Thursday, 21 January 2010

Very interesting questions that have convoluted answers

       There is a Canadian who is married to an American woman, and they are in the postion of being able to retire early and travel.   The thing is that they still have some home-based business activities and some computer-based business that they enjoy.    It was their understanding that employment or operation of a business in Mexico is permitted only under the strictist regulation, registration (tax numbers, sales tax participation permits, etc.).    All of this is true.    BUT.....
       Usually, the continued operation of a computer-based business in a private personally owned or leased home/apartment/condo....will not be subject to any special interest from Mexican authority.   One of the reasons people do not like Mexico is because of the possible "arbitrary" administration of business and labour law.......and conversely, one of the reasons why people like Mexico is because one can normally do almost anything that is otherwise morally correct....and if you keep under the radar....don't strut and brag...keep it cool, calm, and collected....almost always nothing will happen to you.   This is especially true if you are dealing in small amounts of economic activity....either in cash....or in such a way that you can conduct your business banking still in the United States.   It is figured that the money in the bank in the United States will filter, legally, into Mexico and continue to fuel the demand-driven, free-enterprize economic sectors. 
      In terms of keeping things cool, calm, and collected...I would liken this to the difference between the low-class dancing and writhing and acrobatic celebrations in the end-zone when a  wide receiver scores a touchdown as opposed to the players who put the ball down or toss it to the referee, and/or who kneel and quickly cross themselves or point to the Cosmic Giver of Talent to express gratitude, and then return to their bench to enjoy the's a matter of class.     If you want to do a little something in Mexico, then you should be like the second player, and not the first.
       One smiles a bit when the drunk at the end of the bar belts out with something like , "Yeah, in Mexico there ain't no laws....if you can get away with it, pay off the right people...then you're in like Flynn.    Yeah, I've been there a couple of times, and I know what I'm talkin' about."     The fact is that a national, state, and local level is heaped up with tons of plus-sized laws.   The Constitution of 1917, the basis of law in a gargantuan document that, some joke, establishes the distance between parking meters in Tampico....on Tuesday.     The beer, wine, liquors, distillates, and alcoholic preparations law in Tamaulipas needs to have three camel caravans of 1,000 camels each to bring in the amendments to the next State Congressional session.....almost.   What is funnier than these absurd statements is that no one really laughs at these jokes, because everyone knows that the jokes are closer to the truth than not.
      In short, the problem in Mexico is not the lack of laws and is the massive number of laws and regulations.    So, my rule of thumb is....if you are a younger person and you have found the perfect place in Mexico where you know that you are going to live for ten years or until Death do ye part, and you have the capital on-hand (roughly three times more than what you have calculated.......seriously), then I would recommend, strongly, to establish your beauty salon, book store, Pollo Loco franchise (a good choice, actually) strictly along the legal lines....including the Draconian labour laws (more about that later).  Take out the permits, take out your tax number, register your employees in Social Security (Mexico's sabre-toothed, giant ground-sloth socialized medical system{default}) or devise a slightly more expensive private insurance program for you and your employees {preferred},  hire the CPA, as required to do your quarterly filings for the employees' housing fund contribution, Christmas bonus escrow, scholarship contributions for employees' minor dependents, personal and/or small corporation anticipated income tax withholding, etc.etc.etc.
      If, however, you are a geezer....or even a pre-geezer.....then it seems that the attitude among authority is that you are not really going to be doing any damage to the employment picture.....that your pensions and other capital improvements that you are presiding over in Mexico, and your  incidental employment of people to do "temporary projects"...will be tolerated....if you happen to recieve guests in a two or three bedroom bed and breakfast operation.   One of the reasons people will work for you without coverage as required in the common labour package, is because you will probably pay 3 to 6 times more than the minimum otherwise required by law and be a "kinder and gentler" employer.    Just make sure to pay your ad valorem tax on your house and property, every year or at least every other year.     More on these taxes later.

     Remember, that your humble correspondent is not authorized, credentialled, or in any way qualified by any authority save for that which is provided by a half-century of experience....and by the experiences dating back to the 1880's of family members living in and doing business in Mexico.    Also,  free advice could be considered to be worth the cost.....but one should also consider that each case is at least slightly different from any other case.    Like the Old Arriero (mule & donkey pack train driver) said one time when trying to describe the Gringos to the people back in his village...."Yes, I saw many of them in Guadalajara....they are very big and pale....They do you the snow-flakes....they all look just alike, but they are all a little bit different."     That is the case with your circumstances concerning remunerated economic activity in Mexico.