For anyone interested in starting a business in Colombia or already established in Latin America’s fourth-largest economy, payroll outsourcing can be an attractive option. Because when you choose payroll outsourcing in Colombia, you hand over management of the salaries and benefits of all or a portion of your workforce, thereby significantly reducing your in-house administrative burden.
What is more, if you have your payroll overseen by a professional employer organization (PEO) — which can also be known as an employer of record (EOR) — the PEO firm will be able to assist in recruiting staff and providing valuable advice on relevant local regulations.
Colombia registered a gross domestic product (GDP) of $323.6 billion in 2019 — more than three times its reported figure in 2003 and only exceeded in the region that year by Brazil, Mexico, and Argentina. The growth Colombia has experienced over recent years was accompanied by a rise in prosperity, with gross national income (GNI) hitting $6,510 per capita in 2019, placing the country as an upper-middle income country by international standards.
Colombia enjoys a strategic position, both geographically and politically, benefiting from its location at the meeting point between North and South America and possession of major ports serving both the Atlantic and Pacific oceans, as well as its status as one of the closest allies of the United States in the region. The country also boasts good infrastructure for business, with capital city Bogota’s El Dorado Airport having the largest cargo capacity in the region.
Colombia also has a diverse economy, with services accounting for approximately 57% of GDP, while industry makes up 28% and agriculture almost 7%. While hydrocarbons are the country’s most lucrative export commodity, the country also boasts significant production of gem and mineral wealth. Other key export products include coffee, fruits and nuts, trees and plants, and cut flowers.
Meanwhile, Colombia has seen its tech industry grow rapidly over recent years, with the second-largest city Medellin held up as a potential Silicon Valley in Latin America, while Bogota hosts many innovative firms, and is a key regional base for major tech companies, such as Rappi and MercadoLibre.
If you are interested in doing business in this growing market, read on to understand more about payroll outsourcing in Colombia and the advantages it can bring to your operations. Or go ahead and contact us now to discuss your business options.
What is payroll outsourcing in Colombia?
Payroll outsourcing in Colombia involves outsourcing the management of the payroll of all or some of your employees to a third-party provider. That means the provider will oversee the timely payment of salaries and all other benefits.
As part of the service agreement, a provider of payroll outsourcing in Colombia will guarantee compliance with all local norms, as well as be able to offer ongoing advice regarding regulatory changes in the country that could affect your business.
When payroll outsourcing is provided by an EOR in Colombia, it can be included as part of a broader package of services, including recruitment, onboarding and offboarding, and drawing up of contracts and other legal documents related to employment.
Working with an EOR can be particularly attractive to investors who need local workers on a short-term or limited-scale bases, because when you hire via an EOR, those workers are officially employed by the EOR while you retain full control over their schedules and workloads. That means you can secure a local workforce without having to establish a company, branch, or subsidiary.
What are the advantages of payroll outsourcing in Colombia?
The main advantages of payroll outsourcing in Colombia include:
Expert knowledge: The company you will hire to outsource payroll in Colombia will consist of local legal and accounting experts with extensive knowledge about the latest legislative developments, as well as changes that could affect your business.
Guaranteed compliance: If you do not comply with local legislation and norms, you may receive penalties and fines which then could damage your company’s reputation or endanger your operations. A reliable firm will assure your compliance with all regulations.
Reduced administration: When you outsource your payroll, you will reduce your administrative burden significantly, only having to speak with the payroll outsourcing firm you have contracted.
Technological solutions: In the event that you are outsourcing payroll in Colombia, you will want your firm to provide you with the newest human resources management technology, which allows you to monitor the work closely.
Additional services: If you choose an EOR in Colombia, they will be able to assist with recruiting new staff, as well as on-boarding and off-boarding of those staff. By hiring via an EOR, you can also avoid having to establish an entity in the country if you do not already have one.
Biz Latin Hub can support you in Colombia
At Biz Latin Hub, our multilingual team of accounting & taxation specialists is well-equipped to assist foreign investors with payroll outsourcing in Colombia. With our full suite of back office solutions, including hiring & PEO, company formation, and legal services, we can be your single point of entry to Colombia or any of the other 17 countries across Latin America and the Caribbean where we are present.
Reach out to us now to discuss your business needs or a free quote.
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