Starting a Business in Panama: Requirements & Types of...

How To Start a Business in Panama

Hundreds of foreigners start new Panama businesses every year. Knowing Panama’s laws regulating business and commerce along with their structures is critical before starting a business in Panama. Continue reading, and learn about the different types of Panama business, and specific requirements when starting a business.

Choose from 3 Different Types of Panama Business Ownership

Sole Ownership

Sole ownership is where an individual or a family starts a new business and owns the entire business and all assets outright.

Partnership

A Panama business partnership is where you team with one or more people to start a new business. There are three types of Panama business partnerships: General, Limited and Civil, each explained more below.

Panama General Partnership
General Partnerships are recognized in Panama and are called “Asociacion General”.  The problem with this type of partnership is that all of the partners can be held liable by a civil court if one of them is negligent or fraudulent during the course of conducting business on behalf of the partnership.

Panama Limited Partnership
Panama recognizes Limited Partnerships called “Sociedad de Responsibilidad Limitada” (SRL).   Between two to 20 partners from any country can form the limited partnership.   The capital can range between $2,000 USD to $50,000 USD.  Every member’s name is filed with Panama’s Public Registry along with their capital contribution.   While a General Partnership requires meetings to be held, If there are five members or less no meetings are needed.   The partners’ civil liabilities are limited to the capital contribution.

Panama Civil Partnership
Panama also recognizes a Civil Partnership called “Sociedad Civil”.  Partners are subject to unlimited civil court judgment liability.  This is a common partnership for Panama professionals like doctors, attorneys, and architects.

Corporation

A Panama corporation is legally registered with the government, and is required to issue  corporate stocks and maintain a Board of Directors and at least three officers. Two people called “subscribers” create a Panama corporation by filing the Articles of Incorporation with the government’s Public Registry.  After the Panama corporation is registered a minimum of one shareholder is needed.

 

Other Requirements to Starting a Business in Panama

Panama Business Name
Once you have decided on the type of entity to own the Panama business, a unique business name must be selected.   Panama’s Public Registry will contain all of the Panama corporations along with their company’s business name.   The same goes for Panama partnerships.

Panama RUC
Panama’s revenue agency (DGI) issues a RUC which is a company’s income tax ID number.   This number is used for all business purchases and sales along with the income tax return.

Panama Employees
New Panama businesses hiring workers must obtain a new social security employer number from Panama’s Social Security Administration (Seguro Social).   The worker’s social security registration is also handled by the Segura Social in conjunction with the Ministry of Labor (Ministerio de Trabajo).

Panama Tourism
Panama Tourism businesses must obtain a new tax account with Panama Ministry of Tourism (Autoridad de Turismo) or “ATP”.   Panama Tourism businesses must register with the ATP.   Hotels are required to impose a 10% tourism sales tax on top of the normal 7% sales tax.

Foreigner Restrictions
Foreigners cannot become medical or veterinarian doctors, attorneys, engineers, architects, or open a retail business. Additionally, foreigners are required to be legal residents for at least 10 years before becoming real estate agents (brokers) or insurance brokers.

If you wish to start a new Panama business please don’t hesitate to contact our law offices for further details. Also, learn more about why Panama is the best place for offshore business.

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