Starting a small business in Panama is a great option for those looking to live and invest overseas. People who relocate to Panama for an extended period of time often find great success in small businesses that cater to specific needs of the local and expat community and use these businesses to plant roots for a long, happy life in the country. There are many types of small businesses that can be successful in expat communities, and with expat ownership. The key is finding the right fit for you, and for your target market. In order to do it properly, there are some important steps to take and processes to get familiar with before you start. Here is a simple, easy-to-follow guide and breakdown of what you’ll need to do when starting a small business in Panama.
Why are so many expats looking at starting a small business in Panama?
Many expats are looking at starting a small business in Panama because of its lifestyle benefits like a slower pace, lower cost of living, and good quality of life. The country offers favorable immigration programs, such as the Friendly Nations Visa, and uses the U. S. dollar, which contributes to a stable economy. There is also a thriving economy in Panama that has an abundance of opportunities for small business development, particularly in the services sector.
Businesses like restaurants, tour companies, boutique shops, car services, hotels/hostels, and real estate companies are all popular choices among expats. These ventures often thrive in areas with high foot traffic, such as Panama City, Boquete, Bocas del Toro, and Coronado. Health and wellness businesses, such as massage, yoga, and nutrition, are in demand, especially in areas frequented by health-conscious tourists and retirees. With an aging expat population and a growing awareness of preventive care, there’s strong interest in holistic and alternative wellness services.
Lastly, online or remote businesses like consulting or e-commerce can be good options, particularly for expats with international client bases. These ventures often enjoy low overhead, geographic flexibility, and minimal regulatory hurdles, making them attractive to those who want to live in Panama while earning income from abroad. Whether you’re offering digital marketing, coaching, writing services, or selling niche products online, Panama provides the digital infrastructure to support remote operations with reliability and speed.
Structuring your small business and doing your due diligence
When choosing a business structure, expats have several legal options. The most common is a corporation (S. A.), while a limited liability company (LLC or S. R. L.) is simpler for small-scale ventures. A sole proprietorship is only advisable for residents. It’s crucial for foreigners to hire a local attorney, select a resident agent, and understand their legal responsibilities. Keep in mind that while Panama is generally favorable to small business ownership, there are some regulations and hurdles that you may not have expected or planned for. These can come up at a moment’s notice at times, which can be frustrating, but it’s all part of doing business in Panama, and needs to be addressed professionally and with proper consulting from your attorneys.
Panama has a territorial tax system, meaning that only income earned within the country is taxed. Expat-owned businesses can benefit from tax exemptions and incentives, especially in Free Trade Zones, where they can enjoy reduced taxes and other benefits. It is important for expats to work with a local accountant who understands their specific needs to navigate these tax considerations effectively. To succeed long-term as an expat entrepreneur, build relationships with both expat and local communities. Consider joint ventures with Panamanian partners for local insight. Stay compliant by renewing business licenses, paying taxes, and maintaining legal status. Join business networks like the American Chamber of Commerce or local expat groups.
Your next opportunity awaits in Panama
Starting a small business in Panama can be a great opportunity for expats looking for financial independence and a better lifestyle. The country has a stable economy, welcoming policies for foreigners, and many chances for entrepreneurship. Expats can launch various businesses, such as services or tourism.
However, it is important to prepare for the move. Understanding local laws, adapting to cultural differences, and managing bureaucratic processes are crucial for success. With the right support and an open mindset, expats can create successful businesses in Panama. If you’re ready to begin, International Relocation Firm can assist with your relocation and business setup.
