EOR vs SAS Colombia: forming a company or employing through us

If you want one to five people in Colombia and no Colombian revenue yet, an employer of record usually gets them on payroll with less set-up; if you will sell, sign contracts or build a large team in the country, setting up an SAS (Sociedad por Acciones Simplificada, the simplified joint-stock form) tends to serve you better over time. Both routes produce the same Colombian employment contract for the worker. The difference lies in whose name is on it and who carries the administration.

With an EOR, we are the employer: the people you hire sign with us, and we register them, pay them and handle the statutory calendar. With your own SAS, the company you form signs the contracts and takes on every one of those tasks directly, usually with an accountant and a payroll provider hired for the purpose.

The rest of this guide takes the SAS route step by step, then compares the running duties, the visa angle and the cost, which together usually settle the question for a given stage of growth.

A SAS is formed by a private document, registered in the commercial register (Registro Mercantil) of the Cámara de Comercio for the company’s home city, and it acquires legal personality on registration. The framework is Ley 1258 de 2008, and it is the vehicle most foreign groups use, because it is flexible and light on formalities.

The main features matter for a foreign parent company:

• one or more shareholders, individuals or companies, with liability limited to what each contributes
• a private document rather than a public deed, unless the assets brought in require one, authenticated before registration directly or through a proxy
• no minimum capital set by the Act, with up to 2 years to pay subscribed capital in
• at least one legal representative, named in the founding document
• shareholders are not liable for the company’s labour or tax debts, except in cases of fraud

Choosing the vehicle also means choosing people. The legal representative is the person who signs for the company in Colombia, including employment contracts and visa paperwork, and the founding document sets out their powers. Many foreign groups appoint a senior manager from head office and a substitute who can act in Colombia; whoever takes the role should expect to sign regularly, not once.

Registration is only the first step. The company then needs a tax registration (RUT, which gives it a NIT) with DIAN, a bank account, and, where capital comes from abroad, the foreign investment registration with the central bank, Banco de la República. Only after that can it affiliate as an employer to an ARL and a family compensation fund, set up electronic invoicing and electronic payroll, and run its first PILA. Each of those steps has its own forms and its own counterparty, and our onboarding guide on the path from offer to first payroll shows how much shorter the employer side is once a company already exists.

Forming the SAS is a one-off; employing through it is a monthly and yearly commitment that does not shrink with headcount. Every employer in Colombia, from one worker upwards, carries the same core cycle, and with an EOR that cycle sits with us instead.

• affiliating each worker to an ARL the day before they start, and to health, pension and a caja
• settling the PILA every month on the business day its NIT dictates
• deducting retención en la fuente from pay and declaring it to DIAN each month
• transmitting a nómina electrónica record to DIAN for every payment made
• meeting the June, December, January and February dates for the prima, the interest and the cesantías fund
• keeping a written right-to-disconnect policy, which every employer must have

Some duties arrive as the team grows. Internal work rules (reglamento interno de trabajo) become compulsory above 5 permanent workers in commerce, 10 in industry and 20 in agriculture, and must now also be published online. From 15 workers, a private employer outside construction must take on SENA apprentices, one per 20 workers, or else hand SENA a monthly sum of 1.5 SMMLV per missing apprentice.

Working-time rules also become the company’s to apply. From 15 July 2026 the ordinary week is capped at 42 hours, overtime at two hours daily and twelve weekly, and night work starts at 19:00. Rest-day and holiday shifts have cost 90% extra since July 2026. A SAS has to build those rules into contracts, timesheets and payroll; through us, they sit inside our contracts and pay runs.

Mistakes are policed by more than one body. The UGPP audits contributions, and Ministry of Labour inspectors can fine from 1 to 5,000 SMMLV per infraction. Neither the SAS structure nor the size of the team changes that exposure.

If any of your first hires need a Colombian work visa, the choice of employer has a direct effect on the application. The worker visa (visa M trabajador) is for a foreigner hired by a legal entity under an employment contract, and the employer’s file must show, across its latest four months of bank statements, an average income of 100 SMMLV per month: COP 175,090,500 at 2026 values.

A newly formed SAS with no trading history may find that figure hard to show in its first months, because the test looks back over four months of income rather than at capital. The visa also allows work only for the employer and job stated on it, so any later change of employer has visa consequences to check first. The application includes a motivation letter on why a Colombian is not being hired, and a decision is due 30 calendar days after the file is complete.

