If you’re thinking about freelancing in Mexico, it’s important to understand your tax obligations. Working as an independent professional comes with plenty of perks, but it also involves some responsibilities such as issuing invoices, keeping your accounting in order, and filing both monthly and annual tax returns. Sound a bit overwhelming? Don’t worry, we’re here to walk you through the process of invoicing as a freelancer in Mexico.
What Tax Regime Do Freelancers Belong To?
To issue invoices and operate legally, you need to be registered with Mexico’s tax authority, the Servicio de Administración Tributaria (SAT). This means getting your RFC (Tax ID). There are two main ways to do this, depending on how you run your business:
Individual with Business and Professional Activities
As the name suggests, this regime is for individuals who offer professional services or engage in business activities independently. If you fall into this category, you have a few tax obligations:
✓ Register with the RFC
✓ Keep your personal info up to date
✓ Issue invoices for your services or goods
✓ Maintain proper accounting records
✓ File monthly and annual tax returns
✓ Pay taxes, including Value Added Tax (IVA) and Income Tax (ISR), based on your earnings
On the bright side, this regime allows you to deduct expenses related to your business—think tools, equipment, or software essential to your work.
Simplified Trust Regime (RESICO)
RESICO is designed to make life easier for freelancers and small business owners. It offers several benefits, including:
✓ Automatic tax calculation based on your invoices
✓ Pre-scheduled tax filings
✓ Lower ISR rates
Invoicing System: CFDI 4.0
Since April 1, 2023, the SAT has required all taxpayers to use version 4.0 of the CFDI (Digital Tax Receipts). This update brings in new data requirements for both the sender and receiver of the invoice. For example, you now need the fiscal address, tax regime, and purpose of the invoice from your clients. Make sure the information on your invoices exactly matches the details in the SAT’s registry, or your invoice might get rejected.
How to Succeed as a Freelancer
Freelancing offers you great flexibility, you can choose your clients, manage your time, and work from anywhere. However, the key to success is making sure you stay on top of your financial and tax obligations. The best way to do this is by using the right tools and getting expert advice when necessary.
This doesn’t mean you need to handle every financial task yourself. Instead, trust professionals to keep you updated on your accounting, so you can focus on building your skills, growing your business, and staying competitive in your field.
Conclusion: Let Mextax Take the Hassle Off Your Plate
Why worry about the technicalities when you can focus on doing what you do best? Whether you’re just starting your freelance journey or you’re looking to clear up any doubts about your current tax situation, our Mextax accountants help freelancers like you handle their tax and accounting needs smoothly.
Let us simplify your financial life, schedule a consultation with Mextax today, and we’ll show you how easy freelancing can be when your taxes are in expert hands!
