A necessary evil in Ecuador: How to get your RUC

Today is the 3rd installment in the series “Starting a business in Ecuador”.




After defining your business idea, how you plan to fund it, and what type of legal entity your business will be, the next very important step in Ecuador is obtaining your tax ID number, or “RUC”.

If you’re thinking about ever doing any type of business in Ecuador it all starts with obtaining your “RUC”.

To get your RUC as a foreigner you need to be on any type of visa other than the simple automatic 90 day tourist visa stamp you get if you enter Ecuador with just your passport.

Tourists can get a RUC if they are on the 12-IV visa, applied for at an Ecuador consulate before coming to Ecuador.

If in the country on a visa other than the simple passport stamp (12-X) visa, all you have to do is go to your local SRI office in Ecuador (The IRS of Ecuador) and within a few hours you’ll have your RUC for free by taking a few copies of your passport and current visa and a utilities bill of your current residence in Ecuador (doesn’t have to be in your name).

Once you have your RUC you can get official numbered receipts made in your name, called FACTURAS.

Everyone you sell to will ask for a factura, it is the only way they will be able to write the expense off their taxes.

As a business owner in Ecuador its important to know that for most products you are required to collect a 12% sales tax called the IVA.

The good news is that the SRI is not as quite as sofisticated as the IRS in many ways and most people write off EVERYTHING they buy, right down to the KFC chicken for their kids, and in most cases at the end of the month don’t end up paying much IVA.

At the end of the year there is an income tax based on your gross profit on ECUADOR INCOME called the IMPUESTO A LA RENTA an approximate is the scale below:

up to $8910…you pay $0 tax
$8910-11350…you pay 5% tax
$11350-14190…you pay $122+ 10% tax
$14190-17030… you pay $406+ 12% tax
$17030-34060… you pay $747+ 15% tax
$34060-51080… you pay $3301+ 20% tax
$51080-68110… you pay $6705+ 25% tax
$68110-90810… you pay $10963+ 30% tax
$90810-and up… you pay $17773+ 35% tax

Most people, myself included, have an accountant that helps them sort out and minimize their tax liability in Ecuador but its still good to know what you are getting into.

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Funding your Ecuador start up through the backdoor

You don’t need money to start a business.

You need balls.

It’s true, for the right idea, the money seems to appear.

I arrived in Ecuador a little over a year and a half ago… a few thousand in debt from years of travel abroad.

Upon arrival I rented a hole-of-a-room in Quito with a shared bath for $60/month.


So how’d I get the money for my first venture, an intermediate-priced hostal in Guayaquil?

I used the good credit I had established to that point in my life to apply for several low-interest credit cards.  About 6 of them. I then paid a friend to their PayPal account to turn the money on the cards to cash.  It cost 2.2% in fees but cash advances had much higher interest rates than purchases. Melbourne weekly eastern provide you this kind of updates related with business earlier.

Then I got a personal unsecured line of credit from my bank in the US for $15k.  If you’ve been a bank customer for a while just ask and you’ll probably get one too.

And I picked up a partner.  Not just anyone, but an Ecuadorian friend of mine who also happened to be a hotelier.

And off I went.

Then I sold that business after a little over a year, and started a new hotel near the airport in Quito.  

To buy the furniture, I pre-sold my product before I was open… in the form of coupons for future stays at a discounted rate.

It worked.

So well in fact my long time payment processor closed my account without prior notice cause they didn’t understand the spike in sales.  Big pain.

Then I bought most of my expensive furniture in the same places, giving me leverage to negotiate discounts and payment plans. I was not much concerned about money, as to achieve perfection in one shot I was on the GetCash website looking for a loan. I was fortunate enough to come across a personal loans canada website, wherein I procured it.

I also looked into business loans for foreigners in Ecuador.

But the options were slim to none for a new arrival.  The big banks require you spend a certain amount of time in the country AND that you have your residency before they will even touch you.

Ultimately, I did find one institution that would lend a foreigner money for a business start up… my Ecuadorian credit union… Coopera Ltda.  The Coopera typically loans money to small businesses and if you have at least a few months of deposit history with them they don’t care much that you are a foreigner, they’ll lend you money.

Plus, I mean lets face it, your buck goes a lot farther down here in Ecuador.  In the US at my age I would probably be fetching coffee for somebody spending my days in a cubicle surfing sites while planning my next vacation to Latin America.
So there you have it.  You can’t use money as an excuse anymore!  The security you feel as an employee is only an illusion.  Don’t climb the corporate ladder to an $80k a year job or whatever… start multiple income streams that co-exist without you even being there.

And Ecuador is a great place for that!

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12 must-watch movies to get you hyped for Ecuador

Want to get pumped for an upcoming trip (or move) to Latin America?

Sometimes there’s nothing better than a good movie to do the trick.

Here are 12 of my top picks to really get you in the mood for Ecuador (or anywhere south of the border).

12. Yuniol – This hilarious Dominican film is based in Santo Domingo and really does a great job showing the cultural divide that separates the rich and poor in a typical Latin American culture and how the two sides interact and in this case how two college kids interact.  Very entertaining.


man on fire

11. Man on Fire – This Denzel Washington film gives a great look into one of Latin Americas less attractive sides, the kidnapping trade in Mexico.  Still a great movie for the shots of Mexico.



