Since the passage of the North American Free Trade Agreement (NAFTA), many of the barriers to Americans wanting to operate or invest in businesses in Mexico are no longer in place. And, while Mexico has been attractive as an investment opportunity for large American corporations, incentives for new start-ups have made it inviting for small business owners as well.
Over the years, the Mexican government has worked on improving its infrastructure and reforming its economic policies. The hard work has paid off because Mexico is becoming more and more appealing to investors. In fact, it has the second-largest economy in Latin America. The strength of its economy is due to its proximity to the U.S. and the fact that it can count on strong trade agreements, including the USMCA agreement with the U.S. and Canada.
Doing business in Mexico while living in the United States is a relatively simple process. You don’t need to be a resident of Mexico; technically-speaking, you don’t even have to travel to Mexico. With the exception of the oil and gas industry, which are off-limits or heavily restricted, you’re free to register most any type of business without obstacles.
While starting up a business in Mexico is generally easier today than it was years ago, it’s not without its challenges. So, you need to do your homework to find out what the pros and cons are.
Pros and cons
One of the biggest advantages to doing business in Mexico are the benefits you can get from the country’s trade policies. Due to its geographical location, the country can connect North and South American consumer economies very effectively. Additionally, Mexico’s currency is weaker in comparison to other nations and the cost of labor is competitive with that of China.
The majority of Mexican consumers are familiar with many foreign products and brands which makes the process of launching and then expanding your business that much easier.
Starting a business in Mexico can be complicated without the right connections. The Mexican legalese can be difficult to comprehend, especially if you’re dealing with a language barrier. And then there is the Mexican business culture. Unlike the U.S. and Canada, the decision-making process remains almost exclusively from the top with little or no input from junior employees. Personal relationships, loyalty, and status consciousness are important parts of the Mexican business culture.
Paying taxes in a very arduous process in Mexico and takes about 337 hours of business time every year. However, hiring a reliable tax accountant can help you deal with Mexico’s tax laws, its different taxes, and help you to take advantage of any tax breaks and deductibles. Hiring a reputable Mexican law firm can help you help you cut through all the red tape that comes with doing business in Mexico.
Understanding the culture
Once you begin doing business in Mexico, you may find yourself enamored with this fascinating country. And, why not! The Mexican culture is possibly one of the most fascinating cultures in the world. So, maybe it’s time to learn about how to buy a house in Mexico while still living in the U.S. — and enjoy the best of both countries.