In Mexico, the lack of quality job opportunities and access to new technologies has pushed many people into self-employment.
According to the Amway Global Entrepreneurship Report in 2018, 35% of Mexicans consider that their country has the technology available that makes entrepreneurship easier. This is especially true for millennials, who only need an internet connection for their professional activities. In the past few years, there has been an essential growth in the number of self-employment through freelancing, such as content writing, web designing, translations, etc. This is a way for them to work without having to be in an office.
The following article will guide you through the process of setting up as a self-employed professional in Mexico.
Disclaimer: Please bear in mind that this article doesn't substitute legal advice. Information in this article was collected from the Mexican government's official website and other online resources. Please always check official websites or seek legal advice before you take action.
Employee VS Independent Contractor
According to the Mexican Federal Labour Law (Ley Federal del Trabajo), an employment relationship is characterized by the fact that the employee is subordinated to personal service to the employer, in exchange for the payment of a wage. An employer can control and direct the employee's work. Labor relationships are regulated by the FLL, whereas independent contractors services' are regulated under the civil or commercial codes.
The main difference between the employee and independent contractor status is the subordination; an independent contractor can't be subordinate to an employer, as the employee is.
An independent contractor is not subject to the employer's command regarding the way they need to accomplish the work they were hired for. Unlike the employee, the independent contractor is free to define their work schedule as well as the place to perform the work, for instance. Under Mexican legislation, independent contractors are individuals who render their professional services as contractors, without being subject to subordination.
However, the courts determine whether a person is considered to be an employee or an independent contractor based on how the services are rendered. The title given to the employee or independent contractor, or the type of agreement executed between the employer and the employee or independent contractor is not important.
The business owner needs a tax identification number that is required to pay taxes. It's called RFC number (RFC stands for Registro Federal de Contribuyentes); the number is given by the SAT (Servicio de Administración Tribuataria), which is the Service tax administration in Mexico.
To get the RFC number, you need a CURP (Clave Única de Registro de Población — Unique Population Registry Code), which is a general identification number, an 18-digit social security number for people living in Mexico. This one is given if you are a permanent or temporary resident of the country. The CURP is considered as the key to access the procedures and services offered by the Public Administration agencies. Therefore, if you don't already have it, you must obtain it.
What are the steps to obtain a CURP number in Mexico?
You will need first a copy of your passport or a copy of your immigration (permanent or temporary) visa (but not tourist visa), your resident card and a CURP request letter in Spanish. Then, you must find out where your local CURP government office is and check when they are open for CURP registrants.
Mexican government promotes independent work
The Mexican government encourages independent work (self-employment) through El Fomento al Autoempleo (FA), which is a sub-program that aims to support jobseekers who wish to develop an activity on their own with the delivery of furniture, machines, equipment and/or tools. In other words, it's an initiative brought by the Mexican government to help set up as independents.
This FA provides in-kind support (furniture, machinery, equipment and/or tools) whose cost can be up to $25,000 per person and up to $125,000 when the number of the Self-Employment Initiative is five or more.
Here are the requirements :
- Complete the "National Employment Service (NES) Application" process.
- Fill out and sign under protest the form "Applicant Registration"
- Be a job seeker
- To be 18 years old or older
- Have at least six months experience in the activities related to the business to be undertaken, which will be confirmed in the interview with the job applicant.
- In the case of not having experience or knowledge, these people will have the option to participate, previously, in a training course of the Bécate subprogram whose specialty must correspond to the business project.
- Have an income of less than six monthly minimum wages in your family nucleus.
- Contribute their resources for the operation of the business corresponding to fixed and working capital.
- Prepare and deliver the business project proposal.
- The members of the business must sign the "Letter of Commitment", "Carta Compromiso".
The required documentation should be submitted in one original and one legible copy.