BajaNomad - running a business as a non-Mexican Q & (hopefully) A

running a business as a non-Mexican Q & (hopefully) A

BajaNuts - 7-29-2009 at 11:59 PM

After the very informative recent topic on Mexican labor laws, it was proposed to start a topic about doing business in Mexico. Specifically, I'd like to focus on non-Mexicans doing business in Mexico.

I'd like to start with this question-

there are a 1001 plumbers/electricians in Baja. Judging from posts and stories here and elsewhere, there is room for improvement. I can do a better job than what they are doing, so I start a corporation, hit up a few gringo-focused developers/builders and go to work. For the sake of simplicity...no employees.

Tell me how badly I am at risk of lawsuits from someone claiming I'm taking a job away from a Mexican, who cannot do it to the standards I can. I know there's the business tax reporting and all that, but has anyone ever heard of such a thing? It may seem like trying to sell ice to Eskimo's, but if the quality of work isn't there, and someone can do a better job....

Anyone else with "operating a business" type questions or info, feel free to post. Also any gringo-owned businesses who'd like to share their stories...good and bad....

osoflojo - 7-30-2009 at 12:18 AM

I cant speak to the state of getting Immigration working papers today but when I had my buisness the most important tenants were:

1. The way your Articles of Construction were written to justify that you could actually work for your corporation and

2. The ratio of the number of extrenjeros vs Mexicans that worked for the Corp.

I would recomend getting the smartest, most experianced Accountant you can find to properly write and present to a "friendly" Notary your Articles of Construction.

Just as all Immigration offices have different ways of looking at the FM-3 process granting working parers is looked at even more carefully. Buenas Suerte.

P.S. Do not think for one nanosecond that "who can do the best job" will ever enter into any of this process.

BajaNuts - 7-30-2009 at 12:38 AM

Thanks, osoflojo,

care to share what you did, for how long and why you quit?

Why is the ratio of extrenjeros v Mexican's important, I was planning on being the "one-man shop" . Actually, it would be two with hubby and me. No employees.

DENNIS - 7-30-2009 at 05:15 AM

Quote:

Originally posted by BajaNuts

Tell me how badly I am at risk of lawsuits from someone claiming I'm taking a job away from a Mexican, who cannot do it to the standards I can.

Your expertise would be a subjective evaluation not shared by anyone.
I'm not sure that you could get an FM3/Plumber without having commitments of employment for an established firm. I don't believe you can.
You could start a plumbing firm with all the requisite licenses and partnerships and paperwork but, that would be a lot to go through just to change toilets, not to mention what you now know about hiring workers for your new business.
The mere thought of it would give me nightmares.

Skeet/Loreto - 7-30-2009 at 06:01 AM

First:
Contact a good Notoria in La Paz/TJ.
Second:
have them set up a mexican Corp.
Third:
Get a good Local Accountant

Make sure you file all Accounting Reports

Go to work/ be Honest and open and help out some of your Mexican Friends that are in Need.

The word will spread, you will be treated fairly.

Skeet

Pescador - 7-30-2009 at 07:37 AM

The first issue that is very difficult for a lot of people to understand is that Mexico, for the most part, is not run by the principles of "Free Enterprise" and that goes a long ways toward explaining why the country is not further along economically than it is. So, it is irrelevant that you might be a more effective and higher quality plumber, because they would never allow you to get to step one. Unlike the US with very open borders , even though they say differently, Mexico is very protectionistic about their workforce and unless you can show that you are going to be training mexican workers to do more effective plumbing, or some company has need of your specific services, chances are slim and none that you would ever be able to get permission to do that type of business in the first place. And even if you managed to spend a lot of money in all the right places and get permission to actually work, it is up for yearly review and all you need is one complaint from a Mexican plumber who is upset with you and your business to find yourself shut down. The protectionism runs through all levels of government as well as the population.

BajaNuts - 7-30-2009 at 08:44 AM

Actually, we're sparkies, not turd-chasers :biggrin:

"Consultant" is always a vague enough job description.

It's amazing the lack of motivation the culture spawns. There is no incentive to do better than the next guy.

We could definitely train a worker, but then it's back to the old employee hassle.

I KNOW- the consultant angle would work in that we could consult with homeowners who are building their own house. BigWooo, want our number? :lol:

Are you willing to work for Mexican wages?

