When starting a business as a foreigner, it is important to partner with an experienced sales executive to offer your products to potential clients. It is beneficial to hire a sales executive in Colombia who has knowledge of the local market and culture. The hiring process in Colombia can be smooth if the business owner has the appropriate guidance to comply with labor legislation and statutory laws.
In this article, we outline the two pathways to hire a sales executive in Colombia.
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Hiring a sales executive in Colombia
In Colombia, there are two pathways to hire an employee: through a local legal entity or through a professional employer organization (PEO).
1. How to hire a sales executive through a local legal entity
Hiring a sales executive through a local entity should obey the Labor Law Legislation, regulated by the National Constitution and the Labor Code (Código Sustantivo de Trabajo). Some key requisites to comply with when hiring an employee include:
- Accounting and tax obligations
- Affiliation with the social security system
- Social benefits: unemployment assistance, unemployment interests, vacations
- Remuneration must meet the current legal minimum wage proportional to the time worked and nature of the contract.
- Workday not exceeding 8 hours, if it is an internal job it does not exceed 10 hours, or overtime requirements must also be complied with.
Additionally, in Colombia, there are 4 types of labor contracts: indefinite term, fixed-term, temporary and services contracts.
Navigating through the complexity of labor legislation can be time-consuming and costly, particularly at the beginning stage of your business. In this sense, hiring through a PEO is a smart option.
2. Hiring through a professional employer organization in Colombia (PEO)
The second path to hire a sales executive in Colombia is through a professional employer organization (PEO).
A PEO partner offers great organizational advantages, particularly to small to medium size businesses. These organizations partner with your business to hire staff through a co-employment model. Through this model, employers retain control of their employees’ job responsibilities and deliverables, while they appear on a PEO’s registries for compliance purposes. This is known as an ‘Employer of Record’.
On top of that, your PEO partner will take care of payroll, all human resource management, and offer employees diverse benefits provided by bigger companies that smaller organizations may not necessarily have access to.
This method for hiring staff in Colombia is more cost-effective for expanding businesses than establishing a branch. Professional Employer Organizations enable you to comply with labor legislation and give you access to the talent your business needs to start on the right foot.
A PEO’s services are often used to test a market. Hiring through a PEO is a great resource to test the Colombian market before moving on with further investment. Hiring one or two senior sales executives might be the initial start you need to begin operations at a low cost while ensuring quality and compliance for your business. Furthermore, this strategy is a great way to test the response of the Colombian market to your offering or services before incurring additional expenses.
Guide to hiring sales executive through a PEO
1. Contact a PEO
To ensure compliance with labor legislation, smooth processing of documents and transparency, it is important to contact a trustworthy PEO provider with a local presence in Colombia.
At the early stage of expansion, businesses are heavily reliant on experts to guarantee the success of their venture. Contacting the appropriate organization will not only help you ensure you access the right talent, but it will also reduce overall risk as you won’t need to stress about complications with local authorities over non compliance problems.
To hire a sales executive the right way, choose a trustworthy PEO. Your chosen PEO should provide a fair, balanced agreement for both parties. A professional employer organization in Colombia will help you connect with the right local talent that could otherwise be hard to access as a small company. On top of that, the appropriate PEO will guarantee a balanced, fair terms of agreements that benefit both parties. It’s crucial to find someone with specialized knowledge of the Colombian market to ensure the best service.
2. PEO recruits your sales executive for you
PEO recruitment is fast and efficient. Given that PEO organizational structures are usually well-established, they have a great reach to access the best talent for your business. The expertise a PEO has will ensure that you hire the right match for your business.
3. Sign the co-employment contract
At this stage, your PEO will elaborate a co-employment agreement in which you and the organization specify the responsibilities of each party. This contract will appoint the PEO as the Employer of Record.
The agreement contract should be comprehensive. It should specify which executives are being hired, the benefits that will be provided to them, compliance specifications, payroll, human resource policies, unemployment benefits, additional services and more.
The agreement must cover all terms and conditions, fees and payment terms, schedule of employee benefit plan and specific provisions necessary to employ in Colombia. On top of that the government offers tax deductions in certain industries. You’ll need to seek advice from the PEO on whether your chosen commercial field comes with specific employer conditions.
4. Begin operations
From the moment you hire a sales executive or a specialized employee you may begin to run business activities and test the market.
The sales executive acts as the point of contact between a company and its clients. In this sense, they can help you test the market before establishing a local office. Through your sales executive, you are able to assess the viability of your business and potential avenues for success. And if the plan doesn’t go as expected it is easier and less costly to exit the market.
Doing Business in Colombia
Colombia experienced consistent economic growth at a rate above 3% in the first trimester of 2019, surpassing expectations. The country has recently undergone a tax reform to tackle government budget issues and has implemented tax incentives to boost some industries.
In particular, businesses seeking to start an agribusiness or a cultural venture can benefit from certain tax deductions. Following the tax reform, agriculture investments have zero tax for a period of 10 years and there is zero tax for cultural, creative and digital enterprises for a period of 5 years as well. The latter falls under the ‘Orange Economy’ initiative that has gained attention from the rest of the world for its innovative approach to supporting creative industries. It is recommended to obtain professional assistance when looking to incorporate your business in Colombia.
The economic environment has facilitated an increase in foreign investment in Colombia over the last couple of years. Between January and June of 2019, Foreign Direct Investment (FDI) grew 24.4%, according to the Colombian Central Bank data. In this sense, FDI in the first trimester reached US$7.273 million, which is 24% more than the US$5.847 achieved in the first 6 months last year. Tax incentives, skilled labor, and steady economic growth have favored investment opportunities in Colombia.
Contact an experienced PEO in Colombia to support your expansion
Colombia is set to have the regional lead in GDP growth by the end of 2019. The country’s diversified economy offers myriad opportunities for foreign companies to establish a presence in industries such as tech, agriculture, energy and more.
To begin your operations or to test the Colombian market response to your business model get in touch with local employer and legal experts. At Biz Latin Hub, our team of local and expatriate professionals have vast experience offering legal, accounting, due diligence and PEO services to help entrepreneurs access the best talent for their business expansion. Contact us now for a personalized quote.
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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.