Argentine Business Partner Question

[davepa]

So, I'm an expat, who like many, has been running a business in Argentina "under the radar" for the past few years, without even having residency, just on a tourist visa. A lot of the time I run the business with work activity in Argentina without me even being here physically.

The business (service, not bricks and mortar, no employees - just some freelance workers, and it will stay that way), is doing well, and starting to expand faster and faster in the last year.

I want to expand further, but I worry that the bigger the business gets, the more likely there will be problems with continuing to fly under the radar. Also I want to deal with Argentine companies that will be able to pass me more business, and I assume that could cause further problems with my current lack of official business status here.

So, I have a good Argentine friend (family friend, trustworthy, reliable, known for many years, runs a business here already himself) who I was considering asking to be my business partner, so that I can set the business up officially in Argentina, in his name.

My question is, if the only thing I will be asking him to do is putting his name to the business (and dealing with the associated paperwork etc), i.e. no investment or additional work needed from him (I will cover all legal/paperwork costs and do basically all of the legwork myself), then what financial renumeration should I expect to give him? For example, an initial fee, a yearly fee, a % of profits going forward (and if so, what sort of %)?

I have no idea what is standard in this area, and wanted to get some advice before starting to discuss this with my Argentine friend/potential business partner. I don't want to offend him with a low offer, and equally I don't want to offer too much!

Any advice will be greatly appreciated. Thanks in advance!

 

[fifs2]

So, I'm an expat, who like many, has been running a business in Argentina "under the radar" for the past few years, without even having residency, just on a tourist visa. A lot of the time I run the business with work activity in Argentina without me even being here physically.

The business (service, not bricks and mortar, no employees - just some freelance workers, and it will stay that way), is doing well, and starting to expand faster and faster in the last year.

I want to expand further, but I worry that the bigger the business gets, the more likely there will be problems with continuing to fly under the radar. Also I want to deal with Argentine companies that will be able to pass me more business, and I assume that could cause further problems with my current lack of official business status here.

So, I have a good Argentine friend (family friend, trustworthy, reliable, known for many years, runs a business here already himself) who I was considering asking to be my business partner, so that I can set the business up officially in Argentina, in his name.

My question is, if the only thing I will be asking him to do is putting his name to the business (and dealing with the associated paperwork etc), i.e. no investment or additional work needed from him (I will cover all legal/paperwork costs and do basically all of the legwork myself), then what financial renumeration should I expect to give him? For example, an initial fee, a yearly fee, a % of profits going forward (and if so, what sort of %)?

I have no idea what is standard in this area, and wanted to get some advice before starting to discuss this with my Argentine friend/potential business partner. I don't want to offend him with a low offer, and equally I don't want to offer too much!

Any advice will be greatly appreciated. Thanks in advance!

Any of the options are applicable Davepa and will depend upon how big the partner views the risk of being your frontman. You dont have employees so the risks of lawsuits are vastly reduced but not completely zero as once you have a local setup an unscrupulous freelancer who receives a monthly payment may be able to claim that they are in fact an employee in negro so you need to manage your payments to them carefully. As much as him you need a canny local account who ensures there's nothing suspicious in your cash flow and account activitiy that may cause Afip to suspect there's a bigger business being conducted than you are declaring..ie don't register and go from zero to 50% business over night...All obvious I know but as Ive seen locally from owning a business here, the live for now attitude can drive many business owners to forget that every step they take is laying tracks that in the future may be subject to Afip questioning. MANY local businesses use a "patsy" so they can avoid impact in case of bankruptcy or be chased for previous debts/lawsuits. Our lawyers are full of stories of taking people to court only for the business to be in the name of a barely literate guy from a villa paid a small fee so hiring someone smart, who can be logically linked to the type of business by his experience AND can talk credibly about it is worth whatever you decide to pay him. For the record an annual or monthly fee is the most common one I know. Best of luck with it.

