To start a business in Panama there are a series of requirements and steps, which are basic in relation to Panamanian law and thus enjoy the necessary protection for the investment we are making and limit possible legal risks to a minimum. The first, basic and concrete way, is how we want our company to be, for this we must be clear in certain initial points and aspects:
1. Will I be the Only owner of the business?
2. What type of business is it? What activity will it be involved in?
3. What Government Permits do I need for my business?
In order to clarify your doubts, what if we go point by point,
WILL I BE THE ONLY OWNER OF THE BUSINESS?
This topic is completely crucial, as it will help us to recognize who the owners of the business are and in addition to this, it will provide us with insights on how to start our business. In Panama, the 2 most used ways are through "Private Citizen" and through a "Corporation". Both ways are completely legal, but it depends largely on our interest and the number of people who are going to be part of the business.
Private Citizen– Personal Operations Notice
One of the ways to start a business in Panama is through our identity document (Personal Identity Card - Permanent Resident Card). For this, all documentation must be requested through our personal identification.
The first step would be to register with the General Revenue Office (DGI) and request our Taxpayer's Identification Number (NIT). At the end of this process, we must request our "Personal Operations Notice", it is precisely this document which starts our economic activity in Panama. If you are a foreigner, it will be necessary to have a Work Permit to carry out these procedures.
We must take into consideration how we are starting the business, this mechanism (Personal Operations Notice), should be used when we will be the only owner, without the participation of other partners or people who "legally" represent the business.
Business Through a Corporation
This mechanism is the most used, because we completely separate our personal income, for reasons of other activities, from the business income. At the same time, as it is through a Corporation, it offers the possibility of having several Partners or Shareholders at the same time. This gives us the opportunity to have an additional investment and outside of our own investment, of course it is giving up partnership shares of the business and, therefore, also of the profits of it.
Once the Corporation is created and duly registered in the DGI, we must request the Company's Operations Notice and thus, we start our business.
WHAT TYPE OF BUSINESS IS IT? WHAT ACTIVITY WILL IT BE INVOLVED IN?
This is one of the main questions that we must ask ourselves from the start of our business, since, from this answer, depend the possible permits necessary for our economic activity. We must take into consideration, for example, that, if our interest is the sale of liquor, we will need a liquor license; But if we have a restaurant and we want to sell liquor as a "food accompaniment", it is another type of Permit that we must request.
In addition to this, a "Restaurant" type business needs very different permits than those required for a Distributor, or even for a retail business.
Once you have in mind the type of business and the economic activity to be carried out, we recommend legal advice with a Licensed Attorney who will explain the Permits required for said economic activity.
WHAT GOVERNMENT PERMITS DO I NEED FOR MY BUSINESS?
There are a series of Permits that can be requested, but it all depends on the type of business to be carried out. Similarly, there are certain permits and registrations that are basic and crucial in order to carry out the business in a legal way and at the same time, comply with commercial guidelines.
In advance we recommend the following points to consider
1. Register our company or Personal TIN with the DGI
2. Request the Operations Notice of our business.
a. Never run a business WITHOUT Operations Notice
3. Consider the Registration and Request for the Social Security payroll.
a. It must be taken into account that if the business grows and you hire staff, this
step will be ESSENTIAL.
4. Register our company in the Township in which the Business is located
5. If our business has any activity that involves making, cooking or handling Food, we must
have our Sanitary Permits and consider the Food Safety Registry of those products for
sale, if this is the case.
Finally, we recommend you get legal advice from a licensed Attorney, who can clarify your doubts and guide you through this new process you are going to start.