Introduction to Payroll in Bolivia
Managing payroll takes time and effort, no matter what country you're operating in. If you're operating in Bolivia, you have the additional task of understanding local laws to correctly handle tax, compensation, employment, and reporting requirements.
With the payroll solutions offered by Skuad, you can trust that your payroll is always under control. You can work with our team of local experts to ensure that you understand all of the details regarding critical payroll concerns such as:
- Leave: Vacations, holidays, and sick time requirements
- Business taxes: Regulations on national and regional corporate and income tax
- Social taxes: Requirements for pensions, insurance, and unemployment
- Employer contributions: Additional withholdings or benefits required in Bolivia
Get in touch to learn more about how Skuad can help you manage your payroll Bolivia needs today, or keep reading to discover more details about Bolivian payroll requirements.
Payroll Process in Bolivia
Managing payroll in Bolivia takes more work than you might assume. The payroll process can be involved even when hiring in your own country. If you're new to international staffing, it may help to break down the payroll processing Bolivia requires into three broad categories:
- Payroll calculation
Here's what each phase involves and what you need to do to accomplish the payroll compliance that Bolivia expects.
Before calculating your first paycheck in Bolivia, you need to do some prep work. Here's what the pre-payroll phase requires in Bolivia and how to ensure you're not missing any crucial details.
Creating your legal entity
To hire employees in Bolivia, you need to create or work with a legal organization within the country. Bolivia requires this because the country needs employers to be officially registered with the Public Registry of Commerce to track taxes and benefits.
Once you register, you'll need to apply for a tax identification number. This will require you to provide your registration number from the Public Registry of Commerce, a notarized Power of Attorney document, and a floorplan and electricity bill for a registered office address.
Next, you must open a local bank account for your company and register with Bolivia's National Health Insurance and your preferred Pension Fund Administration. Once you've accomplished that, you're legally ready to hire your first employee.
Writing appropriate policies
Just because you're legally ready doesn't mean you're prepared. Payroll in Bolivia also requires you to develop clear policies about topics like:
- Leave: Bolivia guarantees 15 days of paid leave annually for all employees who've been in their position for at least a year. This rises to 20 days of leave after five years at a company and to 30 days after ten years. This leave will affect your payroll for most periods, so you must understand what to expect when writing your policy.
- Attendance: Develop a policy for how you'll record employee attendance, such as through time sheets or biometric devices. Take into account issues like regular hours vs. overtime, shift work, and leave. This policy is essential to fairly calculating payroll every period.
- Pay periods: In Bolivia, employees are typically paid monthly on the last day of the month. This lets your employees know when to expect their pay and gives your payroll team a clear schedule.
Researching and implementing the necessary compensation components
Compensation is an umbrella term that includes both pay and other benefits. In Bolivia, all workers are guaranteed the minimum wage. However, many positions expect higher compensation, so do your research to learn what a competitive salary looks like in your industry.
You'll also be responsible for providing other statutory benefits, such as paying into Bolivia's national healthcare through taxes and contributing to employees' pensions. Researching these benefits is essential to fairly setting and calculating your employees' wages.
Collecting employee information
Finally, you need to gather and securely store employee information, including:
- Bank account details
- Bolivian Identification Number
- Other income
These details are essential for calculating taxes.
You'll also gather and validate employee hours every pay period. Confirming how many hours an employee worked or took as paid leave is a fundamental part of correctly calculating payroll in Bolivia.
Payroll calculation phase
Payroll calculation is handled every period. You will either use a payroll system or manually calculate each Bolivian employee's gross pay for the period, then determine business and personal payroll taxes in Bolivia for that amount.
Post-payroll in Bolivia is everything that happens after you've calculated the amount to send to your employees. It includes:
- Salary payments: You can cut checks yourself, work with your corporate bank to have paychecks sent to each employee, or work with any payroll services Bolivia allows, such as Skuad, to have the funds directly deposited into employee accounts.
- Payroll accounting: Your accounting team will record the payroll and tax expenses.
- Payroll reporting and compliance: You've separated out taxes such as the national healthcare tax, professional risk premium, housing, and employer solidarity contribution. Now you'll report and submit the appropriate amounts to the correct government agencies.
