Explore your options to get an entity health check in Colombia for your own business, or an existing company you may be planning to buy. A complex system of regulations, laws and licenses could be a factor not to buy an existing company without ensuring its status first. Additionally, you may be considering company formation in Colombia.
It is essential to understand any potential corporate non-compliance or concerns for your business operations when doing business in Colombia. In order to take the biggest advantage of these successful markets whilst keeping on the correct side of administrative consistency, an entity health check in Colombia is a key assurance check.
Biz Latin Hub can help you organize this, as we are experts in local regulations. An entity health check in Colombia performed by professionals allows you to relax and concentrate on what you do best – growing your business. Not only that, but we can do the same anywhere in the region, thanks to our network of local offices throughout Latin America and the Caribbean.
What is an entity health check?
Entity health checks, also called corporate due diligence reports, are reviews carried out by financial and legal auditors. Employing an external provider that is specialized in entity health check provides commercial reassurance.
Prospective business owners may authorize the provider to examine the legal, financial and accounting records of a company.
The reason for checking the legal and fiscal states of an organization is to identify whether there are any non-compliance problems that the investors should take into account before buying an existing company. In a minefield of legal and accountancy regulations, it is simple for organizations to oversee or simply ignore compliance regulations.
Why should I get an entity health check?
Entity health checks done by experts save you time because local external auditors are able to obtain information quickly. When buying an existing company, health checks in Colombia will make it possible to verify that the selling party has the legal title to sell ownership of all assets and that regulatory and litigation matters are fully covered.
You can verify that there are no hidden financial problems and gain a more complete vision of the business’ legal status in the eyes of government authorities.
Entity health check types
There are two main types of entity health checks. They typically focus on either the fiscal or legal condition of the company.
The legal health check focuses on reviews of commercial contracts, employment contracts, industry-specific regulations, and intellectual property protection. The industry your business operates within is also an important element for auditors to consider when conducting a legal entity health check in Colombia.
Particular industries carry additional and strict regulations that businesses must comply with; it’s important to know that your business is adhering to any additional industry-specific regulations.
A fiscal entity health check will ensure that your accounts, social security payments, and taxes are consistent with regulations and give you information that will be valuable for your future choices and strategies.
Engage with trusted local auditors
To get the assurance you need from your entity health check in Colombia, contact an external services provider with a trusted background and depth of knowledge of Colombian regulations.
Local expertise can guarantee greater familiarity with Colombian corporate and other regulations. Experienced entity check auditors can provide a comprehensive review for foreign multinational companies operating in Colombia.
As a foreign multinational company, you may also seek a bilingual services provider who can manage language barriers between yourselves and local authorities.
FAQs on an entity health check in Colombia
The main advantages of conducting an entity health check include:
To enable executives to know how the business is being managed
To reduce risks of penalties and negative reputation
To reduce transaction risks
Carrying out a successful entity health check involves the following 3 key steps:
1. Information collection
When carrying out an entity health check, a large amount of information will have to be gathered. This will include collecting data from your company’s operations, legal, accounting, and administrative departments.
Note that a best practice many companies are adopting is the creation of a compliance or audit department, in charge of centralizing important company information, which eases this first step.
2. Information validation
Once gathered, the information goes through a validation process. In this step, an entity health check agent will review all the data and documents obtained, cross-reference it against primary sources where necessary, and otherwise seek to prove the veracity of all records being audited.
3. Record Keeping
Records of all the documents and evaluations made during your entity health check will not only be valuable for presenting to tax authorities in case of an inspection, but also during future entity health checks. In some cases, keeping such records is a legal obligation, due to laws desiged to prevent money laundering.
Generally, an entity health check includes:
Evaluation of finances, social security payments, and other fiscal obligations
Examination and review of contracts signed with third parties
Review of corporate and accounting books
Review of monthly tax returns and tax statements
Review of upcoming renewals of certificates and policies
Preparation of financial statements
Review of balance sheets submitted at the closure of the fiscal period
It should be done by a fully independent auditor to ensure total neutrality.
Biz Latin Hub can do your entity health check in Colombia
Biz Latin Hub specializes in a full range of business solutions for foreign companies in Colombia and the wider Latin American region. Our team of accounting and legal experts in Colombia are have comprehensive experience in conducting regular entity health checks for companies unfamiliar with local compliance legislation.
Partner now with Biz Latin Hub’s legal and accounting specialists in Colombia to ensure your company can be fully compliant with the Colombian regulations.
Contact us today for a consultation.
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Services offered by Biz Latin Hub that can help you with an entity health check in Colombia
