Part 1: Persona Fisica
Do you have a great idea for a business in Mexico but are unsure where to begin? As you start down the path of investigating how to launch your business, make sure you consider how taxes will play a role. Choosing the right approach can be the difference between success and a costly attempt.
Mexico’s tax authority, known as SAT, has developed two ways in which Mexican nationals and foreigners can participate in lucrative activities in Mexico. You can register as a Persona Fisica (an individual taxpayer) or as a Persona Moral (a legal entity like a corporation).
Persona Fisica
Doing business in Mexico as a persona fisica is one of the easiest and fastest ways to begin doing business. This route is designed for individuals 18 years and older who will be offering goods and services for income.
Persona fisica is great for Mexican residents who:
- Are earning income from rental properties, including Airbnb*
- Provide services such as language teachers, yoga and fitness classes, catering, wedding planning, and more
- Offer tourist-related activities such as tour guides, divemasters, and dive instructors
- Retirees looking to start an income-generating project
The benefit of registering as a persona fisica is that it requires fewer steps to begin earning an income, and SAT offers an excellent simplified tax regime for personas fisicas called RESICO, for individuals earning less than $3,500,00 MXN per year. Additionally, RESICO is limited to certain commercial activities and *excludes earning income from digital platforms. If you qualify, the tax rates are quite low and are based on income.
We have written about RESICO in our blog so be sure to review the article linked here (RESICO – Simplified Tax Regime for Individuals). You will also find more details about who can qualify for this tax regime.
How do I register as a Persona Fisica?
- You must have your Mexican temporary or permanent residency
- If you don’t have your residency, please contact Mexlaw for help obtaining residency
- Obtain your RFC from SAT
- Obtain your eFirma from SAT
- Register with SAT as persona fisica, detailing your activities
- Correctly issue facturas (electronica invoices) for all income
- Collect and pay all appropriate taxes from customers (i.e. IVA – sales tax)
- Obtain facturas for all legitimate business expenses
- Declare your income monthly and pay appropriate income tax (known as ISR) and file your annual declaration before the end of March each year.
An accountant is an invaluable resource on your route to starting your own business. Your accountant can walk you through each step to get you properly registered. They can also help issue facturas, file your monthly and annual declarations, and monitor your financial activity to ensure you are maximizing the benefits available to you.
To find out more on how to start your own business and earn an income in Mexico, please contact our professional and highly experienced team at Mextax today.
