The Republic of Colombia’s increasingly outward-looking economy is becoming an enticing target for foreign investment and international companies widening their global horizons. Colombia is the fourth largest economy in South America behind Brazil, Argentina and Chile. The growing emphasis on entrepreneurship and private enterprise means Colombia is very much ‘open for business.’ At the same time, the International Monetary Fund predicts it has better growth prospects than other regional economies.
Alongside traditional sectors such as agriculture, mining for gold and emeralds, petrochemicals, coffee and textiles, there is strong growth in other areas, emphasising innovation and technology. These include remote technical services, e-commerce and cybersecurity. Tourism is expected to be another sector set for growth. The opportunities are there and increasing in number, but they come with challenges – and payroll management in Colombia is among the most demanding. Whether your company is planning to move staff abroad or hire employees in the new territory, you cannot risk making mistakes operating in Colombia’s complex payroll and income tax regime – it could cost you time and money.
There is an alternative and more straightforward route. Bradford Jacobs’ will navigate around these potential pitfalls effectively and efficiently thanks to our Professional Employer Organisation (PEO) services. We recruit the staff in-country and then implement our comprehensive knowledge of tax and payroll regulations. As part of our service, Bradford Jacobs files returns and remits associated payments for tax and social security contributions directly from our payroll system to the relevant authorities. Your new staff members can be up-and-running in days rather than weeks or months to establish a legal entity in the country.
Remote payroll – This option allows businesses to operate under a single payroll system by adding employees in Colombia to the parent company’s payroll. However, these employees must operate under different regulations, which is likely to cause problems.
Internal payroll – You may operate payroll for your subsidiary, especially if you are committed to growing your company’s presence in Colombia. However, this does require hiring dedicated HR staff who understand Colombia’s employment and compliance laws.
Colombian payroll processing company – If you are considering outsourcing, then working with a Colombian payroll company will help in processing your payroll – but not when it comes to compliance.
Colombian payroll outsourcing – However, another option is available to solve both concerns – by working with Bradford Jacobs. We can handle payroll and compliance for all your employees in Colombia. We lift the administrative stress from your shoulders so you can focus on what you do best.
In principle, foreign companies intending to run payroll services in Colombia must establish subsidiaries to comply with social security and tax obligations while employers and employees undergo strict registration procedures. This is essential for dealing with the Colombian Tax and Customs National Authority (Dirección de Impuestos y Aduanas Nacionales, DIAN) and the General System of Social Security in Health (Sistema General de Seguridad Social en Salud, GSSSH).
Operating payroll services in Colombia is complex and requires detailed practical knowledge of the company, tax and employment legislation – and staying up to date with regular changes to the rules. A preferred choice for a subsidiary is a limited liability company, which operates under Colombia’s Commercial Code and is known as a Sociedad de Responsabilidad Limitada (SRL). It has a minimum of two partners who generally have no liability.
Outsourcing payroll services in Colombia will streamline your operations by dealing with the following:
International companies planning to run payroll services in Colombia must establish a legal entity in-country and decide on the best business structure for their Global Expansion plans. A popular choice is to set up a limited liability company as a subsidiary, known locally as a Sociedad de Responsabilidad Limitada, SRL. This company type needs two or more members or partners and will be incorporated according to the Colombia Commercial Code and regulated by the Bogota Chamber of Commerce.
Registration procedures and other requirements include: