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Companies that hire independent contractors in Mexico should have those workers register with the Mexican tax authorities as independent service providers. They should also provide and keep official, signed pay receipts.
Companies often hire 1099 employees because they can help complete non-essential tasks quickly and allow businesses to grow and develop more easily. If you're hoping to work with independent contractors, it can be beneficial to understand their major benefits and the most efficient way to hire them.
Form 1099-NEC & Independent Contractors.
9s and 1099s are tax forms that businesses need when working with independent contractors. Form 9 is what an independent contractor fills out and provides to the employer. Form 1099 has details on the wages an employer pays to an independent contractor. This form is filed with the IRS and state tax authorities.
Hiring an independent contractor in Mexico. The Mexican Federal Labor Law, or the Ley Federal del Trabajo, governs employer-employee relationships and mandates the standard employee protections and benefits. On the other hand, civil and commercial codes regulate independent contractors' work, offering fewer protections
There are two ways to hire employees in Mexico. The first one is to hire employee with a Global Professional Employer Organization, or PEO, such as Serviap. The second one is by your own. You need to make an offer letter determining if the salary is This will cost more time and money than the first one.
If you paid someone who is not your employee, such as a subcontractor, attorney or accountant $600 or more for services provided during the year, a Form 1099-NEC needs to be completed, and a copy of 1099-NEC must be provided to the independent contractor by January 31 of the year following payment.
US citizens are subject to the same tax rules regardless of their location. The IRS will still consider an independent contractor as a US citizen if they perform the service abroad, even if the contractor is technically a tax resident of another country.
Under Mexican legislation, independent contractors are individuals who render their professional services as contractors, without being subject to subordination. However, the courts determine whether a person is considered to be an employee or an independent contractor based on how the services are rendered.
You will need to fill out a W-9 form if you: Classify yourself as an independent contractor or freelancer. Are not a full-time employee of the business. Will be paid more than $600 for work provided to the business.