Corporate accounting in Panama: the essentials that every business owner must know

In the business world, nothing is more important than stability. Together with diversification, these are two characteristics that you can't dismiss when putting together your plan. Moreover, if your financial scheme includes a corporation, corporate accounting must be carefully approached. International businesspeople have to pay special attention to this as they usually have structures across different jurisdictions that, naturally, have their own rules and legislations. If you have a Panama company or want to establish one, you've made the right decision because this country has several advantages. When it comes to requirements to run a company you may need some help, especially if you're just entering this jurisdiction. Here are the essentials that you need to know when incorporating in Panama.

Why Panama is a top corporate center worldwide

First things first: why should I choose to establish and run a Panama company? How can this place help me develop my corporate finances? The answer is simple. Panama comes with a wide array of advantages for everyone who's interested in their personal and financial growth. This, of course, includes Panama company structures. 

With ample financial incentives and convenient taxation, Panama doesn't disappoint. Moreover, its free zone regimes grant exemptions and similar benefits to companies depending on the activities that they conduct.

Contact us

Panama Accounting: What to do to keep your Panama company running

Now we’ve reached the core of this article. Here we give you the basics of accounting in Panama to comply with all your corporate finances and requirements.

Companies that don't conduct activities in the Republic of Panama or that only hold assets in Panama or abroad must keep accounting books and the corresponding supporting documentation to be monitored by the General Directorate of Revenue. The entity must have access to the said information whenever it’s required. Naturally, this stipulation is subject to strict confidentiality laws. No official can breach the confidentiality legislation without facing criminal or civil consequences.

Each year accounting records must be presented on the 30th of June at the latest, and such records correspond to the previous year ending on December 31st. Thus, you always must submit records of the previous year before June 30th.

The law also reaches stock certificates and share registers which must be kept in custody of the agent for at least five years. Moreover, the Panamanian tax authority must have access to all documentation that reflects property, cash, or any other asset in the form of income as well as documentation supporting the company's liabilities and obligations. 

If the company carries out commercial activities, then the records must be prepared in more detail as they must reflect both the general and daily ledgers.

On the other hand, resident agents must also provide information on the companies to which they offer their services. The due date, in this case, is July 15th each year, and the Panama company requirements stipulate the following to be included: names, taxpayer numbers, accounting records, and the physical location where they are stored. Thus, the resident agent must stipulate under an affidavit where the original documentation (or its copies) is kept (the office of the resident agent). If the agent doesn't keep the company's information this must be informed too.

Non-compliance fines and penalties

The reader should pay special attention to this section in order to comply with Panama company requirements. There are some exceptions to the conditions described above. State-owned companies or international or multilateral organizations are exempt from the previous conditions and so are legal companies listed on stock exchanges whether internationally or locally.

If your company is subject to the previous conditions, failing to comply or failing to comply in time may cause sanctions. For the company, fines can go from $5000 to $1,000,000, and they may derive in the suspension of corporate rights. In other words, the entity won't be able to register acts, agreements, or documents, or issue certifications on its behalf. On the other hand, the resident agent will be subject to fines that can go from $5000 to $100,000.

Conclusion: get yourself the best advice for your corporate finances

Although every business owner must be aware of the requirements to run a company in Panama, a good agent is not negotiable. Businesspeople must follow up but that's it. A simple follow-up should be enough if you have a reliable agent that takes care of your corporate accounting for you. Contact our Mundo team for solid advice and high-end services regarding your Panama company.

Contact our team