 

[Splitty]

Pay your employees from outside Argentina using a fake company, so you don't have employee problems. So they work for a subsidiary compay

 

[fifs2]

Oh and one VERY important after thought Davepa is that you must get a legal document drawn up and signed by both of you stressing that the business is yours and he is named for local representation only and only you and your lawyers should retain a copy of such. In the event of your partners divorce or death even, an embittered ex-wife or greedy kids could claim that he owns the company outright and have been hiding company funds and take you to the cleaners, contact your custimers, suppliers etc. I was an innocent young thing before running a business here but Ive learnt that the strong sense of ethics and morals that drive me is not necessaily what drives others so just protect yourself as money or the chances of getting at money can make the best of people do the worst of things...especially here.

 

[vamonos2012]

Divepa, not a 'sales call', but out of occupation curiosity. What type of freelancers do you use. Marketeers?

Txs

 

[va2ba]

I would be VERY careful. I have not heard many good stories about people who find Argentine business partners. That is not to say that good ones can't be found, but I would be wary. My biggest concern would be putting the company in his name, and not yours. Even if you get a legal document that says the company belongs to you, it is still risky. From my experience in Argentina, it does not always matter what is written on a piece of paper, even a legal document.

Just some food for thought. Good luck!

 

[citygirl]

You don't have to put the company in his name (I'm not entirely sure that that means). Set up an SRL and make him a director (for now). He will be paid a set fee as director of the company.

In the meantime, register your company with migraciones to employ foreigners. Once you have the permission, give yourself a work visa and step in as director once you have residency.

Problem solved.

 

[davepa]

You don't have to put the company in his name (I'm not entirely sure that that means). Set up an SRL and make him a director (for now). He will be paid a set fee as director of the company.

In the meantime, register your company with migraciones to employ foreigners. Once you have the permission, give yourself a work visa and step in as director once you have residency.

Problem solved.

Thank for the responses and advice everyone, all useful and food for thought.

Citygirl... is it possible for me to set up an SRL and make him a director while I am officially just a tourist in Argentina? Doesn't setting up an SRL bring with it a lot more headaches than setting up an SA?

Is it easy to register a company with migraciones to officially employ foreigners here? I'm wondering whether it is worth it to give myself a work visa, as I actually don't plan on spending much time in Argentina over the next few years.

For the record, at the moment when we pay freelance workers we do it online from a non-Argentine company, someone else mentioned that ;-)

 

[fifs2]

Thank for the responses and advice everyone, all useful and food for thought.

Citygirl... is it possible for me to set up an SRL and make him a director while I am officially just a tourist in Argentina? Doesn't setting up an SRL bring with it a lot more headaches than setting up an SA?

Is it easy to register a company with migraciones to officially employ foreigners here? I'm wondering whether it is worth it to give myself a work visa, as I actually don't plan on spending much time in Argentina over the next few years.

For the record, at the moment when we pay freelance workers we do it online from a non-Argentine company, someone else mentioned that ;-)

It is hellish painful to register a company with migraciones to officially employ foreigners here and we have a large HR and admin dept...you'll need it for the time you'll spend on paperwork for foreign employees. As mentioned recently in another post, as a rsult of applying for another work visa we were subject to an unannounced visit by Migraciones to check on all our employees to ensure all were legal....If you have the option, freelance payments to all from a non-Argentine company which is how we tend to deal with our contractors when possible.

 

[citygirl]

SRL is far easier and more cost-effective to set up that an SA. Yes, you can absolutely set up an SRL as a foreign owned entity as long as you have a resident as director. The SRL I set up here was owned entirely by 2 foreign entities.

Fifs is right in that applying for one does invite migraciones to come visit to check to make sure there are no foreigners working there. If your contractors work at home, there is no official office, etc, prob not worth the headache. But ojo - if you're going to rely on your local partner, I would be double-checking everything. That's my cynical side talking though!