Having expert and timely advice during the start-up stage of your business is essential for its success. This is especially true when the business is to be located in a foreign country where the laws and business practices and customs are different.
Corporations and other Business Entities
Even though our laws provide for the use of other business entities, such as Limited Liability Companies, Limited Partnerships, General Partnership or Civil Law Companies, in Panama most businesses are set-up and carried-out using a Corporation.
A Corporation is the choice of most because of its relative ease of formation and operation, the ample limited liability of its shareholders and the possibility of having a single shareholder, among other aspects.
Registration of Foreign Companies in Panama
A business in Panama can also be pursued by using foreign companies. For this, the foreign entity must first comply with certain additional registration requirements applicable.
For some multinationals companies with corporate or regulatory restrictions as to the Formation of new subsidiaries, this might be their only or best option for conducting business in Panama.
Commercial License
To run a business in Panama you must have at least one commercial license. Other type of licenses may be required for certain regulated businesses such as Banks, Insurance Companies, Brokerage Firms, and others.
Social Security Registration
To hire and employ personnel in Panama you must register the business with the Social Security Office and obtain an Employer Identification Number for identification purposes in monthly payroll payments and reports.
Employment Contracts
It is unwise not to have properly drafted contracts with employees at the start of the business. If an employer does not have written contracts, the “story” the employee tells a court in Panama in case of controversies will be given greater credibility over the employer’s version of events, unless proven otherwise by the employer.
Protection of Intellectual Property
If your Intellectual Property is not protected at start-up you could very well become involved in a litigious situation at start up, distracting you from the core business or even put your business in jeopardy. Proper registration is highly recommended.
Final Comments
Conducting business is Panama is a very straightforward proposition. However, seeking the advice of local professionals during the start-up stage is highly recommend to avoid costly and time-consuming mistakes.
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