do the registration:

1. Go to SII website, enter RUT e Inicio de actividades in the menu. First, you will need to obtain a RUT number (taxpayer ID number). Then choose the Start of Activities option, and fill out form 4415.
2. You can also carry out the procedure physically at the local Service office. You will fill out the same form, but you will have an SII agent's assistance in case of any doubts or queries.

The following laws regulate a sole proprietorship in Chile:

• Decree Law No. 830 on Tax Code
• Income Tax Law
• Law on Sales and Services Tax

VAT and taxes in Chile

You are obliged to pay the following monthly taxes:

• Declare VAT, PPM, and withholdings. This includes the issuance of sales documents (Invoices, Tickets, and others) and the obligation to keep the Purchase and Sales Book;
• Declare on Form 50 - for more information, check this instruction;
• VAT calendar (Form 29) - for more information, check this instruction.

Your obligation is also to pay an annual tax: Income declaration.

[Ender]

Hello @CassyL  - Thank you for this valuable information, quick question, how do I/we know if through this global HR platform, the taxation will be taken care of or not?

I have recently received an offer through Deel by a company using a fixed-payment term but I am not sure if taxation will always need to be done by me (the contractor) or not.

Thank you.

[CassyL]

Hi @Ender, 

Thanks for asking this question, and congrats on your recent offer! As a Contractor with a fixed-payment contract, you are responsible for handling your own taxes, whether on your own or by seeking legal/tax counsel. While Deel assists in generating and collecting necessary tax forms, it is the Contractors responsibility to manage and file taxes according to your local tax laws. Additional details on taxes and using the Deel features here. 

Hope that helps to point you in the right direction. 
-Cassy

[Ender]

I understand, thank you @CassyL - but what about if the Employer uses EOR services via Deel, will then Deel take care of taxes?

[CassyL]

Hi @Ender, sorry if I misunderstood your agreement with the Employer! If you're hired as an Employee via EOR services through Deel, there are some slight differences, but Deel still does not do personal tax filings or personal tax returns. 

As an Employee, Deel can calculate tax contributions for you and the Employer based on local laws and regulations. Additionally, Deel can register and de-register your employment with the government on behalf of your employer, where required. If your country mandates end-of-year tax documentation, we will ship those forms to you. You can learn more details about this, and other Frequently Asked Employee questions here. Additionally, there's a really robust guide that the Deel Content team put together on Taxes for Remote Workers. It's quite detailed, so I recommend taking a look through to see if any of these examples resonate with you! 

Hope that points you in the right direction,
-Cassy