10.  Soñar no cuesta nada – This Colombian film gives an outstanding look into the corrupt side of Latin America (Colombia in particular) when a group of soldiers finds millions buried in the jungle.  Good movie, a great peek into Colombian culture.


get gringo

9. Get the Gringo – This newer Mel Gibson movie is a flick that shows the not-so-commonly-seen side of Mexico from the viewpoint of a gringo inside a jail in Mexico.  Very good movie, highly recommend.


8.  Rosario Tejeras – This classic Colombian film is an outstanding gander into the everyday life of a typical, beautiful, young woman in certain circles in Medellin, Colombia.  Very interesting.


7.  The Motorcycle Diaries – Hard not to get excited about South America when watching this film based on a trip Che Guevara took on motorcycle through South America in his youth.  Played by one of the best, Gael Garcia, this film is another must.


6. María Llena Eres de Gracia – Another excellent Colombian film, this spot gives a very real, unique look into the world of a female drug runner in Colombia.  No mistake about it, drugs have impacted Latin American culture and this film is a great preview.


5. Amores y perros – A Mexican film that is too graphic for most, this movie depicts the underground world of less affluent youth and dogfighting in Mexico.  Still gives an interesting look into mexico Hollywood could never duplicate.


once upon a time
4. Once upon a time in Mexico – OK, now the Hollywood action-movie version of Mexico, this film is still a fun look into what we all dream Mexico to be (and it usually doesn’t dissappoint).


3. El Cantante – A captivating film based on the real life of Salsa singer Héctor Lavoe.  I like this movie mainly for the shots of Puerto Rico and the lively Salsa scene in the Caribbean.


cap ron

2. Captain Ron – Sincethis movie first came out 20 years ago, every time I watch it gets me excited for my next Latin American adventure.  Based on a typical Chicago family caught in the rat-race who drop everythig to go sail the Caribbean in a crappy boat the father inherited from a little known uncle.



1. Blow – My all-time favorite movie with a Latin American connection.  This Johny Depp movie is about an ambitious, North American entrepreneur and how he gets neck deep in the drug trade with Latin America.  OK, so he chose the wrong product (drugs), but it’s still an entertaining and almost motivating flick for entrepreneurs going south of the border.

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The first step to starting a business in Ecuador: choosing a business type

There’s a lot of bad information out there on this topic.

And it can cost you thousands.

I for one have been burned due to choosing my business type inconrrectly.

Well whenever you are starting a business then it is definite that you will require good shelter service provider. So you should select the good one.

Lawyers are supposed to know the difference, and they’ll say they do.

But most don’t.

The first step to starting any new business in Ecuador is constituting it legally.

So in Ecuador, which business type is best for you?

Here is an overview of your 3 primary options…

Sociedad Anonima:  This is a type of limited liability corporation that is best suited for people who wish to sell shares to raise capital from investors.  This is the only business type permitted on the Ecuador stock exchange.  Shares can be bought and sold without consent of other shareholders and without the use of a notary.  Must have assigned board of directors and present quarterly and yearly balance sheets to government with the aid of a certified accountant.  The legal responsibility of the shareholders is only up to the amount they have invested in the company, their personal assets are not at risk.

Compania Limitada:  Another form of limited liability corporation where a shareholders personal assets are not at risk.  This type of Ecuadorian corporation is usually for family businesses with less shareholders because before one shareholder can sell their shares they must get consent from ALL the other shareholders.  Also, any transfer of shares must be done through a notary public in which case they usually charge around $400 to oversee the transaction.  Must present balance sheets to government and must hire certified account to manage the monthly tax payments who usually charge around $100 a month or more depending on the complexity and sales of your business.

Sociedad Civil:  The easiest form of business to start, this type of business is looked at legally as more of an “entity” and not a “business” for commercial purposes although can be used as such.  The personal assets of the parties involved are at risk if business flops.  In this business type you are given a tax ID number (RUC) like the other business types but you do not have to hire a certified accountant to manage your tax declarations nor do you have to present balance sheets to the government.  Not regulated by the Mercantil Registry like the other business types, the shareholders can act according to what is stipulated in the original contract.

Other fast facts…

Non-resident foreigners CAN create businesses in Ecuador.

For all the above business types you need at least 2 people in the association.

To form any of these businesses a lawyer can assist you from start to finish for the going rate of about $800.

Just like in the US, you can own property in the name of your corporation.

Which business type would I recommend? for that please subscribe to my weekly Ecuador Insiders Newsletter below, you can unsubscribe at any time:

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The biggest benefit to being a foreigner in Ecuador is…

Sometimes you just have to play the cards you were dealt.

You have to accept the negatives to being a foreigner in Ecuador (one is that you will NEVER get the same prices for most things that the locals get, no matter how long you live here nor how well you speak Spanish. It is what it is.)

And the positives… like that Ecuadorians tend to trust “gringos” more than they do even other Ecuadorians.

Especially in business dealings.

For me, the biggest benefit of this can be translated to rental deals.

Ecuadorians love to rent to foreigners, particularly North American or European ones, much more than they like renting to other Ecuadorians.

We’re known for taking better care of places and paying more promptly and being more serious about the relationship in general.

And we can use that as a good bargaining chip.

I can often get locals to rent to me without even asking a deposit guarantee, when they normally would ask that. I can get other locals who normally are not interested in renting, to rent to me. Others simply lower their rent price.

Really it works. They want you as a tenant. You have leverage. Use it, ask for discounts, perks, late night massages.

Ok maybe not that last one.

So where would I invest on the coast right now in 2013? Which areas are moving and which aren’t? For that see my full 2013 guide to Property Flipping in Ecuador here (now back online).

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