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Ecuador Payroll

Ecuador is a South American country with a large population, especially in the capital of Quito. The equator runs through the country, giving Ecuador its name. Its natural resources and large population of workers are perfect for companies looking to expand to a location close to other South American countries.

Unfortunately, planning an expansion requires a significant amount of time and many considerations, one of which is payroll. You need to set up your Ecuador payroll to comply with local labor laws and choose an Ecuador payroll option that works for your company’s size and activities. Globalization Partners offers Ecuador payroll outsourcing to make it easier for your company to expand without the worries associated with compliance laws.

Taxation Rules for Payroll

Ecuador uses a Pay As You Earn (PAYE) system for all income taxes. As an employer, you’re responsible for withholding the right amount for taxes from each employee’s pay every month based on their salary. You also need to report the employee’s taxes and deductions on a 107 Form at the end of each year.

Both employees and employers contribute to Social Security every month. Employees put in 9.45% of their gross salary, while employers must give 12.15%. However, after an employee’s second year of employment, employers have to give additional reserved funds to Social Security at 8.33%.

Ecuador Payroll Options

Every company has different needs, which is why you have several Ecuador payroll options, including:

  • Remote: A remote payroll is when you compensate your subsidiary’s employees using your parent company’s payroll. Every employee from a different country will have different laws and regulations for you to follow.
  • Internal: An internal payroll that you run from your subsidiary can help you keep track of all your employees. However, it’s usually only a good option for large subsidiaries with a commitment to Ecuador.
  • Ecuador payroll processing company: Using an Ecuador payroll processing company is great for businesses that want to outsource with a local company. You will, however, still need to worry about compliance for the other company’s actions.
  • Ecuador payroll outsourcing: Ecuador payroll outsourcing with Globalization Partners is the one sure way to outsource both your compliance and your payroll. We’ll take care of both as the Employer of Record.

Requirements for Setting up Your Payroll

You can’t set up your Ecuador payroll as soon as you decide to work in the country. You’ll have to spend the time to establish a subsidiary before you can choose an Ecuador payroll option. Globalization Partners will help you expand fast through Ecuador payroll outsourcing. Our goal is to make it easier for you to expand by taking on the risk.

Important Entitlement and Termination Terms

Termination is difficult in any country, but it’s even more of a challenge when you’re a foreign employer. Including entitlement and termination terms in an employment contract can help make sure both parties are on the same page. You need to give workers notice 30 days before termination if they have a fixed-term contract. Employees, in any case, are usually entitled to severance.

Globalization Partners Will Help Your Expansion Succeed

Globalization Partners is here for you during your expansion to Ecuador. Contact us today to learn more about Ecuador payroll outsourcing.