Understand the importance of outsourcing corporate secretarial services in Panama.
Panama is one of the most attractive countries for doing business in Latin America. The World Bank states that the country has a fast growing economy with a continuous growth percentage of 4.6% over the last 5 years.
We outline crucial competencies to look for in a provider of corporate secretarial services in Panama, and the importance of these services when expanding your business.
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Importance of corporate secretarial services in Panama
When incorporating your business in Panama, it is typical to encounter a number of social and regulatory challenges. These can include language barriers, cultural differences, and an unfamiliar legal framework.
Hiring a local provider of corporate secretarial services in Panama can help executives overcome these challenges, allowing them to focus on building a business strategy to develop their company.
Furthermore, the right corporate secretarial services provider supports the company’s risk management activities by enabling businesses to comply with local regulations and fulfill corporate obligations.
Avoid penalties or sanctions from local institution and generate success for your business in Panama by seeking an experienced, trusted corporate secretarial services provider.
What are some available corporate secretarial services in Panama?
1. Bookkeeping services
Bookkeeping is the process of recording your business’ financial transactions daily. It is the backbone for creating your business’ financial statements.
Business owners must bear in mind that bookkeeping and accounting registries are mandatory for every legal entity registered in Panama. Even offshore companies must ensure that they are keeping their accounting records according to Panamanian standards.
Companies with local activities in Panama must be careful with the management of their accounting registries and financial statements, as they have obligations to file annual and/or monthly declarations before the DGI (Dirección General de Ingresos).
Tax obligations vary per industry, but the general tax obligations include your business’ value-added tax (VAT), certain withholding taxes and income tax. The right corporate secretarial services provider in Panama will make sure that the company is complying with its obligations to the National Tax Authority, including complying with all relevant tax regulations.
2. Payroll support services
An important corporate secretarial service in Panama that business owners must consider – and that they can also outsource – is payroll processing.
Payroll processing involves calculating, presenting, and paying remuneration for employees, plus making contributions for social security purposes.
Companies that manage employees in Panama have the obligation to file monthly declarations with the Social Security (Caja del Seguro Social). Non-compliance can result in fines imposed on the company, and will create challenges for its Legal Representatives.
The provider must also make sure that the amount of income tax to withhold from employees is correct. The employee’s salary, taxes and deductions must also be included in the annual tax declaration in a form.
With a corporate secretarial services provider in Panama, foreign businesses avoid the risk of non-compliance due to unfamiliarity with local regulations and government expectations. Seek support for hiring and managing your employees, including payroll processing, through professional employer organizations and payroll providers.
3. Auditing or corporate health checks in Panama
An entity health check in Panama – like an audit – is the examination of the business financial reports, accounting records and legal transactions to determine if they comply with local legislations and understand the regulatory ‘health’ of the business. Regular corporate health checks protect the business from unnoticed issues that can result in sanctions or other problems with local authorities in Panama.
By outsourcing corporate secretarial services in Panama, such as the entity health check, business owners can obtain regular reassurance that their company is fully compliant with all local legislation. Local legal and accounting experts have the depth of knowledge and understanding to identify any discrepancies and give businesses confidence that their company is operating within the law.
Most common audits in Panama
Audit of annual accounts for financial statements
The financial statement audit checks all transactions, procedures, and balances of a company. The goal of an audit of financial statements is to determine the accuracy of financial reports and that they reflect accurate information of your business assets and liabilities in compliance with regulations.
Be mindful that financial statements in Panama need to follow IFRS standards.
Fiscal audit
The fiscal audit focuses on a company’s taxes. This type of audit will review the annual/monthly declarations of the company and identify any mistakes that may have resulted in overpay or underpay taxes. Fast identification of unnoticed issues is especially important to avoid problems with local authorities and maintain a clean reputation. Bear in mind that a clean image helps you build new commercial relationships that will support the growth of your company.
The fiscal audit is the most common for companies to outsource to corporate secretarial services providers.
Compliance audit
This final type of audit examines if the business conducts its operations according with internal and external standards. This audit is important to determine if your business complies with all general regulations, plus any additional industry-specific obligations and standards.
The compliance audit is more important to companies that develop activities in special economic sectors in Panama that contain additional compliance requirements such as:
- Education
- Tourism
- Construction
- Financial
- Insurance
- Agriculture.
Finally, the compliance audit also is important for companies that form part of special regimes like:
- Colon free zone
- Panama Pacifico
- City of Knowledge
- SEM regime (Sede de Empresa Multinacional).
These economic sectors offer certain tax, labor, or corporate benefits to companies operating within them. Businesses must comply with special conditions to become eligible for those benefits. Companies that don’t follow these sector- and industry-specific regulations can have their operating license suspended or revoked.
Expert corporate secretarial services providers in Panama will assist you with your auditing needs and escalate any issues that may cause problems for your business.
4. International taxation
While expanding your company in multiples countries in Latin America a commercial strategy will be important to ensure the growth of business. International taxation entails the structuring, planning, and submission of documents for compliance with the respective jurisdictions. This means that understanding more than one country’s tax regulations is of the utmost importance.
The provider of corporate secretarial services in Panama can also assist you in building a strategy considering double taxation and free trade agreements. This will reduce cost for your company allowing a faster growth.
Engage with trusted providers of corporate secretarial services in Panama
Expanding to Panama can be a complex process, but thankfully the country is well known for its wealth in legal and financial expertise. Make sure to satisfy your taxation and legal needs with a trusted, responsive, and efficient corporate secretarial services provider in Panama.
At Biz Latin Hub, we help businesses from all over the world to enter and operate in Panama and Latin America. Our team of local and expatriate lawyers and accountants have vast experience in tax compliance, company incorporation, auditing, and visa services.
Contact us today for a consultation.
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