How to Outsource Your Payroll, HR, and Accounting in Mexico for Your Manufacturing Site

September 24, 2021

More and more global manufacturers are setting up operations in Mexico due to the country’s low labor costs, skilled workforce, and various free trade agreements. But along with these benefits come the stress and complexities of establishing a business in a foreign country.

It’s possible for companies to navigate these laws and regulations themselves, but this can easily lead to non-compliance issues and hefty fines, and put the success of the business at risk. If manufacturers do decide to handle their own administration, it also takes away the ability to focus on production and the direction of the business. For these reasons, many decide to outsource their HR and accounting and payroll services in Mexico.

Benefits of Outsourcing Your Accounting Services

Fewer costs & more productivity

Handling payroll and accounting internally can lead to reduced productivity among your team as they try to adapt to new regulations, or it can lead to hefty fines as a result of failing to comply with tax, labor, or payroll laws. Manufacturers may also bring in new employees well-versed in Mexican payroll processes, but this often requires resources that may not be available as the company gets up and running.

Instead, many manufacturers choose to utilize the services of a shelter company, such as NAPS. By partnering with a shelter service provider, manufacturers not only receive experts that will take over all accountancy processes, but also complete support across all other administrative areas.

Understanding profit-sharing laws

Unlike in the United States, whose laws give companies the option to offer profit sharing, companies in Mexico are required to disperse 10% of their taxable earnings among their employees every fiscal year according to the income of each specific manufacturing site.

Though seemingly simple, there are various complications and exceptions. A manufacturer, for instance, who has been operating in Mexico for less than two years would not need to participate in the profit-sharing program. This also applies to first-year employees and companies that have not met the minimum income requirement. Instead of worrying about these complexities, companies are able to take advantage of Mexico’s IMMEX program and enlist the help of a shelter service provider who would become responsible for correct profit distribution.

Social Security support 

In addition to complying with profit-sharing requirements, businesses in Mexico are required to make monthly social security contributions. This, again, is a different process than what United States manufacturers may be used to as companies in Mexico must contribute 15-25% of an employee’s salary to the Mexican Social Security Institute (IMSS).

Because contributions must be made through a local system, international manufacturers may have trouble navigating the process and guaranteeing full compliance. Helping companies avoid any fines and unnecessary costs, while contributing to the well-being of their employees, shelter providers can ensure that manufacturers are following these standards and correctly making their social security contributions.

Other Outsourced Services

Human Resources

Many companies also choose to outsource their human resources in Mexico given the wide range of responsibilities that fall on HR departments. From navigating differences in business culture to ensuring compliance with labor laws, shelter services are an effective option for manufacturers looking for support ramping up their operations.

Site Selection

Every manufacturer knows what type of facility will work best for their business, but site selection in Mexico must involve local expertise. A shelter company is able to support companies through every step of this critical process, and an experienced one will provide comprehensive evaluations of key considerations, such as workforce availability, and oversee the entire infrastructure construction or remodeling process.

Outsourcing with NAPS

With more than 30 years of experience, NAPS is here to support your business’s growth through outsourced accounting, HR, and site selection services. We have the knowledge and resources to handle any of your accounting needs while ensuring full compliance with Mexico’s tax and payroll laws. Contact NAPS today so we can discuss your specific needs.


Content reviewed for accuracy & relevancy by:

Megan Richford

This content has been reviewed for accuracy by Megan Richford. As NAPS’ Marketing and Communications strategist for the last 7 years, Richford has become an expert in the industry with extensive knowledge of the manufacturing industry in Mexico.