Currently, Paraguay is regarded as one of the most attractive destinations within South America to establish a local sales presence. Developing a local sales presence is easier for companies using the help of a Professional Employer Organization (PEO) in Paraguay.
Paraguay’s economy is showing signs of growth since the last decade and its domestic market is increasingly diversifying. Despite this, many foreign companies expanding into the country face the challenge of hiring employees and following strict local employment regulations.
There are several ways to establish a local sales presence in Paraguay. Businesses may choose to build their sales force by incorporating a local branch or subsidiary. Alternatively, they may choose to partner with a Professional Employer Organization (PEO), which requires a lower capital investment.
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Options to establish your local sales presence in Paraguay
Investors looking to enter the Paraguayan market have three main methods to do so:
- Establishing a local branch.
- Establishing a local subsidiary.
- Using a PEO to build your sales team in Paraguay.
The first two alternatives are recommended for companies that are willing to build a heavy structure in the country. Both options require an important upfront capital expenditure and tax compliance procedures.
Establishing your local sales presence in Paraguay through a branch or subsidiary is also energy and resource-demanding. The incorporation process in both cases can last as long as two or more months.
What is a Professional Employer Organization (PEO)?
A PEO is an outsourcing firm that provides services to small and medium sized businesses (SMBs) through co-employment. The PEO becomes the Employer of Record for tax purposes by filing payroll taxes under its own tax identification numbers.
A PEO supports foreign companies to enter and operate in the Paraguayan market leaving a very small footprint. They hire staff on your behalf and manage your local employment obligations.
With PEO, you can employ people to work for you on the ground even if you don’t have a physical presence in Paraguay. As the Employer of Record, your PEO partner will take care of all non-revenue generating paperwork in Paraguay. This includes recruiting, hiring, training, paying, and complying with social security and other employment requirements for your sales team.
Five reasons to establish your local sales presence with a PEO in Paraguay
1. Coordinating the recruitment and hiring process
A PEO can coordinate the entire recruitment and hiring process for your new sales team of executives. This entails the job posting, the selection of candidates, and the interviews.
Thanks to the co-employment model and its expertise, the PEO is able to coordinate this process without needing constant direct involvement from the contracting company. The PEO and the contracting company may work together again after final interviews (although not necessary) to decide which candidate should receive the job offer. Once a person is hired through the PEO, the PEO becomes the ‘Employer of Record’ for your staff member.
2. Responsible for the employee’s records
As the Employer of Record, a PEO can handle all non-revenue generating paperwork related to the hiring process and ongoing labor requirements for employees. Keep in mind that Paraguayan law requires several documents from employees shortly after they’ve received an offer of employment and have signed the contract.
The foreign contracting company does not need to concern itself about the extent of Paraguayan employment regulations and social contributions for employees. A PEO partner is responsible for the local compliance requirements for establishing your sales presence in Paraguay.
3. Manages employee’s payroll and related legal requirements and payments
Employers have more obligations to their employees than just paying their monthly salary. Human resources and finance departments must be aware of other legal obligations and necessary payments when hiring an employee in Paraguay. A PEO in Paraguay can assist a contracting company avoid calculation errors and/or late payments.
4. Deep knowledge of the Paraguayan market
The process of hiring and managing employees in Paraguay requires strong skills and in-depth knowledge of the stringent Paraguayan labor law. Making mistakes during this process may lead to expenses with court trials, attorney costs, and fines. You can relieve yourself of compliance burdens by hiring a PEO in Paraguay, who will ensure you stay compliant with all labor and social security authorities. This allows you to focus on developing your sales team in Paraguay.
5. Reduction of administrative costs for the contracting company
Take note that administrative costs must be taken into account. Handling employees in Paraguay is not usually an easy task for foreign companies. Paraguayan labor and social security obligations are likely to increase the company’s internal costs. Thus, if the company decides to hire the services of a PEO, several internal company costs will be saved: not only financial costs, but also the cost of time spent.
We’ll help you establish your local sales presence with a PEO in Paraguay
Although Paraguay is a very favorable business destination, some complexities may arise for foreign businesses expanding into the country. Complexities include navigating unfamiliar employment and other corporate compliance regulations.
At Biz Latin Hub, our group of local and expatriate professionals offer full and tailored market entry and back-office services. Our services are designed specifically to solve your employment, tax compliance and all other burdens. We are a trusted Professional Employment Organization (PEO) with local knowledge and experience to find the right talent you need to establish your sales presence in Paraguay.
Find out how we can customize our PEO and other services to suit your business needs in Paraguay. Reach out to us today for personalized guidance.
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The information provided here within should not be construed as formal guidance or advice. Please consult a professional for your specific situation. Information provided is for informative purposes only and may not capture all pertinent laws, standards, and best practices. The regulatory landscape is continually evolving; information mentioned may be outdated and/or could undergo changes. The interpretations presented are not official. Some sections are based on the interpretations or views of relevant authorities, but we cannot ensure that these perspectives will be supported in all professional settings.