Easily manage employment in Puerto Rico

Payroll services in Puerto Rico

Puerto Rico has a diverse economy with key industries in manufacturing, tourism, and finance. With specific labor laws and tax regulations, employers in Puerto Rico must ensure compliance with local payroll requirements, including social security contributions, employment contracts, and tax obligations. Understanding these regulations is essential for smooth payroll operations and legal compliance.

Payroll breakdown in Puerto Rico

Employers in Puerto Rico must adhere to national payroll regulations regarding wages, taxes, and social contributions. Below is an overview of key payroll components:

Minimum wage and working hours

• Minimum wage: Puerto Rico’s minimum wage is USD 9.50 per hour.
• Payroll frequency: Salaries are generally paid biweekly or monthly.
• Standard working hours: The normal workweek in Puerto Rico is 40 hours, typically spread over five days.
• Overtime: Employees are entitled to additional pay for overtime work, calculated at 150% of the regular wage for extra hours and 200% for work on public holidays.

Taxation and social security contributions

• Personal income tax: Puerto Rico has a progressive income tax system with rates ranging from 0% to 33% depending on income levels.
• Employer contributions:
• Social Security (FICA): 6.2% of the gross salary.
• Medicare: 1.45% of the gross salary.
• State Unemployment Tax (SUTA): Varies by employer history.
• Employee contributions:
• Social Security (FICA): 6.2% of the gross salary.
• Medicare: 1.45% of the gross salary.
• Corporate tax: The corporate income tax rate in Puerto Rico ranges from 18.5% to 37.5% depending on revenue.
• Tax reporting: Employers must file payroll taxes and contributions with the Puerto Rico Department of Treasury and the U.S. Internal Revenue Service (IRS) regularly.

Payroll compliance in Puerto Rico

• Employment contracts must be provided in writing and specify terms such as salary, working hours, and job responsibilities.
• Payroll deductions: Employers must ensure accurate deductions for social security, Medicare, and income tax.
• Employers must stay updated on changes to Puerto Rico’s labor laws and tax regulations to avoid penalties.

Run payroll in Puerto Rico with Remote

Managing payroll in Puerto Rico requires careful attention to tax regulations, employment laws, and social security requirements. Employers must stay informed about tax rates, wage laws, and reporting deadlines to ensure smooth payroll processing and avoid penalties.

The good news is, you can pay anyone, anywhere — from your team in the office to your team abroad, all with Remote Payroll. To see just how easy global payroll can be with Remote, book a demo today.