Dave - 7-30-2009 at 09:23 AM

Quote:

Originally posted by BajaNuts
I can do a better job than what they are doing, so I start a corporation, hit up a few gringo-focused developers/builders and go to work. For the sake of simplicity...no employees.

Why would a contractor use your services when he could hire Mexican labor at 1/4 the cost, or less? That you do a better job... so what? He could have his Mexican plumber/electrician redo a job 3 times and still come out ahead.

BajaNuts - 7-30-2009 at 09:38 AM

I would think that eventually the builder/contractor would get tired of all the hassles of shoddy work and shoddy work ethics and maybe there is a quality builder out there who would like someone to do it right the FIRST TIME!

Or do all the contractors have the same "whatever" attitude as workers are portrayed to have? Are they all in the same mindset?

We faced a similar situation when we first moved to where we live now. Many other electrical shops, but the quality of work was ghastly. It took a while, but eventually we connected with some builders who appreciate quality....not just the cheap price others would charge.

DENNIS - 7-30-2009 at 09:56 AM

Quote:

Originally posted by BajaNuts

Or do all the contractors have the same "whatever" attitude as workers are portrayed to have? Are they all in the same mindset?

I would guess that most contractors, if not all, were once workers. And, after learning of all the illogical labor laws on the books, the question arises, "Who works for whom?"

osoflojo - 7-31-2009 at 12:53 AM

Everyone here gives a good prospective on this, but the bottom line is that even the best " constructed " corp will do you no good if La Migra will not give you working papers to work for it. It may be worth the expense and hassel to hire an immigration consultant that can explore any "special circumstances "in your area.
You asked what I did, I had a shop on the Marina of CSL that before cell phones had long distance phone service, a liquor license, laundramat and message center. A whole bunch of different thing conspired to create the perfect storm to close up shop. Again best of luck.

JESSE - 7-31-2009 at 02:23 AM

I know a smart gringo who got around all of this.

He hired plumbers and electricians from Tijuana and Mexico city. Moved them to La Paz. Hes the boss-supervisor, employs Mexicans, does good work, charges twice the locals, and many people like myself hire him all the time.

Phil S - 7-31-2009 at 08:06 AM

In BCS for over seven years, I worked with (hired) plumbers, electricians, painters, landscapers, roofers, plasterers and cement folks. All really good hard working (by Mexican standards)citizens. suppporting their families.
I have a really hard time with folks who want to come down & "do it better". To have the "good life". Personally I think it 'stinks'. MHO.
Yes they 'do it differently' than we do it in the states. But look how long they have been doing it, and no one is worse for that fact. Yes. If you were there to watch a house being built every day, you'd have numerous heart attacks by completion. Especially the one that comes when the home did'nt get finished on time by six months average. But most of their homes are still standing today. The owners living in them are happy. Why would you want to give up your "eastern oregon" practice to come down, and 'show them how it's done???? And for a lot less money, and a ton of frustration with 'their paperwork.' For nineteen winters, I lived down there, and made many friends during that time. Some will be for a lifetime.
I think you'd maybe make more money if you were selling timeshares at the Loreto airport!!!!!!! And non of this is intended as a 'put down'. Just how I see it.

[Edited on 7-31-2009 by Phil S]

shari - 7-31-2009 at 09:51 AM

from reading some of the info...it seems like many companies create a "sheild" type company to hire workers to prevent profit sharing...the bogus company doesnt make a profit...hmmm..sounds plausible.

JESSE - 7-31-2009 at 11:44 AM

Quote:

Originally posted by shari
from reading some of the info...it seems like many companies create a "sheild" type company to hire workers to prevent profit sharing...the bogus company doesnt make a profit...hmmm..sounds plausible.

Trust me shari, it doesn´t work. It used to be the practice a few years back, but not anymore. My lawyer specializes in business law, and he takes down "shields" like this one all the time. The judge doesn´t determine the "source of the job" or fuente de trabajo based on what a paper says anymore.

MitchMan - 7-31-2009 at 12:33 PM

Is there a problem with several Americans getting together to form a partnership (not a corporation), split the expenses and revenues and do all the work themselves and not hire any Mexican employees? Some businesses that come to mind are construction and related services, real estate sales assistance and brokerage, real estate and construction administrative consulting & facilitation, bookkeeping services (great feeder business), residential property management, etc.?

