Payroll
in Colombia

Get your own offshore software team with outsourced payroll in 2-3 months. We guarantee:

  • Valley-grade team of 20+ senior developers in 3 months
  • Offshore tech market navigation, tax, and legal consulting
  • Up to 40% savings compared to traditional outsourcers
  • Zero buy-out cost
  • Employer of Record service – our compliant employment solution
  • No intermediary in team management

Alcor is Disrupting the Traditional Staffing Models

Valley Talent for 40% less costs
No Buy-Out insource for free
All-In-One no intermediary

We Guarantee Seamless Payroll Service in Colombia and

2.5 years

is the average tenure of our hires

Cultural alignment

with your company values

Pricing transparency

no hidden or buy-out fees

Legal & compliance

and other needed operational support

Exceptional dedication

it’s literally your own team

Long-term partnership

shared responsibility & commitment

Key Things about Payroll in Colombia

Payroll & taxes in Colombia
Payroll processing in Colombia
Payroll compliance in Colombia
Is outsourcing payroll in Colombia more beneficial?
Choosing an outsourced payroll company in Colombia
What is Employer of Record?

Payroll & taxes in Colombia

Tech companies must contribute 9% of the monthly payroll. However, if their employees earn less than 10 times the minimum monthly wage, employers are exempt from this tax. Instead, the employer will be liable for a self-withholding income tax on their earnings, with rates (0.4%, 0.8%, or 1.6%) contingent on their primary economic activity.

Every employee’s income is subject to income tax deductions, which range from 0% to 39%, with no income tax levied on income up to 1,090 UVT. The UVT (Unidad de Valor Tributario in Spanish) is the Colombian tax value unit, used as a reference for many tax-related calculations to measure different limits and thresholds. The value of the UVT stands at COP 47,065 in 2024.

Social security contributions are divided between employees and employers. The former is subject to paying around 8% of payroll contributions, including 4% to the pension fund and 4% to the medical plan. The latter usually pay 12% to the pension fund, 8% on the medical plan, 0.52% – 6.96% on labor risks, totaling 20.52 – 26.96% of payments.

Payroll processing in Colombia

Pre-payroll

  1. Create a payroll policy: devise a payroll policy outlining the payment method, pay periods, payroll deductions and withholdings, payroll benefits, and other aspects. 
  2. Collect employee data: gather their personal details, tax identification numbers, bank account information, employment contracts, and other relevant documentation.

Payroll calculation

  1. Calculate gross salary: take your employees’ basic earnings and add all the allowances, bonuses, and any other taxable income components specified in the employment contract as well as overtime work, PTO, etc.
  2. Deduct income tax & social contributions: As an employer, you must calculate the employee’s income tax, withhold their portion of social security contributions, and contribute your share. Most of these contributions go to the pension fund, healthcare, unemployment schemes, etc. 
  3. Calculate net pay: after estimating employees’ gross pay, withholding payroll taxes, and determining deductions, you can identify your employees’ net pay. You can easily perform this task by using payroll software or entrust it to a service provider.

Post-payroll

  1. Approve the payroll: once all the calculations are done, you can take some time to check if everything is included and estimated correctly, so that your employees would get accurate paychecks on time.
  2. Issue payments: you can pay compensation to your employees via the most convenient payment method whether cash, cheque, pay cards, mobile walletі, etc. 
  3. Payroll reporting, compliance, records: after paying out the salary, spend some time on filing other mandatory documents, keeping employees’ payroll records and submitting reports to the finance department or management team for analysis.

Payroll compliance in Colombia

A proper payroll guide for Colombia includes accurately calculating and withholding taxes, contributing to social security funds, granting all mandatory employee benefits, and fulfilling other financial obligations. Failure to comply can result in penalties, fines, lawsuits, and even criminal charges. Moreover, non-compliance with payroll and tax regulations can cause errors in wages, benefits, and deductions, which can erode employee trust and morale.

The most efficient and risk-free way to achieve payroll compliance in Colombia is by partnering with a trusted Employer of Record provider, like Alcor, who knows all the ins and outs of the local legal, taxation, and labor law systems of Eastern Europe and Latin America. 

Is outsourcing payroll in Colombia more beneficial?

Keeping payroll management in-house is often associated with overspending. Not only do you need to scale up your internal payroll team but also spend time and resources on their training so they can understand the legal, tax, and payroll specifics of the offshore location where you plan to expand.

In contrast, using external payroll services provides tech companies with access to a professional team of accountants and lawyers who are knowledgeable about the peculiarities of the local laws and regulations. This ensures your payroll is fully compliant and error-free. In addition, getting outsourced payroll services in Colombia is several times cheaper and more time-effective, especially when included as a part of a comprehensive Employer of Record solution. 

Choosing an outsourced payroll company in Colombia

  • Qualification & experience: Choose a vendor with experienced payroll and legal professionals in the tech industry. Also check out their case studies, client reviews, and testimonials.
  • Pricing structure: Consider firms with predictable pricing and detailed invoices to avoid hidden fees and therefore eliminate the risk of overpayment. 
  • Technology & security: Check if your vendor uses modern payroll software, applies security protocols and encryption standards, and complies with data privacy regulations to safeguard employee information.
  • Guarantees: If your vendor provides compensation for mistakes or missed deadlines, has outlined timeframes, and offers pricing transparency, they are a green flag.

