Paying and managing remote Panamanian hires can be difficult for companies unfamiliar with local laws and those that run on a limited budget. That's why outsourcing human resources (HR) tasks to a professional employer organization (PEO) in Panama makes sense.
PEOs are outsourcing companies that perform various HR duties for their clients, including payroll handling, benefits administration, and employee management. They are an excellent choice of a partner for small and medium-sized companies looking to grow without spending too much time, effort, and money in the process.
Read on to learn more about PEOs and the advantages of using them to pay and manage remote Panamanian employees. You'll also discover how to choose the best global PEO service provider in Panama.
Global or international PEOs are companies that provide outsourced, integrated HR services to reduce employer risks and ensure compliance for the client. Small and mid-sized companies often hire PEOs for business-critical tasks such as risk management, payroll processing and administration, vacation tracking, benefits administration, and taxes. PEOs take over these duties and many other employee-related liabilities and responsibilities, so their clients can focus more on driving success through their operations.
Here are some other characteristics of PEOs you should know:
When researching PEOs, you may encounter global employment organizations (GEOs). At first glance, PEOs and GEOs appear similar since they relieve payroll and HR burdens for companies. However, they work differently.
GEOs provide many advantages, including full employee insurance coverage and risk bearing. But GEOs don't mitigate compliance risks like permanent establishment risk. They may also:
PEOs offer many benefits to companies of all sizes, especially those with limited time and resources for creating subsidiaries in Panama. Some of them include:
PEO providers handle a significant range of HR services, including:
Unlike GEOs, which handle all your HR tasks, PEOs let you pick services. For example, if you need payroll and time attendance, your PEO will only assume those functions.
PEOs can also give your employees comprehensive benefits that align with their needs and local regulations, including:
Panamanian labor and tax laws can be hard to understand, even if your in-house HR staff is fluent in Spanish. They're also prone to change, so you may find it hard to keep up with and meet all regulations. Upon non-compliance, you are likely to face sky-high fines and reputational damage.
Top-class PEOs will prevent such situations altogether and keep your company compliant with regulatory updates. Moreover, they can team up with your in-house HR team to update it on changes and support the right moves towards compliance.
The cost savings of working with a PEO are significant because you don't have to finance the following:
PEO services are also inexpensive. According to Google, most packages start as low as 2% of your wages for basic salaried workers' plans and can go up to 11% of your wages for more comprehensive plans. Either way, you can expect to pay around $500 to $1,500 per employee yearly, which is cost-effective, especially for small teams.
First-class PEOs employ experienced Panamanian HR experts who can help you comply with relevant labor and tax laws without investing too much time and effort in the process. They also use state-of-the-art HR software to accelerate risk management, payroll, and other HR functions. These platforms streamline your workflow by answering significant questions about it, including:
These tools also let you:
As you can see, Panamanian international or global PEOs can help you onboard, pay, and manage local employees according to relevant labor and tax laws. Here's a breakdown of how it works.
Once you partner with a PEO in Panama, you and the PEO will share employer responsibilities. Most of the time, your PEO will be responsible for:
Note that you don't have to outsource all of these functions unless you want to. As previously mentioned, PEOs can be responsible for all or some of your HR tasks.
Meanwhile, you're responsible for:
Each PEO's price structure is different. Depending on the company you choose, you may have to pay for services and:
PEOs typically charge administrative fees for their services. They usually use the following pricing structures:
Unfortunately, some PEOs exploit their co-employer status to earn additional revenue without telling you. For instance, PEOs may define and calculate taxable wages and payroll taxes fees differently to inflate your invoice. They may also hide additional costs in the fine print, such as:
If partnering with a PEO sounds like the right choice for your company, follow these tips to get started.
First, assess how much HR help you need. Although it's tempting to outsource all your HR functions to a PEO, you may not need to.
As a general rule of thumb, if you only need a few independent contractors for part-time work, you can work without PEO's help. Panamanian labor laws only apply to employees, not independent contractors. Under Panama's Labor Code, employees are subordinate or economically dependent on their employers. In other words, they're workers in employer-employee relationships with regular payments and mandatory workdays and hours.
Accordingly, you should partner with a PEO in Panama if you want to hire full-time employees from the country. The right PEO will streamline payroll and benefits administration and ensure compliance with Panamanian labor and tax laws.
When you determine your needs, you can search for PEOs with confidence. However, perform a thorough research of every company you put on your list, whether found online or through recommendations.
You can ask the following questions to learn more about your chosen PEOs and narrow down your choices:
PEOs give you a budget-friendly and reliable way to pay and manage remote employees in Panama. However, most can't help you source employees, which is the most challenging part of the employee cycle. It's especially tough in competitive niches like blockchain and DeFi development.
Fortunately, Revelo is here to help. As Latin America's leading tech talent marketplace, we provide premier PEO and recruitment services. Specifically, we offer access to over 300,000 highly educated and experienced IT professionals, including blockchain developers, game devs, site reliability engineers (SREs), and PHP developers.
All you need to do to start hiring in Panama with Revelo is tell us your requirements, and we'll handle the rest. Our team of experts will list the best pre-vetted candidates and assist you with onboarding, payroll, benefits, and other tasks once you make your pick.
Reach out today for more information about Revelo and our PEO services in Panama and beyond.
Further Resources: Alternative Technology Staffing
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