Category: Blog

“I can’t believe my friend in Montanita,” I said recently to another friend over a drink in a small bar in Manglaralto, a small town next to Montanita on the coast of Ecuador.

“He’s from the States, moved down here, bought a hotel and is running the business, but he doesn’t have a CLUE about doing business in Ecuador.” I continued.

Doing business in Ecuador is actually quite EASY comparatively to the USA.

But you gotta know the basics.

And hire a good local accountant, like those from Charter Partners accountants from Bundaberg they don’t charge much, mine charges me around $35-50 a month.

But here’s 6 things you HAVE TO KNOW before you start a business in Ecuador.  ALL of which my buddy who was already actively doing business in Ecuador had no clue about and was not doing!

1. First, if you buy a business or a property with a business attached, i.e. a hotel, have the previous owner fire all the current employees before you start, you can hire one or two of them back if you want, but don’t just keep them on, because when you fire people in Ecuador you have to pay them quite hefty “liquidation payments” based on how long they’ve worked for you so be sure the previous owner takes care of that before you get on.

2. Next thing know you MUST affiliate all your employees to the IESS social security system and pay a percentage of their wage to said organism every month.  Even part-time employees, the only exception is when hiring contract work in which case ask for the factura or official receipt for the work rendered.

3. Also, know that any business must get a tax ID number called a RUC (foreigners can get one) and then you must give all your clients official receipts for their purchase based off the RUC called FACTURAS on which you charge the 12% sales tax called IVA, and once a month declare with the help of an accountant your sales and expenses and pay the sales tax you collected on the difference.

4. Permits while generally easy to attain in Ecuador are necessary, inquire at your local Municipal which are necessary for your specific business type.

5. There is an income tax in Ecuador called IMPUESTO A LA RENTA that needs to be declared and paid every March.  It’s much lower than in the USA and for most income brackets it’s less than or around 15%.  Ask accountant for assistance.

6. You must pay employees two bonus payments yearly, one equal to the minimum wage in August (which hovers around $400) and one equal to their monthly salary in December.  You must make them sign a document (ROL DE PAGOS) once you pay them  that your local accountant can give you upon request.

That’s it!  Know that, hire an accountant for the particulars and your off to a great start!

If you’ve been following me a while you know i do pretty ambitious bucket lists.

Not this year, I think it’s best to prioritize and keep it simple and that way you can actually get more of the list done.

Here’s what I’d like to do-have-be in ECUADOR in 2018…

1. Bike the whole coast.  I think it would take around 7-14 days only.  Most of the road is flat and well-paved.  Maybe I could do it in parts.

2. Climb a volcano.  There are many 20,000 footers to choose from in Ecuador like the famous Cotopaxi or Cayambe, both a stone’s throw from Quito where I live.  Most trips can be hired out of Quito and take 2 days to summit. Best to go in dry season from May-November

3. Amazon trek. Get off the grid for a few days, I just spoke with friends who saw Anacondas, the pink river dolphin and piranhas in their lodge near Cuyabeno (Lago Agrio).  5 days is all you need.  And I’ve heard the bugs actually aren’t that bad.  Can book 3-4 day trips starting around $300 per person all included.  Best to book in Quito at one of the street agencies, can often find better prices than online.

4. Kayak a river in the Andes.  There are (just a few) outfitters in Baeza where the rapids flow down into the Amazon for all levels.  Most don’t know Ecuador even offers this but the rivers are plentiful and amazing in Ecuador.

5. Start a farm in Ecuador.  I’ve already got the land on stand-by, now it’s time to make it productive (don’t worry I’ll keep you informed on how it goes).

6. Flip a property on the coast.  (At least one.) This is what I do.  Probably stick to the less expensive stuff under $20k, it moves faster.

7. Expand out my property management biz in Guayaquil to 5 properties.

8. Deep-sea fish off Salinas.  Hire a chartered boat to take me out or hop on with the locals.

9. Hang-glide off the cliffs of Crucita.  Been putting this one off.

10. Trek to the lost city of Ecuador in the Zamora jungle area and the ancient Tayo Cave famed to have hieroglyphics and alien activity (even Neil Armstrong trekked there to check it out).  On the way you can see a pre-historic, gigantic coral reef now covered in jungle.

If you have one you’d like to add to the list let me know, happy 2018!

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Working near the airport I have a chance to converse daily with travelers who get bumped trying to fly standby to or from Ecuador.

Thing is, most international airlines like Delta, United or Copa only have one flight to and from Ecuador daily.

So especially in peak season chances of getting on your first try are slim.

Here’s what I’d do to greatly improve your chances…

1. Don’t fly during peak season in Ecuador which is July-August and late December to early April.

2. Bogota!  If you have trouble getting out of Quito try buying a cheap one way flight on the budget carrier Wingo for around $150 to nearby Bogota.  Your chances of then getting out of Bogota (a city of 10 million people with hoards of flights to match) are much greater.

3. Fly on Sundays.  From the flow of my airport hotel in Quito, I can tell you the lowest travelled days are often Sundays.

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Recently, a friend started a pizza shop in Ecuador.

3 months later he was done and out of business.

Another friend just started an Italian restaurant.

He looks to be done within the month.

For me, what´s the key to starting a business that lasts no matter where you are in Ecuador?

Accommodations.

For instance, what if your passion and what you REALLY want to do is start a surf school, or a restaurant, or a yoga retreat center?

Then offer accommodations in the form of a vacation rentals-hotel-B&B and on the side offer the retreat center/restaurant/school.

People got to sleep somewhere, then they gotta eat. Then, they got to be entertained. Might as well all be with you. If you can give them a reason to stick around longer all the better.

This will keep you in business.

Hasta pronto, if you liked this sign up for my Ecuador Insider’s newsletter so you can check out my latest posts(not available online) on living and investing in Ecuador:

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Even Warren Buffett says farm land is one of the best longer-term investments you can make.

And in Ecuador, desirable farm land can still be found dirt cheap.  For instance, $1000 per hectare or less.

Yesterday in fact, I was chatting to one guy who exports plantain weekly from his farm in Santo Domingo to New York.

But a lot of people don´t realize there are actually various innovative income streams you can generate from the same farm.

1. Sell plants.  All you need is a small greenhouse on your property and preferably a major road frontage and you can actually do quite well selling plants.  I have made money selling red raspberry plants around $5 a pop and they don´t really cost me anything to produce as they are just the off-shoots from my existing bushes.  It helps if the plants you sell are not widely found in Ecuador.

2. Offer bird-watching tours.  Birders come to Ecuador in hoards and they often have BIG money.  Offer guided tours on your farm or better yet host them at a lodge on your farm.  All you need is that one rare bird that interests them and they´ll come.  And spend, often $100-200+ a night!

3. Distribute.  Don´t just grow, buy up the neighboring product and export, this can be done before your crops even start producing (and is a good idea to do so as you gain market for your coming crops).

There you have it, three ways to generate more from your farm in Ecuador.

Hasta pronto, if you liked this sign up for my Ecuador Insider’s newsletter so you can check out my latest posts(not available online) on living and investing in Ecuador:

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