Deciding to start your business in Panama? There are fundamental requirements to set up a business according to local legislation. These steps ensure optimal protection of your investment and minimize potential risks. Since 2005, Panama has streamlined business setup procedures through various fiscal and commercial reforms. Panama Contact Services handles all the steps so you can operate your company with peace of mind.
Setting up a Corporation (S.A.):
Most businesses in Panama (about 90%) operate as corporations. These structures protect the identity of their shareholders and limit risks to capital and assets in case of difficulties. Setting up such a company takes between 5 and 7 working days in Panama.
Choose a location for the business:
This location can be your personal residence or a premises specifically acquired as the company’s headquarters. You can either own or rent this space.
Obtain the "Aviso de Operaciones":
This is the only authorization required by the government to start your activity. Once you have this document, you can inform the commercial, fiscal, and municipal authorities of your intention to start operating. This saves you from having to make separate applications to various entities.
Opening a bank account:
Although not mandatory, it is highly recommended to open a bank account after setting up the company and obtaining the Aviso de Operaciones. This task can be particularly challenging without knowledge and reliable contacts in the country.
Subscribing to public and private services:
After obtaining the necessary documents, you can subscribe to public services (water, electricity, phone, etc.) and private services (internet, cable).
Registering staff:
It is imperative to register your staff with the Ministry of Labor and Social Security. Without a written contract, the government will take employees’ statements as given. Surround yourself with a reputable accountant who actually carries out these registrations to avoid unpleasant surprises.
Registration with "AMPYME":
Finally, businesses with an initial investment of less than $150,000 must register with “AMPYME” (Autoridad de la Micro, Pequeña y Mediana Empresa). This allows for tax benefits, including an exemption from taxes on the first two income statements.