It’s very easy to get a simple partnership or sole proprietorship off the ground in Chile. You simply need to register with the federal tax authority (SII); obtain a R.U.T. (tax identification number); and start doing business, making sure you file your tax returns. If you will be delivering invoices (facturas) and paying added-value tax, you must register to do so and have your invoices stamped by the SII; please see the LegalFácil Guide to Tax Law in Chile regarding how to do so.
Though is inexpensiveness and easy to get a non-incorporated business off the ground, bear in mind your liability will not be limited in any way. If you or your partner(s) commit an offense or cause an injury while operating your business, you and your partner(s) will be entirely and equally liable for damages; the same is true, of course, for sole proprietors and freelancers – except you won’t have any partners!
Another disadvantage is that there are no rules or regulations regarding the governance of non-incorporated partnerships, which can cause complications as you try to grow or sell your business.
Finally, incorporating has distinct tax advantages once your business’s revenues and your personal income reach a certain level. Basically, if you are paying more than 20% income tax on your business-related income, you should consider incorporating.
It is up to you to calculate whether, or for how long, it makes sense to run your business as a non-incorporated entity. It’s a no-hassle way of getting a business off the ground, but if you if have any growth ambitions and/or are concerned about liability, it is preferable to incorporate.
