Doing Business in Roatan

Legal Considerations

Incorporating

Foreigners can incorporate in Honduras. Forming a legal corporation is a fairly straightforward process in Roatan. We advise you work with a local attorney so that the formation and registration of your corporation are properly recorded. Your attorney will ensure that your new corporation is registered and on record with the Chamber of Commerce. Your tax identifier is called an RTN which is the acronym for "Registro Tributario National." You can expect the process of incorporating a new organization to take anywhere from one to four weeks depending on your attorney and the type of business you are trying to incorporate. As soon as the new entity is chartered, you'll be able to apply for a business license. Formal inspections will follow after your corporation is formally established. A business license is required to legally operate a business. Once you complete this process, you'll be required to renew your business license each year. 

As an employer, you'll be responsible for collecting income tax and in many cases, other forms of taxes. While the percentage of the tax amount might change, these are a few of the taxes Roatan businesses might be responsible for collecting: 

  • Income Tax
  • Cigarette or Alcohol Tax
  • Tourism Tax (levied on hotels and rental properties)

Honduran Labor Laws

One of the most important aspects of going into business in Roatan is understanding labor laws. Honduran labor laws are favorable to employees. For instance, the legal workweek in Honduras constitutes a 44 hour work week. This usually means working 8 hours a day for five days and then working an additional half day each week. All hours worked above and beyond the 44 work week are paid for overtime hours. 

All newly hired employees go on an automatic 60 day trial period. After the trial period, employees are entitled by law to receive all benefits including severance pay. A small exception to this rule applies to employees you hire to work in your home, these are called "domestic" employees and their trial period is only 15 days. 

Severance pay is accrued by each employee as they work. As an example, if an employee has worked for you for more than five years, and is fired, then that employee is entitled to five months worth of their average monthly income. A good business practice is to write up and execute a contract with each employee good for one year. At the end of each contract, pay off the severance and then enter into a new contract the following year. Employees who quit or leave the company through a formal resignation are entitled to their vacation and bonus pay which should be proportional to their time worked. Employees receive 14 months worth of pay over the course of a calendar year. Employers in Roatan are required (by law) to pay bonus twice each year. The first bonus is paid out in June and the other in December. Each bonus is equal to one month worth of wages. 
 

Human Resources

A pregnant woman has special protections under the law, and they can almost never be fired. 

It is also illegal to hire foreigners who do not have proper permission to work in Honduras. 

If you purchase an existing business, the employees you inherit have the right to demand the payment of outstanding benefits from the previous ownership. As the new owner, you'll be responsible for paying these wages so be sure to work that into your purchase agreement. 
 

Honduran National Holidays

What follows are national paid holidays which are observed on Roatan. If an employee works on any of these holidays, they will do so at double their regular pay. Conversely, employees are entitled to be off work during these holidays. 

  • New Year Day (January 1st)
  • Easter  (March/April) 
  • America's Day (April 14)
  • Bay Islands Annex Day (April 22)
  • Labor Day (May 1)
  • Morazan Day (October 3)
  • Columbus Day (October 12)
  • Armed Forces Day (October 21)
  • Christmas Day (December 25)

*Employees do not get double the pay when working on the Bay Islands Annex day. However, the holidy is observed throughout the Bay Islands and businesses are usually closed. 

 

What follows are observed national holidays which do not require employers to pay employees at double their rate:

  • 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 (2nd Sunday in May)
  • Student's Day (June 11)
  • Honduras 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)

 

Domestic Employees 

Domestic employees are employees who, generally speaking, work inside a private residence. Domestic employees do get the same benefits are not entitled to the entire employment benefits which traditional employees are entitled to. Anyone you hire to work in your private residence is entitled to whatever pay you agree upon. These employees are not entitled to the bonus month pay. They are not entitled to any severance pay either.