Multinational companies are increasingly choosing Latin American as the location for commercial expansion. There are two main ways to establish a local presence in El Salvador: creating a legal entity or utilizing a PEO to hire local staff.
How you establish your local sales presence in a country will be the key to the success of your business. Some generate greater profits and others better mitigate the risks, obligations and local regulations of the country.
Here we outline the different ways to establish a local presence in El Salvador, their differences, benefits and risks.
Both alternatives have their benefits and disadvantages. Choosing an alternative depends on your business model, budget and risk tolerance.
Establish a legal entity in El Salvador
When establishing a legal entity in El Salvador, you have different types to choose from. The most common entity is a Corporation. This is the best way to start as it gives you a strong local sales presence from the start. It gives you more control of the company’s administration, including navigating local regulations and laws. In addition, you can manage and have greater control over the employees hired.
However, despite these benefits, consider the following disadvantages:
Costly: Establishing a company is expensive. It not only requires a heavy initial investment but also requires constant investment for maintenance.
Compliance obligations: These include commercial, tax and accounting obligations required for all companies in El Salvador.
Commercial obligations: You must renew your trade registration to continue operating. Additionally, a General Meeting of Shareholders must be held at least once a year.
Tax obligations: Annual tax returns must be submitted monthly to the tax authorities of El Salvador.
Accounting obligations: Includes the preparation of the company’s financial statements.
Other obligations: Depending on your business activity, you must comply with different obligations from several public institutions. These institutions include the Ministry of Labor, the Salvadoran Social Security Institute and the Pension Fund Administrators.
Contract a PEO in El Salvador
Hiring a PEO in El Salvador can be a great alternative if interested in entering the Salvadoran market, but are not willing to heavily invest at first. It is also the ideal alternative if you want to test the local market before making that larger investment.
By establishing a local sales presence, the PEO hires staff necessary to carry out your commercial activities in the country. The PEO is responsible for employee payroll, benefits and handling withholding taxes to employees. In short, a PEO hires talented staff to work for you without you needing to have your own physical company in El Salvador. When your business is ready, you can convert from operating via a PEO to establishing your own company in the country.
A PEO also allows you to operate staff remotely, saving you from incorporation costs and constant administration of a company. Without a physical company presence, the compliance obligations previously mentioned do not apply to your commercial activities or are drastically reduced.
Establish your local sales presence in El Salvador with Biz Latin Hub
There are different options to enter the Salvadoran market. As a business executive you can compare the advantages and disadvantages of each option. Our team at Biz Latin Hub is comprised of local and foreign experts. We can support your businesses however you choose to establish a local sales presence, whether by incorporating a company or hiring a PEO in El Salvador. We offer a wide range of services tailored to the needs of your commercial business. Contact us for more information and guidance, it will be a pleasure to assist you.
As informações fornecidas aqui não devem ser interpretadas como orientação ou aconselhamento formal. Consulte um profissional para sua situação específica. As informações fornecidas são apenas para fins informativos e podem não abranger todas as leis, padrões e práticas recomendadas pertinentes. O cenário regulatório está em constante evolução; as informações mencionadas podem estar desatualizadas e/ou podem sofrer alterações. As interpretações apresentadas não são oficiais. Algumas seções baseiam-se nas interpretações ou pontos de vista de autoridades relevantes, mas não podemos garantir que essas perspectivas serão apoiadas em todos os ambientes profissionais.
La información que aquí se ofrece no debe interpretarse como orientación o asesoramiento formal. Por favor, consulte a un profesional para su situación específica. La información proporcionada tiene únicamente fines informativos y es posible que no recoja todas las leyes, normas y mejores prácticas pertinentes. El panorama normativo está en continua evolución; la información mencionada puede estar obsoleta y/o sufrir cambios. Las interpretaciones presentadas no son oficiales. Algunas secciones se basan en las interpretaciones o puntos de vista de las autoridades pertinentes, pero no podemos garantizar que estas perspectivas se respalden en todos los entornos profesionales.
