Attention: it's advisable to seek professional advice, such as from an accountant or business advisor, to ensure you comply with all legal and tax requirements when setting up your sole proprietorship as a contractor in Mexico.
In Mexico, you are not allowed to operate as individuals to be a contractor. You will need to register a legal entity. This legal entity could be a sole proprietorship, business or organisation.
To create a sole proprietorship (or "Persona Física con Actividad Empresarial" in Mexico) to operate as a contractor, you'll need to follow these general steps:
Register with the Tax Administration Service (SAT): You need to obtain a tax identification number (RFC) from the SAT. You can register online or in person at the nearest SAT office.
Register for the Unique Population Registry Code (CURP): This is a unique identification code for individuals in Mexico. You can obtain it through the National Population Registry (RENAPO).
Register with the Social Security Institute (IMSS): If you plan to hire employees, you'll need to register with IMSS. As a sole proprietor, you may also choose to register yourself for social security benefits.
Obtain Permits and Licenses: Depending on the nature of your contracting business, you may need specific permits or licenses at the municipal, state, or federal level. Check with local authorities to ensure compliance.
Open a Business Bank Account: It's a good practice to separate your personal and business finances. Open a business bank account using your RFC.
Comply with Tax Obligations: As a sole proprietor, you'll need to file taxes periodically. In Mexico, this typically involves filing monthly or quarterly reports and an annual tax return. Keep track of your earnings and expenses to calculate your taxes correctly.
Remember that regulations and requirements may vary depending on your location and the nature of your business activities. It's essential to research and understand the specific rules that apply to your situation in Mexico.