I suppose the question is whether or not any of these above-mentioned businesses would be easily allowed when trying to acquire the requisite permissions and work permits, in view of the fact that truthfull filings would not indicate the future hiring of Mexican employees.

Based on the preceding posts, it sounds like it may be impossible to get the work permits.

JESSE - 7-31-2009 at 12:43 PM

Quote:

Its not going to happen.

bajalou - 7-31-2009 at 01:07 PM

I don't think you're legally going to get around the rule "Foreigners can do no work (paid or not) on any property but their own."

But, keep on skeaming, the great pastime for those from NOB.

Woooosh - 7-31-2009 at 02:40 PM

Quote:

Originally posted by MitchMan
Is there a problem with several Americans getting together to form a partnership (not a corporation), split the expenses and revenues and do all the work themselves and not hire any Mexican employees? Some businesses that come to mind are construction and related services, real estate sales assistance and brokerage, real estate and construction administrative consulting & facilitation, bookkeeping services (great feeder business), residential property management, etc.?

I suppose the question is whether or not any of these above-mentioned businesses would be easily allowed when trying to acquire the requisite permissions and work permits, in view of the fact that truthfull filings would not indicate the future hiring of Mexican employees.

Based on the preceding posts, it sounds like it may be impossible to get the work permits.

There are thousands of Americans living in baja norte (most without FM3's too) that would hire a fellow american tradesman to get the correct job done right the first time. Look at the million dollar homes in Puerto Nuevo for example. Just start doing the work you do- do it well and and ask for them to tell their friends. You won't make a living at it- but you will make more money than the local guys hanging out with signs on their trucks on the blvd.

The previous posts are accurate- but why be the only one in this place that plays by the rules? And of course everyone who makes money down here reports it ALL as US income, as required under the IRS rules... right?

BajaNuts - 7-31-2009 at 02:56 PM

Quote:

Originally posted by JESSE

Quote:

Its not going to happen.

Jesse-
can you clarify? Do you mean government would never allow it or that partnerships rarely ever work out? or both?

"And of course everyone who makes money down here reports it ALL as US income, as required under the IRS rules... right?" RIIIIIIIIIIIGGGHHHT!

Uh...

Dave - 7-31-2009 at 03:00 PM

Quote:

Originally posted by Woooosh
Look at the million dollar homes in Puerto Nuevo for example.

Where???

Are you adding them up collectively? :rolleyes:

Woooosh - 7-31-2009 at 03:17 PM

Quote:

Originally posted by Dave

Quote:

Originally posted by Woooosh
Look at the million dollar homes in Puerto Nuevo for example.

Where???

Are you adding them up collectively? :rolleyes:

No- sadly. I think they actually got that much for some of those homes in the walled enclave on the ocean just south of the lobster village. really. Some fancy Orange County builder.

I bet you'll find realtors who will brag they sold one- but no gringos foolish enough to admit they bought one though.

JESSE - 7-31-2009 at 03:22 PM

Quote:

Originally posted by BajaNuts

Quote:

Originally posted by JESSE

Quote:

Its not going to happen.

Immigration would never issue papers for such a company.

flyfishinPam - 7-31-2009 at 03:49 PM

Hi there. In my studies of the ley federal del trabajo it states that there must be nine Mexican employees to every foreign employee. exception would be the sole administrator of a Mexican corp who can prove their skills are necessary for the company to run but their activities are spelled out right into their FM2 or 3 booklet.

JESSE - 7-31-2009 at 04:03 PM

Honestly,

The quality of work at least here in La Paz, is something i have never seen anywhere in Mexico. Even doctors here surprise me, they just give you a pill and hope for the best. So i have to do my own little research and actually tell them what the posibilities are based on the symptom. It really represents a huge problem for any business.

Even people from Constitucion and other places in Baja consider Paceños inept and lazy.

shari - 7-31-2009 at 04:03 PM

eso eso eso...accompanied by my the top of my index finger pumping up and down...many of you will know what I mean.

comitan - 7-31-2009 at 04:04 PM

Nuts just keep your nose to the grindstone, when you have paid your dues come on down!!!!!!!!!!!!!