The information provided here within should not be construed as formal guidance or advice. Please consult a professional for your specific situation. Information provided is for informative purposes only and may not capture all pertinent laws, standards, and best practices. The regulatory landscape is continually evolving; information mentioned may be outdated and/or could undergo changes. The interpretations presented are not official. Some sections are based on the interpretations or views of relevant authorities, but we cannot ensure that these perspectives will be supported in all professional settings.
Legal Team El Salvador
Legal Team El Salvador is the Biz Latin Hub leading experts on doing business in Salvador The Team writes on the news, doing business, law, and changing regulations. The team are experts in corporate law, Administrative law, Employment law, Immigration law and legal advisory services. Read more about them here. You can contact Legal Team El Salvador via our "contact us page".
Reciba las últimas noticias y consejos sobre la expansión global de su empresa
Suscríbase a nuestro boletín para recibir las últimas noticias y consejos empresariales sobre constitución de entidades, cumplimiento de la normativa sobre personas jurídicas, contabilidad, back office y requisitos fiscales. Reciba las últimas noticias y consejos sobre la expansión global de su empresa.
Permiso de marketing: Al enviar este formulario, doy mi consentimiento para que Biz Latin Hub se ponga en contacto conmigo por correo electrónico utilizando la información que he proporcionado en este formulario y con el propósito de brindarme actualizaciones sobre negocios, formación de entidades, cumplimiento de entidades legales, contabilidad, servicios administrativos, PEO y/o para fines de marketing.
Qué esperar: Si desea retirar su consentimiento y dejar de recibir notificaciones de Biz Latin Hub, simplemente haga clic en el enlace para cancelar la suscripción en la parte inferior de cualquier correo electrónico que le enviemos o contáctenos a través de social@bizlatinhub.com. Valoramos y respetamos sus datos personales y haremos todo lo posible para protegerlos. Al enviar este formulario, acepta que procesemos y utilicemos su información de acuerdo con los términos y condiciones establecidos en nuestra política de privacidad.
Receba as últimas notícias e conselhos sobre como expandir seus negócios globalmente
Assine a nossa newsletter para receber as últimas notícias e conselhos de negócios sobre formação de entidades, conformidade de entidades legais, contabilidade, back-office e requisitos fiscais.
Permissão de Marketing: Ao enviar este formulário, dou meu consentimento para que a Biz Latin Hub entre em contato comigo via e-mail, utilizando as informações que forneci neste formulário, com o objetivo de me fornecer atualizações sobre fazer negócios, formação de entidades, conformidade de entidades legais, contabilidade, serviços de back office, PEO e/ou para fins de marketing.
O que esperar: Se desejar retirar seu consentimento e parar de receber mensagens, clique no link de cancelamento de inscrição na parte inferior de qualquer e-mail que enviarmos ou entre em contato conosco pelo e-mail social@bizlatinhub.com. Nós valorizamos e respeitamos seus dados pessoais e faremos o possível para protegê-los. Ao enviar este formulário, você concorda que podemos processar e usar suas informações de acordo com os termos e condições declarados em nossa política de privacidade.
Receive the latest news and advice about expanding your business globally
Subscribe to our newsletter to receive the latest business news and advice about entity formation, legal entity compliance, accounting, back office and fiscal requirements. Receive the latest news and advice about expanding your business globally.
Marketing permission: By submitting this form, I give my consent for Biz Latin Hub to be in contact with me via email using the information that I have provided in this form and for the purpose of providing me updates about doing business, entity formation, legal entity compliance, accounting, back office services, PEO and/or for marketing purposes.
What to expect: If you wish to withdraw your consent and stop hearing from us, please simply click the unsubscribe link at the bottom of any email that we send or contact us at social@bizlatinhub.com. We value and respect your personal data and will do the utmost to protect it. By submitting this form, you agree that we may process and use your information in accordance with the stated terms and conditions in our privacy policy.