Establishing and maintaining payroll in El Salvador
If your organization is looking to expand in El Salvador, one of the first steps will be hiring employees locally, and this requires setting up a payroll in the country. While it is certainly possible to do this, El Salvador’s unique employment laws, as well as language and cultural barriers, can cause delays and make it a lengthy process for foreign businesses.
At Horizons, we help organizations from all sectors to build and scale their operations in El Salvador with our payroll outsourcing services. We will handle your organization’s payroll setup and management, giving you full flexibility to focus on your Salvadoran expansion, even if you don’t yet have an established entity in the country.
Why choose the Horizons payroll solution?
If you have an entity
If you have already established an official entity in El Salvador, we offer outsourced payroll support to help you set up and run your El Salvador payroll. In addition, we can provide HR, contract, and legal compliance support meaning you won’t have to worry about any of the complex administration and can focus on your expansion efforts.
This service is the perfect solution for any organization that has already registered an entity in El Salvador but could benefit from support navigating the unique Salvadoran employment system.
If you don’t have an entity
For organizations that have not established an entity in El Salvador, we provide full support to help set up, manage payroll, and hire your local workforce. Through our Salvadoran subsidiary, you can recruit and pay your employees, giving you greater flexibility a scalable, low-risk route into the Salvadoran market.
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El Salvador payroll guide
What are the withholdings and tax requirements in El Salvador?
Employers and employees in El Salvador must pay a percentage of salary toward the nation’s social security scheme at rates of 7.5% and 3% respectively.
Income tax in El Salvador is progressive, with rates between 0% and 30% depending on income level. For non-domiciled individuals, the rate is fixed at 30%.
Entitlements and terminations
Generally, there is no requirement to give notice of termination in El Salvador, but it is good practice to do so. Employees may also wish to add terminations clauses to employment contracts.
Severance payments are common and generally equal around one month of salary for every year of service.
How to establish payroll in El Salvador
Establishing a payroll in El Salvador yourself can be a time-consuming and frustrating process. You will first need to register an entity in the country, then register with the tax office, open a bank account, and more. The whole process can take several weeks to complete, holding back your expansion and cutting into expected revenues.
Alternatively, you could use a payroll outsourcing firm to handle your Salvadoran payroll. At Horizons, our El Salvador payroll experts can set up and manage your benefits system for you, freeing you to focus on your successful expansion.
Manage payroll in El Salvador
Whether it’s EOR service or just payroll management, Horizons’ employment experts can help you get started in 24h.