If you are doing business in Panama or planning to launch in this prosperous Central American market, you may find that outsourcing your payroll is a good option for streamlining your operations. Because when you choose payroll outsourcing in Panama, you hand over a heavy administrative task as well as the compliance issues related to it.
Payroll outsourcing can be provided by a traditional accounting firm, or by a professional services provider that has professional employer organization (PEO) services within its portfolio.
A PEO firm is a company that will hire staff on behalf of a client, allowing them to enter productivity as soon as those employees are hired, as well as to avoid the need to incorporate a local entity.
SEE ALSO: Lawyer in Panama: Find a Good Corporate Attorney
For anyone seeking a small number of overseas employees, or a team to work on a limited-scale project, that can mean both time and cost savings, making it a particularly attractive option.
The provider will also be able to help with the recruitment, hiring, onboarding, and offboarding of those staff, as well as managing their salaries, which is why they are often referred to as a PEO payroll company.
Note that a PEO firm may also be referred to as an employer of record (EOR), and while some providers differentiate between PEO and EOR services, they are effectively the same.
If you would like to know more about how we can assist you with payroll outsourcing in Panama, have questions about PEO services in the country, or would like to explore other back-office support options, contact us today.
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What is payroll outsourcing in Panama?
Payroll outsourcing in Panama entails contracting a provider to manage the payroll of all or some of your employees, who most often will be based in a different jurisdiction to the client they are working for.
As such, it forms a critical element of PEO services, however it can also be taken as a standalone service.
In terms of the payroll itself, the provider will oversee the following:
- Timely payment of salaries and tax responsibilities
- Proper undertaking of calculations related to those and other payments
- Production and distribution of payslips
- Information management and tracking related to all of the above
Where payroll outsourcing in Panama forms part of a wider PEO package, the provider will also be able to assist with:
- Seeking candidates for positions
- Undertaking initial interviews with candidates
- Preparing contracts and other paperwork for selected candidates
- Onboarding and offboarding employees
- Overseeing the proper implementation of all laws with regards to those employees
Is payroll outsourcing in Panama right for you?
Panama is particularly popular with foreign investors, in part because of the prosperity and opportunities on offer in this highly developed economy, as well as the country’s famously secure banking system, including an offshore banking regime that does not tax users on income generated outside the country.
The fact that Panama is one of Latin America’s dollarized economies is also a major draw for investors from the United States, or who hold significant assets in US dollars, given tha stability the currency offers, as well as benefits associated with avoiding currency conversions to transfer funds in or out of the country.
Beyond that, Panama is known for being particularly favorable to business and investment, with minimal red tape and streamlined processes for the likes of company formation.
SEE ALSO: Forming an Offshore Company in Panama: What You Need to Know
Panama also has relatively low levels of violent crime, including one of the lowest intentional homicide rates in Latin America, a favorable immigration regime, and has good infrastructure and high-quality healthcare.
Combined with the fact that there are regular flights to major US cities, those factors make Panama more attractive to both investors and expats, with a large retiree community from the United States and Canada living in the country, which was recently named as one of the best countries in the world to retire to.
Beyond its banking regime, Panama is perhaps most famous for the Panama Canal, a major artery for the global shipping industry, providing access between the Atlantic and Pacific oceans, and generating an estimated 6% of the country’s GDP in the process.
However, the country also sits on gold reserves, produces agricultural goods such as bananas and coffee, and has a well-developed manufacturing sector, with chemicals, ships, and pharmaceuticals among its key exports.
Nevertheless, its massive banking industry and high level of education mean that the services sector remains the most significant, generating more than 70% of GDP in 2020.
For anyone taking advantage of the opportunities and business conditions on offer, or planning to launch in the country, despite the relatively low administrative hurdles to doing business compared to other markets in the region, it is worth keeping in mind that official processes will be carried out in Spanish, and considerable compliance considerations remain.
For that reason, payroll outsourcing in Panama can still be a wise choice, allowing you to tap into the expert knowledge of a local provider, while avoiding administrative and legal inconveniences.
Use a payroll calculator to understand costs
If you would like to consider the costs associated with hiring, and by extension payroll outsourcing in Panama, compared to other markets in the region, an online payroll calculator can be a useful tool.
A payroll calculator will only give you a general idea of the costs associated with hiring, however it will offer a good indication of the likely and comparable tax burdens.
They can then be compared to other jurisdictions, which can be the basis for further exploration of other potential markets.
The Biz Latin Hub payroll calculator offers information on hiring costs related to all of the markets in Latin America and the Caribbean where the company has offices.
The Biz Latin Hub payroll calculator will provide guide calculations including the following variables:
- Location where staff are being hired
- Expected salary for each employee
- Prefered currency (with USD and local currencies available for each jurisdiction).
Biz Latin Hub offers PEO services and payroll outsourcing in Panama
At Biz Latin Hub, we provide integrated market entry and back office services throughout Latin America and the Caribbean, with offices in 17 major cities around the region.
Our portfolio includes accounting & taxation, company formation, due diligence, legal services, and hiring & PEO, while our unrivaled reach means we are ideally placed to support multi-jurisdiction market entries and cross-border operations.
Contact us today to find out more about how we can assist you.
If you found this article on payroll outsourcing in Panama of interest, you might want to check out the rest of our coverage of this popular Central American market. Or read about our team and expert authors.
