Most common business entity in Panama
The Sociedad Anónima (SA) is the standard choice for most small- to mid-size businesses in Panama. Like a US LLC, it provides limited liability protection separated from the owners' personal assets. Annual franchise tax $300 + RUC $50 + agent.
The full menu of Panama business structures
| Structure | Liability | Tax | Best for |
|---|---|---|---|
| Sociedad Anónima (SA) | Limited | 25% corporate | Most operating businesses |
| Sole proprietor / self-employed | Unlimited personal | Personal income tax rates | Freelancers, one-person services |
| Partnership | Joint and several | Pass-through to partners | Professional services (law, accounting) |
| Branch of foreign company | Parent company liability | 25% on Panama-source profits | Foreign companies entering Panama market |
| Public limited company | Limited | Same as Sociedad Anónima (SA) but stricter | Companies preparing for listing |
Which one should you pick?
- Freelance or one-person service in Panama? Self-employed structure if simple, Sociedad Anónima (SA) if you want liability protection.
- Software / e-commerce / agency? Sociedad Anónima (SA) — standard, scalable.
- Operating an existing foreign company in Panama? Branch (simpler) or subsidiary Sociedad Anónima (SA) (more substance).
- Planning to raise venture capital? Confirm investors accept Panama entities. Many require a US Delaware C-Corp flip — see US company formation.
- Holding company for IP or other companies? Sociedad Anónima (SA) with minimal substance requirements.
The Sociedad Anónima (SA) in one paragraph
Sociedad Anónima (SA) is Panama's primary limited liability vehicle. Minimum paid-up capital: nominal. Headline corporate tax: 25%. Territorial: 0% on foreign-sourced income. 25% on Panama-sourced.. Banking accessibility: 6/10. Privacy: 7/10 (UBO non-public). Remote formation: yes. Processing time: 5 business days.
For US comparison, see Panama vs USA. For non-resident formation specifics, see forming a Panama company as a non-resident.