Panama is a country in Central America, sandwiched between its western neighbor Costa Rica and its southeastern neighbor Colombia. It is well-known as a significant shipping route between the Atlantic and Pacific Oceans because of its canal. Services, trade, and tourism are all vital parts of Panama’s robust economy. Panama uses a currency called the Panamanian Balboa, which is tied to the US dollar and is written in Spanish.
Many would-be business owners around the globe now fantasize about setting up a company in this country. The Panamanian firm ensures the country’s continued economic growth and commercial success. Moreover, the only tax due is the uniformly applied Annual Flat Tax. Because of this, incorporating a business here is a great idea.
Procedures for forming a company
When compared to other countries, registering a company in Panama is easy and doesn’t take too much time:
Select a company name
The first stage in forming a Panamanian corporation is to settle on a company name. The name you choose cannot be used by another Panamanian business.
You can register a variety of business structures, such as a Limited Liability Company (LLC), a Corporation, or a Partnership. There are benefits and drawbacks to each of these business structures, so pick the one that works best for you.
Select a company-registered agent
Find a Panamanian resident to act as your company’s registered agent. A registered agent is a physical or legal entity designated to accept service of process on behalf of a firm.
Prepare your article of incorporation
The next thing to do is to write out your company’s articles of incorporation. Your company’s mission, stockholders, directors, and officers are all spelled down in this document.
Articles of Incorporation must be filed with the Panamanian government once they have been drafted. A lawyer or registered agent can help with this. If your company is officially established in this state, you’ll need to apply for a tax ID with the country’s tax authorities. This is a mandatory identifier for any business.
Open a bank account
Company formation is not complete until a bank account has been opened for the business. This will enable you to conduct business with customers and accept payments from them.
Company registration in Panama is a simple process that may be finished in a matter of weeks. To make sure you’re doing everything by the book and following Panamanian law, though, it’s best to engage with an experienced attorney or registered agent.
Panama business registration requirements
To register a business in Panama, an entrepreneur must satisfy the following requirements:
- There must be at least three directors.
- Have three officers: President, treasurer, and secretary (also to be named dignitaries).
- There must be at least two subscribers, and each subscriber must commit to purchasing one share.
- A legal representative can be the president or an associate established in the Social Pact.
- A local representative (it is mandatory by law to have a Panamanian lawyer).
- Create a tax ID at a registered office.
- Get your tax returns in on time every year.
- At least two partners or stockholders are required.
- Payment is made on an annual basis to the Public Registry.
The Pros of setting up a company in Panama
The following are some of the advantages of forming a company in Panama:
Financial security
The economy has grown steadily over the past few years, making the country competitive with others in the Caribbean.
Company formation made simple
Startups are encouraged to set up shop in Panama because of the country’s easy company registration process.
Simple business administration
As there is no legal requirement for having meetings or keeping financial records in Panama, local company rules allow for more fluid firm management.
Reasonable tax rates
Because there is no tax on foreign company activity or transactions, Panama’s taxation policy is quite appealing.
Gains from trade
Trade is liberalized and free trade agreements have been signed by Panama, which has also established a free trade zone and other special economic zones.