What is Employer of Record?

No business growth is possible without a powerful team of A-players. And, in order to legally employ such software developers, some tech companies see only two possible solutions:

  • establishing their legal entity and managing the employment, payroll, tax payments, and compliance on their own 
  • or outsourcing these operations to multiple vendors. 

The good news is that there is a viable alternative — an Employer of Record (EoR) service that allows tech businesses to employ talented software developers without setting up a legal entity and receive all the needed operational support in one place.

What you get with Alcor’s EoR 

Alcor provides an Employer of Record service in Eastern Europe and Latin America. Unlike other EoR vendors, we focus on the technology field, possessing niche knowledge of recruiting and employing Senior, Lead, and C-level software developers on the best terms. We handle everything from payroll management in Colombia, onboarding, and employee termination to tax payments, documentation, and employee benefits management.

We guarantee:

  • 100% compensation for fines caused by our mistake
  • 20%-40% cost reduction in comparison with outsourcing
  • 100% transparency, with direct salaries instead of rate cards
  • Key account manager to assist you in all matters
  • No third parties as we do everything in-house
  • 2.5 years is the average tenure of our hires

Better Than Just Outsourced Payroll in Colombia

Alcor is an all-in-one place to establish and run a turnkey software R&D center:

  • Employer of Record support — no need to set up your legal entity
  • From 0 to 100 software developers in one key talent pool
  • Establish your corporate culture with your own team. No intermediary
  • No buy-out or other hidden fees
Book a call

Companies Scaling with Alcor

Alcor is a reliable partner that meets our hiring needs. We finally hired experienced software engineers in Eastern Europe with strong tech skills and business acumen. Account Managers are awesome!

Andrii Akselrod CTO People.ai

With Alcor’s all-in-one solution, we got a software R&D office with 15 senior PHP devs and a compliant operational coverage. I really appreciated their transparent pricing structure and deep expertise.

Boris Glants CTO Tonic Health

We interviewed a lot of EoR platforms and companies, but Alcor was the only one that provides a combo package of EoR and Recruting offerings. Alcor helped us build a full stack team in 1.5 month.

Dmitrii Iermiichuk Head of Engineering Gotransverse

We wanted to switch from our outsourcing provider, and Alcor has become really game-changing for us. Within a mere 6 months, we got a fully-fledged team of 30 engineers in our own R&D office.

Elena Leonova Director of Product Management BigСommerce

Alcor’s R&D solution eclipses full-cycle recruitment, EOR service, and operational support for our offshore team. Their ‘all-in-one place’ approach is far more cost-effective than I could’ve imagined.

Farhad Shamshirzan
Farhad Shamshirzan Director of Software Engineering Certent

I value their commitment to going the extra mile. We evolved from an outstaff project into an independent company, and Alcor’s support was crucial. They hired and ondoarded 15+ professionals for us.

Grigoriy Didorenko Research and Development Director BIScience

Thanks to Alcor, we hired four engineers and a designer that strengthened our team. Beside stellar recruitment, Alcor flawlessly handled our payroll. Their approach was seamless and swift.

Kirill Latish Head of Engineering & Communications Velory

Alcor closed our 4 QA positions in a month and more than doubled the team in a year! We chose Alcor because of their communication style, cost, scope of services, and ideas to help us be successful.

Vitalii Belelia Production Management & App Support Manager Ledger

FAQ

1) Is it better to outsource payroll in Colombia?

Yes, if you are an executive of a tech company planning to expand your software development team. Each country has its own specific legal, tax, and labor requirements. To avoid wasting time and resources on the in-depth training of your internal personnel, it’s best to opt for payroll outsourcing in Colombia. The local agency will take care of every minor detail to make your payroll fully seamless and compliant. 

2) How can IT companies change offshore payroll, PEO, or EOR provider?

Firstly, choose a suitable and reliable alternative. Draw on your previous experience and pay attention to the vendor’s industry expertise, pricing structure, track record, guarantees, technology and security capabilities. If your development team is rapidly growing abroad, you may consider opting for a more comprehensive solution, like Alcor’s R&D center, to keep all operations in one place. Next, audit your processes to uncover inefficiencies and set clear goals for your new vendor. Finally, develop a transition plan and transfer your payroll processing to the new provider. 

3) Which model is best suited for tech companies: an outsourced payroll company, PEO, or EoR?

For international tech companies expanding their development teams abroad, cooperation with a payroll processing company is not the best fit, as it typically offers a limited set of operational services. In this case, Professional Employer Organization (PEO) or Employer of Record (EoR) alternatives often prove to be more cost-effective and convenient.

While PEOs operate on co-employment terms, which basically equals developer leasing, EoR providers serve as legal employers of your programmers, leaving team management under your control. Some EoR companies, like Alcor, also cover full-cycle tech recruitment services, making the process of entering a new market entirely hassle free.

4) Can a new payroll outsourcing provider fix existing payroll errors?

Yes, a professional vendor of payroll solutions in Colombia can help you cope with the existing errors. But you’d need to put in extra effort to choose a reliable payroll provider in Colombia capable of addressing your specific problems. Pay attention to their expertise, track record, client reviews, pricing model, guarantees, and security protocols.