Mexico Payroll Services

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Mexican Payroll

Bradford Jacobs’ expertise provides complete answers for companies targeting Mexico in their expansion plans. We know successful international expansion depends on making the right moves from day one. This is crucial for companies building their international profile in Mexico. Compliance with Mexican payroll regulations is vital for your company’s smooth and stress-free integration into the economy.

At Bradford Jacobs, we make business expansion easy, thanks to our Professional Employer Organization (PEO) and Employer of Record (EOR) platforms. We navigate the administration of the Mexican payroll system for you. As part of our service, we make the returns and associated payments for income tax and social security contributions directly from our payroll system to the local tax authorities. We process every requirement directly to the relevant authority, the Tax Administration Service (SAT) at the Ministry of Finance and Credit (Secretaria de Hacienda et Credito Publico).

What Mexican Payroll Options are available for Companies?

Remote payroll: This option allows businesses to operate under a single payroll system, by adding employees in Mexico to your parent company’s payroll.  However, these employees must operate under different regulations, which is likely to cause problems.

Internal payroll: You may operate payroll from your subsidiary, especially if you are committed to growing your company’s presence in Mexico. However, this does require hiring dedicated HR staff who understand Mexican employment and compliance laws.

Mexico payroll processing company: If you are considering outsourcing, then working with a Mexican payroll company will help in processing your payroll – but not when it comes to compliance.

Mexico payroll outsourcing: However, there is another option available which solves all concerns – by working with Bradford Jacobs. We can handle both your payroll and compliance for all your employees in Mexico. We take the administrative stress off your shoulders so you can focus on what you do best.

Mexican Payroll Services

Setting up payroll in Mexico demands a complete understanding of the employment and taxation regulations. This involves many levels of complexity in Mexico, as laws can vary between different states, as well as being affected by collective or union agreements.

Running payroll includes registering with the Mexican Social Security Institute (Instituto Mexicano del Segura Social), the relevant local tax administration for payroll (Secretaria de Finanzas del Gobierno de Distrito Federal) and then with the Sistema de Informacion Empresarial Mexicano (SIEM), which keeps a register of all businesses in Mexico.

Outsourcing payroll services in Mexico will deal with the following:

  • Remitting withheld taxes to the Tax Administration Service (SAT). Thresholds and rates may vary between states
  • Remitting required deductions to the Mexican Social Security Institute (Instituto Mexicano del Segura Social, IMSS)
  • Filing returns for the tax year, which runs from January 1 to December 31, although for foreign employees their tax year can start from their day of arrival
  • Creating employment contracts
  • Creating pay slips and calculating monthly salary and income tax contributions to be remitted

What is required to set up Mexican Payroll?

Requirements for setting up payroll in Mexico can vary depending on how foreign companies establish their presence. Setting up a subsidiary is one option as a first step. However, this takes time and can be a complex process depending on where you incorporate your company as well as the type of entity you choose to establish.

Deciding on the type of company involves crucial decisions. Options include a Limited Liability Stock Corporation (Sociedad Annima, SA), a Limited Liability Company (Sociedad de Responsabilidad Limitada, SRL), a Civil Enterprise (Sociedad Civil, SC), a Branch (Sucursal) or a Subsidiary (Subsidiario).

Before a foreign company can operate payroll in Mexico, they must meet various legal requirements. These include:

  • Obtaining approval from the Ministry of Foreign Affairs for the company name
  • Registering the public deed confirming legal establishment of the company with the Public Registry of Property and Commerce
  • Registering the legal entity with the National Foreign Investment Bureau
  • Registering with the Tax Administration Service (SAT) and the Mexican Social Security Institute (Instituto Mexicano del Segura Social, IMSS)
  • Obtaining Advanced Electronic Signature (Registro Federal de Contribuyentes)
  • Once the deed of incorporation has been notarized, obtain a tax ID number from the Ministry of Finance and Credit (Secretaria de Hacienda et Credito Publico)

Registration can take up to 90 days and all the above procedures must be carried out before a company can pay employees.