As a foreigner, you are allowed to start a business in Honduras. To begin the legal paperwork to open a business, you must start a corporation. Working with a Honduran attorney, you will need to identify the type of business the company will conduct in order to charter the company. Once the attorney completes the registration process with the Merchant Registry and the Chamber of Commerce, and then receives the tax identification number (called an RTN or Registro Tributario Nacional) for the company, the charter process is complete. This typically takes around 4 weeks, during which time the business may not operate.
Once the company is chartered, you may apply for your business license. This process typically takes about 2-3 weeks to process the preliminary papers and complete the official inspection. With a business license in hand, you may begin to operate your business. Your Honduran accountant will notify the tax authorities that you operations are starting and your process is complete. The entire process to open a business in Honduras typically takes about six weeks before you may begin operating. After this initial process, you are simply required to renew your business license on an annual basis.
Employers are responsible for collecting income tax and a few other deductions from their employees, if applicable.
Current sales taxes for businesses include the following: • 15% on all commercial sales • 18% on all cigarettes or alcohol • 4% tourism tax levied on all hotels or short-term rentals
Understanding local labor laws is an incredibly important part of going into business in a foreign country. Honduran labor laws favor the employee, which is something to keep in mind as you begin to hire your staff. The legal workweek in Honduras is 44 hours, which typically means five 8-hour workdays plus a half-day on Saturdays. Any hours worked beyond those 44 are considered overtime and the employee must be compensated.
For all employees, the initial 60 days are considered a trial period. After that trial period is over, the employee is entitled to severance pay and all benefits. Domestic employees have a trial period of 15 days. Employees accrue their severance pay throughout the time they work. If you fire an employee who has worked for you for five years, the fired employee is entitled to five months’ worth of their average salary over the course of their time worked. It is recommended that you maintain annual contracts with each employee, pay the severance accrued at the end of each year, and then begin a new contract with the employee for the following year. This allows you to better budget and also encourages an employee to continue to work hard as he or she will not accrue a massive payout over the course of several years. If an employee quits, he or she is entitled to vacation pay as well as bonus pay in proportion to their time worked. All employees are entitled to fourteen months of pay over the calendar year. In June and in December, employers are required to pay a bonus of one month’s salary to each employee. It is highly recommended that you have written contracts for each employee – it was not common practice until recently but it is very important to have on record should you have any dispute with an employee. These contracts should also include full reports on any and all issues with the employee so there is a record in case he or she needs to be fired.
Other laws to keep in mind include the following: • Employers can never fire a pregnant employee, with only very few exceptions. • The national minimum wage varies with the job being done and company size, but is roughly about $355/month. Salary is obviously dependent upon the employee’s experience and role in the company, so minimum wage is commensurate with minimum responsibility. • It is illegal to hire a foreigner who does not obtain proper permission to work in Honduras. • If you buy an existing business and employees from the previous owners stay on staff, they have the first six months to demand payment of any outstanding benefits from the previous owner, which you are required to pay.
The following public holidays are observed in Honduras. When employees work on these days they are entitled to double pay; otherwise it is a paid day off.
• New Years Day: January 1
• Easter varies (March/April), known locally as Semana Santa, which is essentially a week-long holiday but only Thursday-Sunday of the week are holidays for employees
• America’s Day: April 14
• Labor Day; May 1
• Independence Day: September 15
• Morazán or Soldier’s Day: October 3
• Columbus Day: October 12
• Armed Forces Day: October 21
• Christmas Day: December 25
April 22 marks the Annexation of the Bay Islands to Honduras and is observed on the Bay Islands only. Most government offices and banks are closed, however, employees do not get paid double for working on this date. In 2014, the federal government combined the October holidays into one long weekend at the end of the month – meaning all employees who worked over that weekend were paid holiday pay while the actual dates of the holidays were considered to be normal work days. This may or may not happen again each October.
Other holidays observed in Honduras, without additional pay, include the following:
• National Women’s Day: January 25
• Day of Our Lady of Suyapa: February 3
• International Women’s Day: March 8
• Father’s Day: April 19
• Mother’s Day: Second Sunday of May
• Student’s Day (Jose Trinidad Reyes’ Birthday): June 11
• Honduran Day (Honduran Heritage Day): July 14
• Lempira Day: July 20
• National Flag Day: September 1
• Children’s Day: September 10
• Teacher’s Day: September 17
• National Youth Day: October 28
• Day of the Dead: November 1-2