If you are interested in doing business in Panama, but are only planning a shorter-term or limited scale operation, you may find that your best bet is to hire staff via an employer of record (EOR). Because when you hire through an EOR in Panama, the contracted firm acts as their official employer, while you oversee their workloads and schedules, meaning you can avoid having to set up an entity.
An EOR in Panama can also be known as a professional employer organization (PEO) and may be referred to as a PEO firm or PEO payroll company — the latter being because payroll outsourcing is one of the most popular services they offer.
Panama has experienced continuous and exponential economic growth since the turn of the century, with gross domestic product (GDP) hitting $66.8 billion in 2019, with $6.07 billion of foreign direct investment (FDI) inflows recorded that same year (all figures in USD) .
Panama is a prosperous high-income nation by international standards, with a gross national income of $14,950 per capita in 2019. The country is well-known for its pro-business outlook, with Panama obtaining a high score of 92.0 in the World Bank’s Doing Business 2020 report.
The country’s territorial tax system and secure banking industry also means that many foreign companies seek to form an offshore company in Panama in support of their international operations. Meanwhile, for onshore companies, the country offers some the lowest value-added tax (VAT) and income tax rates in Latin America.
The country also benefits from its strategic location, serving as the meeting point between North and South America, with the famed Panama Canal linking the country’s Pacific and Caribbean coast, allowing easy access to the Atlantic. Approximately 14,000 cargo ships transit through the canal each year, contributing almost 10% of the country’s annual GDP.
Among the country’s prime exports are refined petroleum, chemicals, and ships, with China, Ecuador, Guatemala, the Netherlands, and the United States.
The country is also a major tech hub in Central America, boasting skilled talent and good infrastructure in support of innovation, and the sector can be expected to contribute significantly to post-pandemic economic recovery.
If you are interested in doing business in the country, readon onto understand more about what an EOR in Panama is and the benefits of hiring staff through one. Or go ahead and contact us now to discuss your business option.
What will an EOR in Panama do for you?
An EOR in Panama will have a legal entity established in the Central American country, through which it will employ staff on your behalf, meaning that you can secure a local workforce without going through company formation.
The EOR will be able to oversee all aspects of employee onboarding and offboarding, as well as drawing up contracts and completing other relevant administrative tasks in connection with those employees.
Your EOR in Panama will also be able to seek out those staff, if needed, activating its established recruitment network and using its knowledge of the local job market to effectively vet candidates before they are put forward for your consideration.
On top of all of that, an EOR in Panama will manage the payroll process, guaranteeing that salaries are paid on time and all benefits and leave entitlements are met in accordance with local regulations. That means that you can rest assured that your operations in the country will be fully compliant with Panamanian legislation, so you will not face any legal issues or penalties in the future.
Where your EOR in Panama offers other back office services, it may also be able to help you with the likes of company formation, or offer additional legal and accounting services, should you wish to deepen your commitment to the local market, or develop your relationship with that provider.
Main advantages of hiring local staff through an EOR
The key benefits you can expect from hiring staff via an EOR in Panama include:
Legal support: As well guaranteed compliance, your EOR in Panama will be able to provide ongoing advice on local legislation and regulatory changes that may affect your business. Being familiar with local legal processes, they will also be able to oversee processes in the fastest time possible.
Market familiarity: Working with an employer of record means having the opportunity to get to know the market better ahead of a potential deeper commitment via company registration, or the establishment of some other type of entity.
Cost efficiency: While hiring staff through an EOR in Panama will come with a service fee per employee, those costs will often be significantly less than the outlay needed for company formation and ongoing operations.
Rapid entry: Hiring staff through an employer of record means your market entry can be completed in just the time it takes to find the right staff. That will allow you to get to work in just a few weeks — or even days — depending on the profiles of the employees being sought. That also means you can exit the market in the time it takes for those staff to serve their statutory notice periods.
Biz Latin Hub can be your EOR in Panama
At Biz Latin Hub, our multilingual hiring & PEO experts can help you find the staff you need for your operations in the Panamanian market. With our complete portfolio of back-office support options, including legal, accounting, and company formation services, we can be your single point of contact to enter and do business in Panama or any of the other 17 jurisdictions around Latin America and the Caribbean where we operate.
Reach out to us now to discuss how we can assist you.
Learn more about our team and expert authors.