For businesses paying independent contractors in Mexico
Best payment methods for Mexican contractors:
Key requirements:
Mexico has a rapidly growing tech and freelance economy, with nearshoring making it increasingly attractive for US companies. If you're hiring contractors in Mexico, you need to understand:
| Method | Cost | Speed | Best For |
|---|---|---|---|
| Wise | $3-$8 | 1-2 days | Regular payments, best exchange rates |
| PayPal | $5-$12 | Instant | Widely accepted, instant transfers |
| Payoneer | $5-$10 | 1-3 days | Popular with Mexican freelancers |
| SPEI Transfer | $0-$3 | Same day | Domestic Mexican transfers only |
| Bank Transfer | $15-$35 | 3-5 days | Large amounts, traditional method |
Why Wise is best for Mexico payments:
How to set up:
Unlike many other countries, Mexican contractors are comfortable with both USD and MXN. The choice depends on several factors.
Pay in USD if:
Pay in MXN if:
Pro tip: Many Mexican contractors are flexible on currency. Tech workers often prefer USD, while local service providers may prefer MXN. Always ask your contractor which currency they prefer before setting up payments.
Mexico has specific tax requirements for contractors. While the contractor is responsible for their own taxes, you need to understand the system to ensure proper compliance.
The RFC is Mexico's tax identification number, similar to a US EIN or SSN.
CFDI is Mexico's digital invoice system, required for all business transactions.
Important: As a foreign company paying a Mexican contractor, you typically don't have tax withholding obligations in Mexico. However, you should collect CFDI invoices for your records. Consult with a tax professional for your specific situation.
Problem: You pay contractor but don't get CFDI invoice, creating tax compliance issues.
Solution: Always request CFDI invoice before or immediately after payment. Kontrable can track this automatically.
Problem: Contractor doesn't have valid RFC, creating legal and tax issues.
Solution: Verify RFC before starting work. You can check RFC validity on SAT's website.
Problem: Traditional international wire transfers cost $15-$35 per transaction with poor exchange rates.
Solution: Use Wise or PayPal to save 60-80% on transfer fees.
Problem: Communication issues due to language barriers.
Solution: Clarify language requirements upfront. Many Mexican tech contractors are bilingual, but not all.
Problem: Treating a contractor like an employee creates legal risks under Mexican labor law.
Solution: Ensure true contractor relationship: they control how work is done, use own tools, work for multiple clients, provide CFDI invoices.
Mexico has become increasingly popular for US companies due to several key advantages:
For payments: Wise, PayPal, or Payoneer
For contractor operations:
Kontrable is built specifically for managing international contractors:
A: No. EOR (Employer of Record) is for hiring employees internationally. Mexican contractors handle their own taxes and compliance. You just need a good payment method (Wise) and contractor management tool (Kontrable).
A: It depends on the contractor's preference. Tech workers often prefer USD, while local service providers may prefer MXN. Always ask your contractor which currency they prefer.
A: CFDI (Comprobante Fiscal Digital por Internet) is Mexico's digital invoice system. You need it for tax compliance and record keeping. Your contractor should provide CFDI for each payment.
A: No. As a foreign company paying a Mexican contractor, you typically don't withhold Mexican taxes. The contractor is responsible for their own SAT tax compliance.
A: You can verify RFC validity on SAT's website (sat.gob.mx). Ask the contractor to provide their RFC before starting work.
A: Wise offers the lowest fees ($3-$8) and best exchange rates. PayPal is also popular but has higher fees ($5-$12). Avoid traditional bank transfers ($15-$35).
Managing Mexican contractors?
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