Entity annual compliance in Honduras

Entity annual compliance in Honduras

When thinking about starting or conducting business in Honduras, it’s crucial to fully grasp the annual entity compliance requirements and the broader regulatory framework in the country. Before officially registering a company in Honduras, it’s essential to be aware of these financial regulations, as non-compliance could lead to legal challenges and financial penalties. Financial regulatory compliance is a significant aspect of overall corporate compliance and is typically covered by corporate secretarial services.

If you’re thinking about company formation in Honduras, a comprehensive guide to annual entity compliance is indispensable. This overview is designed to assist you in navigating the legal landscape and ensuring adherence to all regulatory requirements.

For businesses already operating in Honduras or those exploring market entry, we provide tailored assistance. Feel free to contact us today to learn more about how we can support your business’s unique needs and help you stay compliant in the Honduran business environment.

We recognize the challenges inherent in adapting to the new legislation, especially when it comes to complying with corporate obligations. In order to simplify this process, Biz Latin Hub has designed the following Annual Fiscal Compliance calendar.

Types of companies in the country

In Honduras there are a variety of company types, but the most used in practice are the following: 

  • Corporations – A corporation exists under a name and has capital divided into shares, whose partners are responsible for the payment of those they have subscribed
  • Limited Liability Companies – A limited liability company exists under a corporate name and whose partners are only required to pay their contributions, and are not responsible for the financial liabilities or the debt of the company as a whole
  • Branch of foreign company – The foreign parent company regulates the rules and assumes the responsibilities before third parties

Entity annual compliance in Honduras: Corporate requirements

In Honduras, businesses are obligated to adhere to distinct corporate and mercantile requisites, aiming to guarantee both legal adherence and operational effectiveness. These prerequisites encompass the yearly submission of financial statements and tax returns, the meticulous upkeep of current corporate records, and the organization of regular shareholder meetings, usually conducted on an annual basis. Additionally, companies must conform to the stipulations outlined in the Honduran Commercial Code concerning corporate governance. This involves tasks such as appointing a legal representative and, depending on the company’s scale and nature, potentially constituting a board of directors.

Requirements for setting up a corporation

If you have not yet set up a corporation, consider reading the following in-depth guide on how to:

  • Certificate of registration of the foreign company in its place of origin
  • Agreement of the assembly appointing a resident and permanent legal representative in Honduras
  • These documents must be of recent date, be duly notarized and, where appropriate, translated into Spanish

Board meetings and annual shareholder meetings where presentations are given, appointments made to fill a job vacancy, the company’s financial status reported, profits or losses discussed, and similar activities, must also be disclosed to financial authorities as part of entity’s annual compliance.

Entity annual compliance in Honduras: Tax considerations 

In Honduras, the fiscal year runs from January 1 to December 31. To start commercial operations, companies must have a Unique Taxpayer Registry which is obtained via the ATV portal of the Ministry of Finance.

The main taxes that must be declared and paid are:

Income Tax This annual tax is levied on income from capital, labor or a combination of both
Sales Tax  Applied in a non-cumulative manner on imports and the sale of goods and services 
Municipal Taxes This annual tax is levied on income from capital, labor, or a combination of both

Entity annual compliance in Honduras: Labor regulations 

Foreign companies doing business in Honduras must comply with labor regulations, which include:

  • Trial or probationary period that cannot exceed 60 days and must be paid
  • Payment of at least $305 USD per month, which is Honduras’s national minimum wage
  • Companies are required to pay fourteen monthly salaries (12 regular monthly salaries, plus the June bonus payment and Christmas bonus paid in December)
  • A standard workday of eight hours
  • Employees are entitled to 10 days of paid vacation per year

For entity annual compliance in this Central American nation to be met, companies must also provide their employees with social security. The employer/employee contributions are as follows:

  • The employer covers 10.66 percent of the employee’s salary to monthly social security payments
  • The employee must contribute 6.5 percent of their salary to monthly social security payments
In order to simplify processes, Biz Latin Hub has designed the following Annual Legal calendar as a concise representation of the fundamental responsibilities that every company must attend to in Honduras
In order to simplify processes, Biz Latin Hub has designed the following Annual Legal calendar as a concise representation of the fundamental responsibilities that every company must attend to in Honduras

Based on our extensive experience these are the common questions and doubts of our clients when looking to operate within the country

1. What are the common statutory appointments for a company in Honduras?

The following are the most common statutory appointments for Honduran legal entities:

– An appointed Legal Representative who will be personally liable, both legally and financially for the good operation and standing of the company. This should be a local national or a foreigner with the right to live/work in the country.

2. Is a Registered Office Address needed for a legal entity in Honduras?

Yes, a Registered Office Address or local Fiscal Address is required for all Honduras entities to receive legal correspondence and Governmental visits.

Biz Latin Hub can help you with entity annual compliance in Honduras

At Biz Latin Hub, we provide integrated market entry and back-office services throughout Latin America and the Caribbean, with offices in Bogota and Cartagena, as well as over a dozen other major cities in the region. We also have trusted partners in many other markets.

Our unrivaled reach means we are ideally placed to support multi-jurisdiction market entries and cross border operations.

As well as knowledge about entity annual compliance, our portfolio of services includes hiring & PEO accounting & taxation, company formation, bank account opening, and corporate legal services.

Contact us today to find out more about how we can assist you in finding top talent, or otherwise doing business in Latin America and the Caribbean.

If this article about entity annual compliance in Honduras was of interest to you, read about our team and expert authors. 

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The information provided here within should not be construed as formal guidance or advice. Please consult a professional for your specific situation. Information provided is for informative purposes only and may not capture all pertinent laws, standards, and best practices. The regulatory landscape is continually evolving; information mentioned may be outdated and/or could undergo changes. The interpretations presented are not official. Some sections are based on the interpretations or views of relevant authorities, but we cannot ensure that these perspectives will be supported in all professional settings.

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