Finding the right professional employer organization (PEO) payroll company in Panama will allow you to hire qualified local staff without having to formally establish a business in the Central American country. For foreign companies with a limited-scale or short-term operation, it is often the most suitable option available, while for others planning a larger-scale involvement, using a PEO payroll company in Panama offers the opportunity to get familiar with the market before investing further.
A PEO company can also be known as an employer of record (EOR), while PEO payroll services can also be referred to as payroll outsourcing.
With a gross domestic product (GDP) of 68.5 billion (all figures in USD) in 2019 and a population of approximately 4.5 million, Panama is considered a high-income country that saw it score a high 92.0 in the World Bank’s Doing Business 2020 report. The nation recorded more than $6 billion of foreign direct investment (FDI) inflows in 2019, stimulated by a territorial tax system in which only income earned within the country is taxed.
The Central American country’s business-friendly approach sees it employ the lowest value-added tax (VAT) and income tax rates in Central America, while its politically stable government and secure banking sector have made it a highly popular destination for foreign investors and expats. Some of the country’s main export commodities include refined petroleum, coal tar oil, passenger and cargo ships, and gold.
Panama has an advantageous geographic location, linking Central America to South America, while also connecting the Caribbean Sea and the Atlantic Ocean via the iconic Panama Canal, through which roughly 14,000 ships transit each year, generating an estimated 8% of the nations’ GDP.
If you are considering company formation in Panama or are otherwise looking to enter the market, read on to understand the advantages of hiring local staff through a PEO payroll company in Panama.
What is a PEO payroll company in Panama?
A PEO payroll company will support your business expansion by providing high-quality HR services that will give you time to focus on other vital aspects of your business. A PEO payroll company in Panama will be responsible for recruiting, hiring, firing, managing employee payroll, and paying all holiday and social benefits.
Operating as the official employer in the eyes of the local government, a PEO payroll company in Panama will be in charge of remunerating local personnel in the event of resignation, dismissal, maternity leave, retirements, and any other payments established by local labor regulations.
In addition, with extensive knowledge of local labor, tax, and corporate legislation, a PEO payroll company in Panama will also guarantee your business remains in good standing with authorities and will assist you with time-consuming administrative processes, such as drafting contracts and other documents and paperwork.
Main advantages of hiring local staff trough a PEO payroll company
Working with a PEO payroll company allows you to enter the Panamanian market in a short time frame, allowing you to get your commercial operations underway in a timely manner. Some of the main benefits of hiring local staff trough a PEO payroll company in Panama include:
Legal Representation: Claims related to your company’s employees will be addressed to the PEO payroll company, which is equipped to represent your business and resolve many employee-related legal and administrative issues that might affect your business venture.
Legal Advice: with abundant knowledge of local civil, corporate, tax, and labor regulations, a PEO payroll company in Panama is able to provide expert advice to avoid delays and overcome challenges often faced by foreign enterprises.
Profitability: Hiring local staff through a PEO payroll company in Panama will allow you to save money and avoid additional fees that may increase the cost of developing your business operations in the country.
Employee recruitment: with years of experience helping companies finding qualified personnel, a PEO payroll company will identify and recruit the most suitable staff for your company.
Visa processing: a payroll company will also monitor the work visa application process for foreign employees and reduce any chances of rejection.
Time-saving: By outsourcing time-consuming and complex HR tasks, you will have time to manage other essential aspects of your newly established business.
Understanding the hiring process in Panama
Understanding local legislation can be challenging for foreign executives. Without the support of a PEO payroll company in Panama, you would need to complete the following process to legally hire staff in the country:
- Incorporate a new company
- Open a corporate bank account
- Register your company with the Ministry of Commerce
- Register your organization with the municipality where it is located
- Prepare formal employment contracts for all employees and obtain contract approval from the Ministry of Labor
- Register your company as a formal employer with the Social Security Fund of Panama (CSS)
- Comply with monthly payroll statements
Note that in Panama, only 10% of a company’s total payroll can be foreign.
Biz Latin Hub can be your PEO payroll company in Panama
At Biz Latin Hub, our team of multilingual specialists is equipped to deliver excellence and help you recruit the most suitable employees to ensure the success of your commercial operations in Panama. With our full portfolio of hiring and international PEO services, we can be your single point of contact to incorporate your business in Latin America and the Caribbean.
Reach out to us now to receive personalized assistance.
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