How can an Umbrella Company Help with Contracting in Central America?
Most freelance workers aren’t superheroes who successfully tackle these issues all on their own. There are companies who specialise in helping workers make the most out of their contracts.
They’re called Umbrella Companies (or, contractor management companies).
Basically, an Umbrella Company acts as your full-time employer, even though you maintain your independence as a contractor. They collect and filter payments from your clients, filtering out the necessary social security and fees. You send them your timesheets, and they send you payments.
Because they act as your “employer,’ they can sponsor you and provide a single work permit for multiple contracts in Central America. Even better, most are experts in Central America and expat tax law, meaning they’ll also help you optimise your earnings in Central America
Although the Umbrella Company is technically your “employer,” you’re essentially freeing yourself to work even more independently. You still dictate your contracts, your hours, your schedule. The Umbrella Company simply filters out the time-consuming admin and immigration issues, allowing you to focus on your new contract.
Can I Organise My Taxes and Work Permit Myself?
Generally, you need to have an employer sponsor in order to secure the appropriate work permit and work visa for Central America
If you’re working independently, it can be difficult to find clients willing to sponsor you. Moreover, even if your client can do this, you’ll need a new sponsor each time you decide to take on a new contract. Of course, every new sponsor will mean more paperwork.
Also, are you familiar with the intricacies of the tax system in Central America, as well as your own country’s laws on overseas earnings? If so, good on you!
However, if you’re like the rest of us, figuring out (much less reducing) your tax liability in Central America and your home country can seem like full-time work in itself.
A Contractor’s Guide to Taxes in Central America
One of the most consistently challenging aspects of contracting in Central America is complying with the country’s tax system. As well as paying tax in Central America, you might also still be eligible to pay some tax in your home country, and understanding the legislation behind this can be a challenge.
How do I calculate my taxable income in Central America
Tax Filing as a Contractor in Central America
Tax Figures in Central America
Tax Residency in Central America
When do you become a tax resident in Central America
You become a tax resident in Central America when:
Tax residency only pertains to the type of income that will be taxed by the host country while you are there. It does not confer any type of legal residency and is not a factor if you decide to pursue legal residency. Stays as short as six months can result in tax residency for ex-pats.
If you don’t want to take any chances navigating the tax residency rules, Contractor Taxation can be your valuable partner. We have a network of umbrella companies with local experts who know all of the residency criteria and tax rates. This ensures that you will remain in compliance, and pay the correct tax rates under local criteria. The umbrella company can also assist with handling client payments, withholding taxes and negotiating any client disputes.
Can you set up your own Limited Company in Central America?
How We Can Help You with Tax in Central America
We work with numerous umbrella companies in Central America, many of whom are experts in tax and immigration laws. If you have any questions about tax in Central America, we’ll get the answers from them directly so you can rest assured you’ll be getting accurate information. We also have a comprehensive knowledge of the different services they provide, and we can help you find the right company to handle your income tax. We help oil and gas workers, software developers, IT project managers, testers, business analysts and telecommunications contractors get tax efficient payments and sponsorship for their Central America work permits. Our advice is 100 per cent free, and it comes with no obligations. You will be paying taxes in Central America but without the overhead of directly dealing with the Central America tax authorities. Get in touch with us today for some reliable advice on tax in Central America!
A Contractor’s Guide to Work Permits in Central America
As your permanent employer, umbrella companies are able to sponsor you for your work permit provided they’re on the register of approved sponsors. Many different companies offer this service because it makes contracting infinitely simpler and saves you the hassle of continuous paperwork. Instead of changing your work permit every time you get a new contract, you can just work how you ordinarily would under the same permit.
How Does an Umbrella Company Work?
Most people want to do their work, earn their money and enjoy their spare time without taking on loads of admin in a new country. That is why an umbrella company can help.
When you’re working through an Umbrella Company, you’ll essentially be outsourcing the admin and tax issues to specialists.
While the umbrella company will charge a fee, you’ll likely end up saving more money in the long run: you’ll be able to focus on your work, expertly reduce your tax liability, and comply with all laws and regulations in Central America (which means avoiding fees, fines, or even worse penalties).
How Can We Help You?
There’s a huge variety of Umbrella Companies with different specialities and advantages in Central America. How do you find the right one for your circumstances?
We work closely with Umbrella Companies all throughout Central America and match contractors with the right company for them. If you’ve already secured a contract in Central America, we can help you find your best match (for free). Or, we can simply give you feedback on your situation (for free).