Panama is not only an attractive jurisdiction for tourism and vacations, but also a reputable place for business, making it an enticing destination for those considering how to start a business in Panama. In fact, Panama has become a place for economic activity worldwide, from small family businesses to large franchises. The canal, the financial district, and business-friendly policies are popular contributors.
Let’s discuss some of the technical requirements you need to set up a business in Panama.
Types of ownership
You can choose from three types of business ownership:
Partnership
A Panama business partnership is where a team joins to start a new business. You can choose from three types of partnerships: General, Limited, and Civil.
- General: also known as Asociacion General, in this type of partnership, all members are held liable by a civil court if one is negligent or fraudulent while conducting business.
- Limited: in Panama, they are also called as Sociedad de Responsabilidad Limitada. It requires filing each member’s name and capital contribution in Panama’s Public Registry. The partners’ civil liabilities are limited to capital contribution.
- Civil: also called Sociedad Civil. This is a common partnership for Panama professionals like doctors, attorneys, and architects. Partners are subject to unlimited civil court judgment liability.
Sole ownership
In this case, an individual or a family starts a new business and owns the company and all assets.
Corporation
Corporations are legally registered with the government, must issue corporate stocks, and maintain a Board of Directors and at least three officers. After the Panama corporation is registered, a minimum of one shareholder is needed.
Choosing the Right License
All corporations, partnerships, or individuals must get a business license to carry out commercial activities in Panama. The type of business license usually follows your decision on the entity (natural or a legal person). This is a process that goes through the Ministry of Commerce and Industry.
View all the details about the Panama Business License here
Accounting Requirements and Financial Statements
In Panama, having an accountant as an employee in the company is not necessary. But the company must work with an accountant for tax returns.
All commercial entities and individuals are obligated to create and keep their financial accounts in their offices or premises, accurately and truthfully representing the results of their yearly or periodic operations, available for relevant authorities.
Companies must keep accounting records identifying the commercial activities, assets, liabilities, and equity must represent the quantities and nature of commercial transactions.
The business must prepare such accounting records following International Financial Reporting Standards for all companies and people doing business (IFRS).
Organizations and individuals conducting business also need to keep a general diary and a ledger on file. A resolutions book and a register of shares and shareholders are also required to be maintained by commercial enterprises.
Yearly Fees and Regulated Activities
Every registered corporation must pay the Treasury a $300.00 yearly fee. Other costs also involve Resident Agent, and appointed Directors and Officers depending on the type of business you choose.
You should also remember that specific laws regulate some business activities depending on the industry. For instance, the Superintendence of Banks’ licensing system regulates banks and fiduciary businesses. The Superintendence of Insurance and Reinsurance of Panama Regulates insurance firms, insurance brokers, reinsurance brokers, captive insurance companies, and insurance administrators. And the Superintendence of the Securities Market regulates stockbrokers and securities.
Reach Out to Us
Kraemer & Kraemer has been helping clients open their corporations since 2008. Please send us a note to info@kraemerlaw.com to have one of our experts assist you.
