If you are looking to streamline your operations by outsourcing some part of your back-office services to Latin America, you may want to consider payroll outsourcing in Puerto Rico.
Puerto Rico is a particularly attractive destination in Latin America because, owing to its status as a US territory and the strong cultural connections between the Caribbean island and US mainland, investors enjoy the benefits of operating in a jurisdiction where the US dollar is official currency, as well as the fact that English proficiency is high – with half of people on the island using the language daily.
SEE ALSO: Doing business in Latin America’s dollarized economies
Located between the Dominican Republic and US Virgin Islands, Puerto Rico had a population of 3.21 million in 2020, according to World Bank data.
That year, gross domestic product (GDP) hit $103.14 billion, while the island registered a gross national income (GNI) of $23,370 per capita — a figure significantly lower than the $64,140 registered by the United States overall, but higher than any mainland Latin American nation.
Puerto Rico has a large manufacturing sector, with industry contributing more than 50% of GDP, while the services sector accounts for slightly less. With an emerging startup sector and growing call center industry, the island boasts a ready supply of workers for both skilled and unskilled work.
That means that, beyond just employing accounting professionals for payroll outsourcing in Puerto Rico, you may want to consider hiring local staff via a professional employer organization (PEO).
Because when you hire through a PEO in Puerto Rico, the provider employs those staff on your behalf, who then report directly to you. Meaning you can avoid going through local company incorporation and subsequent liquidation.
The PEO firm will also handle the payroll of those staff, as well as their onboarding and offboarding
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What is payroll outsourcing?
Payroll outsourcing involves a third-party provider overseeing the administrative tasks associated with managing the payroll of some or all of your employees.
When you choose payroll outsourcing in Puerto Rico, that can simply involve the provider managing the payroll for an entity you have established either in the territory or on the mainland United States.
Or, as highlighted above, it could be part of a broader PEO arrangement that sees the provider also employing staff on your behalf.
When you choose to hire staff through a PEO firm, as well as the convenience of not having to establish a local entity, you also benefit from gaining access to the provider’s established recruitment network, helping you to find the right local staff in the shortest time possible.
Some key tasks a provider of payroll outsourcing in Puerto Rico will oversee include:
- Processing payments
- Completing tax procedures
- Undertaking payroll and budget calculations
- Keeping internal registries related to contracts and salaries up to date
- Producing and delivering pay stubs
- Overseeing deposits of wages and benefits
- Preparing periodic reports
Benefits of payroll outsourcing in Puerto Rico
Choosing payroll outsourcing in Puerto Rico offers a number of benefits, including:
Payroll is a time-consuming element of your back office operations, so when you outsource payroll, you can keep a more streamlined in-house accounting team, which can focus their time on other elements of the business.
When you choose payroll outsourcing in Puerto Rico you benefit from the fact that your service agreement will come with the guarantee of full compliance with all local regulations and norms, relieving you of a significant regulatory headache.
A payroll outsourcing company will generally bill you on a per employee basis, which will often be significantly cheaper than going through the process of establishing a local entity, employing local accounting staff, and subsequently liquidating the entity once your local operations close.
The provider of payroll outsourcing in Puerto Rico will be staffed by seasoned professionals who are abreast of all of the latest regulatory developments, meaning that an additional perk will be the opportunity to call on their expert advice for all matters related to managing salaries and benefits in the jurisdiction.
A step-by-step guide to business incorporation in Puerto Rico
If you are considering payroll outsourcing in Puerto Rico for a business you are yet to set up, below a step-by-step guide to the business incorporation process is provided:
1. Reserve your company name
The first step for business incorporation in Puerto Rico is to reserve your company name. This will involve first checking official databases to guarantee that nobody is trading under a similar name.
2. Appoint a legal representative
If you are not planning to relocate to Puerto Rico, or will be away from the island for long periods of time, you will need to appoint a legal representative via a power of attorney, who will be able to oversee a variety of official processes on your behalf.
3. Establish the company bylaws
Your next step for business incorporation in Puerto Rico is to establish the company bylaws, which describe the activities, structure, and goals of the business, as well as details of the shareholders.
4. Register the entity
With the bylaws established, the company can be registered before local authorities, including the Puerto Rico chamber of commerce. This part of the process can be completed by your legal representative.
5. Open a corporate bank account
The final step of business incorporation in Puerto Rico is to open a corporate bank account, with your legal representative likely able to advise you on the best providers to choose from.
6. Choose payroll outsourcing in Puerto Rico
With your company now established, an optional sixth step is to outsorucing your payroll to a third-party provider.
Biz Latin Hub can can assist with payroll outsourcing in Puerto Rico
At Biz Latin Hub, we provide integrated market entry and back office services throughout Latin America and the Caribbean, with offices in more than a dozen jurisdictions around the region, including Puerto Rico.
We also have trusted partners in many other markets, meaning that our unrivaled regional presence makes us ideal partners to support multi-jurisdictional market entries and cross-border operations.
Our portfolio of services includes company formation, accounting & taxation, legal services, bank account opening, and hiring & PEO.
Contact us to find out more about how we can support your business.
If you found this article on payroll outsourcing in Puerto Rico of interest, check out the rest of our coverage of this US territory in the Caribbean. Or read about our team and expert authors.