Foreign founders sometimes ask about the shareholder visa instead. The visa M socio o propietario is for foreign investors and needs an investment of at least 100 SMMLV, so it covers the owner rather than the staff; the people you hire still need their own route to work for a Colombian employer.

We do not promise visas, and no employer can; the decision is Cancillería’s. What matters at this stage is that the sponsoring employer exists, can meet the documentary requirements and will file the SIRE report within 15 calendar days and the RUTEC registration within 120 days once the person starts.

The cost of employing the person is almost identical on both routes, because the same contributions and statutory benefits apply. What differs is the overhead around it: our fee on one side, and company formation, accounting, payroll software or bureau fees and management time on the other.

Take a mid-level professional in Bogotá earning COP 8,000,000 a month on an indefinite contract, in ARL class I. Assume the employer, whichever route you take, is a company that files income tax, so the art. 114-1 exemption from employer health, SENA and ICBF applies below 10 SMMLV. The 2026 employer cost comes to approximately COP 128,821,120 a year: COP 96,000,000 of salary plus pension, ARL, caja, prima, cesantías and interest, about 34.19% on top of base pay. Without the exemption it would be COP 12,960,000 more.

Through us, the extra line is our service fee, which begins at USD 560 for each employee monthly. On the SAS side you add the set-up and running costs of a company, which depend on your advisers and your structure, and a fixed overhead that is the same for one employee as for five. For a small team the EOR fee is usually the more predictable number; as headcount grows, the per-person fee adds up and a company’s fixed costs are spread more thinly. Our pricing page explains how our quote is built.

An employer of record fits when you are hiring a first handful of people, testing the market, hiring specialists who serve customers outside Colombia, or need someone working well before a new SAS would have its bank account, RUT and affiliations in place. A SAS fits when you will invoice Colombian customers, hold assets or sign local contracts, or plan a team large enough that a company’s fixed costs are worth carrying.

A few signals point clearly one way. If you plan to invoice Colombian customers in your own name, a Colombian company is the natural vehicle for that trade, and the employees can sit in it too. If the plan is one engineer, one salesperson covering the region and perhaps an analyst, the fixed cost of a company, its accounts and its filings can outweigh the fee for some time. If you are unsure, an EOR keeps the decision open while the team proves itself.

The two are not exclusive. Plenty of foreign businesses begin with Employer of Record Colombia and form a SAS once the plan is proven. When that happens, the employment moves from one employer to another, and the timing, the final settlement of prestaciones and any new visa need planning, so tell us early. We can line up the dates so that nobody misses a prima or a cesantías deposit in the handover.

Whichever route you pick, the employee’s position is the same in the ways that matter to them: an indefinite contract by default, 15 working days of paid leave, the prima twice a year, cesantías in a fund of their choice and the protection of the dismissal indemnity table. That is worth saying to candidates who ask whether being employed through an EOR is a lesser arrangement.

If you are still weighing the basics, start with what an EOR in Colombia covers, and before signing with any provider, use our six tests for shortlisting a Colombian EOR.

Q01Do we need a Colombian company to hire through an EOR?+

A.No. We are the employer on the Colombian contract and run the payroll, so you do not need a SAS, a NIT or employer affiliations of your own.

Q02Is there a minimum capital for a SAS?+

A.Ley 1258 de 2008 sets no minimum capital, and subscribed capital can be paid in over up to 2 years. Registration and authentication still have costs, and the company then needs a RUT, a bank account and employer affiliations.

Q03Does the employment cost change between an EOR and a SAS we form ourselves?+

A.Barely. The same contributions and statutory benefits apply. For a salary below 10 SMMLV, the art. 114-1 exemption is open to any income-tax-filing company acting as employer. The difference is our fee against the cost of running a company.

Q04Can a new SAS sponsor a worker visa straight away?+

A.Sponsoring a worker visa means proving, from bank statements, four months of income averaging 100 SMMLV, which is COP 175,090,500 monthly in 2026. A company with no trading history may not be able to show that at first. Cancillería decides each case.

Q05If we set up a SAS in a year or two, can the team transfer to it?+

A.Yes, with planning. The employment moves to a new employer, so the timing, the settlement of prestaciones and any visa change need to be agreed in advance.