Starting a Business and Opening a Bank Account in The US and Chile

I finally finished the process of legally creating a Chilean business and getting my business bank account. I also just created another US business and opened a bank account. Here’s the process and time required for each.

USA – Wisconsin LLC, Federal Tax ID Number and Business Checking Account

LLC and Tax ID Number

1. Go to Department of Financial Institutions website
2. Fill out application form
3. Pay $130 online with credit card
4. Go to IRS website
5. Fill out forms
6. Click Submit

Total time: 10 minutes

Documents received: LLC registration paperwork from State of Wisconsin. Tax ID number (FEIN) from the IRS.

Bank Account

1. Walk into bank with LLC paperwork and Tax ID Number
2. Fill out four page form
3. Sign your name
4. Deposit a check for $55.00
5. Print your debit card in the bank

Total Time: 20 minutes, plus travel time.

• Total time – 30 minutes
• Total money spent – $130
• Deposit held by bank $55
• Bank Account Cost: Free

Chile – SpA, RUT and Business Bank Account

An SpA is basically a Chilean LLC, the RUT is the tax ID number.

SpA

1. Find an attorney, pay a retainer
2. Fill out paperwork with attorney
3. Wait for attorney to finish paperwork
4. Go to notary and sign paperwork. Fingerprint three places. Pay $200
5. Wait for notary to send paperwork to attorney’s office
6. Send attorney copy of Carnet (national ID card) and other identification documents
7. Attorney takes paperwork to SII (Chilean IRS) to apply for RUT (tax id number)
8. Get listed in legal Chilean business registry. Pay $50.
9. Wait for SII to process your paperwork
10. Receive confirmation, pay attorney

Total Time: Five weeks. Mine was a special case because of visa issues, but three weeks is totally normal.

Total Costs and fees: $2500. Maybe as low as $1500 without visa issues.

Bank Account

I needed a bank account to accept money from the US and use it to purchase goods in Chile. I didn’t need credit cards, lines of credit, loans or anything else. Just a place to deposit money and spend money. I went to five banks and this was the only bank that actually gave me an account. See end of post for each bank’s requirements.

1. Go to bank
2. Ask for account
3. You must have a personal account at the bank to get a business account
4. Fill out ten page personal bank account application form
5. Sign 8 times, 8 fingerprints
6. Show proof of income in Chile of at least $900 per month
7. Show an employment contract
8. Get a credit report
9. Show a business plan
10. Send in your resume
11. Send bank statements at other banks or foreign banks
12. Recommendation letter from bank with at least 5 years and $10,000 deposits
13. Wait
14. Wait some more
15. Send in more paperwork
16. Sign paperwork again
17. Put at $3000 untouchable deposit to securitize account
18. Wait two weeks to get checks, credit cards or be able to access online banking.

Total Time: 4 weeks.

Summary

• Total time – 9 weeks
• Total money spent – $2500
• Deposit held by bank – $3000
• Bank Account Cost – 10/month
• Documents Signed – 12
• Fingerprints – 12
• Trips to bank – 5

Conclusion

Chile’s banking and business creation system are both extremely bureaucratic, cost a lot and hold bank entrepreneurship. Asech, Chile’s entrepreneurship association, is doing great work to force the government to make it easier. They’ve taken on the notary lobby and passed a law that allows you to create a business in one day. In reality it takes at least a week the first time through, but it’s great progress. Right now only one type of business is available online, but more will be available shortly.

Asech is also working with a bank to allow an immediate deposit account for new businesses. This is still awhile off it seems, but when it’s approved, it will make Chile much more competitive. All of these barriers to business creation shield the elites and entrenched interests in power and prevent competition and entrepreneurship. Asech and the government are doing a good job to try to make things better, but its extremely slow. If you’re interested in seeing my attempts to open an account at multiple banks, read on:

Bank Requirements

Bank 1

I went for my first meeting after an introduction from a friend. The banker met me, was really nice, seemed very interested in my business. We met for 60 minutes. He told me that I had to open a personal account and then get a business account. I had to send a business plan, a resume, any press i’d gotten in Chile, my bank statements from US banks, my bank statements from my Chilean banks, a letter of recommendation from a bank where I had $10,000 and at least 5 years as a client, a contract or independent contractor payments of at least $2000 per month for the last three months in Chile, a deposit of $2000,

He told me it’d be ready in three days if I sent the information. I immediately emailed in all of the documents. No response. I emailed back the next day. No response. Next day, no response. Finally he responded and said he never got my documents. I sent them again. He confirmed receipt.

A week later, I still hadn’t heard back and emailed again. No response. Another week later I tried again. No response. Three weeks later, I’ve never heard back.

• Trips to bank – 1
• Documents sent – 34
• Minimum salary required – $2000/month in Chile
• Total time – five weeks
• Account cost: $20/month
• Result: Stopped responding to my emails

Bank 2

I went to this bank on a friend’s introduction. They told me I needed a personal account and asked me to fill out the forms. It was six pages of normal questions and two pages of very personal questions. They asked for every document imaginable, same as bank 2. I filled out the forms, send in the documents, but could not prove that I made sufficient money in Chile each month and they told me I was not approved for a personal or business account.

• Time spent: two weeks
• Forms Filled: 2
• Fingerprints: 16
• Minimum Salary – $2800
• Account cost: $15/month
• Result: Denied

Bank 3

I met with a private bank from one of the major Chilean banks. They told me they would open my account if I could prove I had $1m in net worth in Chile. I don’t. They kindly showed me the door.

• Time spent: 45 minutes
• Net worth required: $1,000,000
• Result: Denied

Bank 4

I met with this bank on an introduction. The executive was really nice and helped me fill out all the forms. I send in the same documents as bank 1. I didn’t hear back for two weeks, but finally was approved, if I could show $1500 per month in Chilean earnings and deposit $1000.

• Trips to bank – 1
• Documents sent – 34
• Minimum salary required – $1000/month in Chile
• Total time – three weeks
• Account cost: $10/month
• Result: No response for two weeks, then halfway approved

Bank 5 – Where I have my account

I was already a client at this bank, so I didn’t have to get a personal account. I walked in, talked to my personal executive, she took me to the banking executive. We filled out paperwork and they told me I was approved. I had to show business documents, a resume, my identification. And I had to deposit $3000 in a 1 month CD that is renewed each month in order to open the account. This bank was the nicest to me of any of the banks I met with.

• Trips to bank – 5
• Documents sent – 12
• Fingerprints – 12
• Forms filled – 9
• Minimum salary – $900/month
• Time spent – 10 hours
• Deposit held – $3000
• Total time – four weeks
• Account cost – $20/month
• Result – Approved!