(originally written in March, 2007 and most details of runing a small business here have changed since then)
The Old Gringo Starts a Business
“I’m almost of retirement age and I’ve bailed out early from the States, according to Social Security and norms, so I decided to start a business here in Puerto Vallarta, Mexico. We had sold our house and business in the States and moved here with a fixed amount of money that bought us a house and gave us enough money to live for 2 or 3 years.
Most people I talked to about starting a business either said, “Don’t do it (the legal formality) and just stay under the radar” or “Good luck, it’s a lot of bureaucracy and bullshit and bribes and fees, etc.”
Well, not being the brightest entrepreneur, I decided to give it a go the legal way. I had run a rare-plant nursery back in California so that’s what I went with for a business plan.
The #1 obstacle seems to be changing an FM3 visa to a “working” FM3. I met one person, a chiropractor also from California, who was trying unsuccessfully for months to get this classification. And I met many people who had it, but only as employees, not as self-employed business people.
Finding out where to start the process was the hardest part. Some people said, “Go to Hacienda (the tax people).” Some said go to Immigration. One friend said, “I know an accountant. Go to him first.” Which I did since the person recommending this approach seems to have survived here longer than anyone else I’ve met.
He had recommended an accountant he knew that spoke English, so I made an appointment.
Sarah and I went in to the accountant’s office (upstairs and marked on Francisco Villa Avenue only by an ice cream sign on the shop below). He saw us immediately and, as it turned out, was very easy to access at almost any time with no appointment or notice. I told him that I wanted to start a business and he asked a few questions and then typed up a letter for me to take to immigration to have my FM3 status changed to “working.”
He explained that there are 3 levels of personal business here in PV, with the distinctions being the percentage of tax paid and what it is paid on (gross or net). I opted for the lowest level since this business is an experiment for me and I won’t be desperate for another year.
I will pay 4% tax on my gross sales every two months. Seemed fair to me since my business is low-investment (I’m not reselling anything, only producing).
The accountant didn’t charge for any of the four visits to him at this point. His fee is 200 pesos a month for accounting and filing the tax payments. I have nothing to compare this amount to so I don’t know if it’s fair or not, but it’s extremely fair by US standards.
I took his letter to Immigration and they accepted my application without question. I now have a working FM3. The accountant made an appointment for me at Hacienda to get my tax numbers, but I was unable to meet it because “something came up.”
I finally went down to Hacienda yesterday afternoon (it was on the 3rd floor of the Caracol shopping center at that time) and saw about 100 people sitting and standing in a large waiting room. I asked the information person about this and he said to come back the next morning at 8:30 and it would be easier.
So I did. The place opened at 9 and I arrived at 8:45 and there were about 10 people in line. Just before 9 a man came out and asked each person in line what s/he was there for and checked for appropriate documents. He spoke limited English and I spoke very limited Spanish but things came out ok. I had everything and he gave me a number.
The door opened at 9 and at 9:05 I was inside and given another number (0001 !!!!). In a few minutes the number came up on the screen above the chairs and I went to window 5 where a very young man named Ivan (who spoke English) set to work on his computer and within about 10 minutes handed me my official tax number papers and I was a “real” business. This cost nothing.
I took a bus over to the accountant to see what to do next and he explained that I needed to have some “nota de ventas” printed up with my tax numbers and name on it (the copy was to be given to customers and the original to be kept for bookkeeping). Nota de Ventas are simply carbon copy receipts.
This is where I am now. My nursery is growing on the roof of my casita and I’m setting things up for sales. I have no idea of what’s going to happen from this venture (see the next installment….) but I have already had inquiries from people from Mexico City who want to come and buy some of my plants.
I forgot to mention that I also created a website for the nursery since the plants that I sell are extremely specialized and I will reach a larger market that way (it worked well in the States… who knows, it might work here. If it doesn’t, I’ll try a different approach).
Mexico seems to be changing from the horror stories I’ve read about the necessity of bribes to get anything done. I have had to pay some bribes (not in this process but with my move down here with customs) so things are not completely changed, but everyone I’ve come into contact with so far with Immigration and setting up the business has been great.”