You don't need to do all of this work alone, though. Skuad can handle pre-payroll, payroll calculation, and post-payroll tasks on your behalf. You can focus on running your business and leave payroll to the experts.
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Payroll Processing in Bolivia
Payroll processing can be complicated. The payroll compliance Bolivia requires can change regularly as laws are enacted or altered. Staying on top of those laws is critical if you want to continue hiring in Bolivia and give your employees a positive experience with your company.
Payroll Processing Company in Bolivia
If you want to hire internationally, payroll outsourcing Bolivia with Skuad can simplify the process. Get in touch today to learn about the payroll services Bolivian Skuad experts can provide so that you can stop worrying about payroll and start focusing on your core functions.
Payroll Management in Bolivia
Payroll management is the act of controlling how payroll is calculated and disbursed. The payroll solutions Bolivia accepts will handle tasks like calculating employee salaries, generating pay slips, and reporting and paying taxes. Payroll services Bolivian employees trust also manage compliance with labor laws.
Payroll Compliance in Bolivia
Statutory compliance is the act of following all labor, tax, and payroll laws in a country. It's essential because non-compliance can have major consequences for a business.
For instance, failing to comply with tax laws can put companies hiring in Bolivia at risk of significant fines. Failure to register can lead to the closure of a business and a fine of 2,500 Housing Promotion Units (UFV). Similarly, failing to properly compensate workers can lead to lawsuits and the requirement to pay significant back pay, damages, and fines. Working with payroll services Bolivian experts approve can help your company remain compliant and avoid these fines.
Payroll Components in Bolivia
In Bolivia, payroll is made up of many different components:
- Compensation: Bolivia's minimum wage is 2,122 Boliviano (BOB) per month. Bolivia also mandates a "salary" at the end of the year. This is an extra month's salary that's essentially a holiday bonus. Furthermore, if Bolivia's GDP or the company's profits are over 4.5%, the company must also pay a "14 salary" as well, capped at 25% of the company's profits.
- Working hours: Bolivia's standard working hours are eight hours a day and up to six days per week.
- Overtime laws: Hours beyond the standard work limit are paid as overtime and are limited to two hours per day, paid at 200% of the normal pay rate.
- Social security: Employers are responsible for paying a 10% National Healthcare tax. They are also responsible for withholding employee taxes such as a 10% SSO contribution and a 0.5% Pensionary Fund commission.
- Sick leave: The country mandates up to 26 weeks of paid sick leave each year, for which the employer pays 100% of the regular salary rate and is reimbursed 75% by Bolivia's social security program.
- Parental leave: Bolivia mandates 90 days of maternity leave, with 45 days taken before the birth and 45 days taken after, and 3 days of paternity leave. This leave is paid for at 100% of the national minimum wage instead of the employee's salary. Social security reimburses the employer for 90% of that amount.
- Public holidays: Bolivia recognizes the following public holidays: New Year's Day, Plurinational State of Bolivia Anniversary (January 22), Feast of the Virgin of Candelaria (February 2), two days of Carnival (floating), Good Friday (floating), Corpus Christi (floating), Labor Day (May 1st), Andean New Year (June 21), Agrarian Reform Day (August 2), Independence Day (August 6), All Saints Day (November 2), and Christmas Day (December 25).
- Payroll taxes: Companies must pay a 2% housing tax, 1.71% Professional Risk Premium, and a 3% Employer Solidarity Contribution in addition to the social security tax. They must also withhold a flat 13% employee income tax as payroll tax Bolivia requires.
Tracking each of these components may seem overwhelming. However, with payroll outsourcing, Bolivia's compensation can be simple. Skuad is prepared to help you with payroll in Bolivia so you can focus on your areas of expertise.
Hiring in Bolivia is an excellent idea. With an exchange rate of 6.88 BOB to 1.00 USD, expanding into Bolivia is a cost-effective way to bring in new employees. You just need to decide how you'll handle payroll.
There are two basic approaches: handling everything yourself or working with payroll solutions Bolivian employees trust. To save time and effort, you can work with payroll outsourcing Bolivian experts like Skuad.
Skuad's services guarantee that your payroll in Bolivia will be completed accurately and on time. Skuad already understands Bolivian laws and requirements, so there's no risk that little details will be missed. Start the process today by requesting your demo of Skuad's easy payroll solutions.