Why are shelter companies important for manufacturing?

March 25, 2023

Setting up manufacturing operations in Mexico can offer various benefits to foreign companies, such as tax benefits, cost savings, and access to a skilled industrial workforce. When it comes to establishing a new setup in Mexico, businesses have several operational structures to choose from. Here are the reasons you should join hands with shelter company for the manufacturing procedure.

 

Nordex USA nacell manufacturing facility

 

Quick startup time

Joining shelter can lead to various cost savings, including your precious time. When a manufacturer from the US or another foreign country decides to establish operations in Mexico, manufacturers can either create their own independent entity or join a recognized shelter company.

By partnering with a shelter, producers can retain full control over their procedures whilst the shelter assumes all administrative duties, leading in a faster launch. It typically takes around 90-120 days to commence operations with a shelter, while when you start as a new entity, the duration may be six to seven months.

Reduced risk and liability

By collaborating with a shelter company, businesses can benefit from reduced risk and liability. Unlike foreign manufacturers, they don't have to establish a legal entity to operate, making it a safer option. Additionally, the shelter is responsible for staying updated with the latest compliance measures, which can help new manufacturing companies save time and resources in the learning process.

Tax and customs agreement can be challenging for manufacturers, particularly as rules change frequently. For instance, Mexico's 2020 tax reform altered the financial rules and regulations earlier established in 2014, affecting the term of operation in collaboration with a shelter. Initially, the term was limited to four years, after which companies could both continue under the shelter and pay tax for coming four years, or switch to an individual entity.

However, the tax improvement removed the four-year tenure for NRI entities to work in Mexico with zero income tax. The constantly changing language and regulations can be puzzling and overpowering, but a shelter company's knowledge and experience can help protect businesses and ensure projects stay on track.

Complete control of production

Manufacturing companies can rely on a shelter as a companion to ease their administrative burden, including tasks such as Human Resource, accounting, law, customs, and tax compliance. This allows manufacturers to concentrate solely on production. While working with a shelter, businesses maintain complete control over production and retain their rational property rights. Furthermore, a shelter can assist companies in graduating from their services and transitioning to operate as a single entity.

Advantages of choosing shelter manufacturing in Mexico

Several shelter companies have honed the art of providing comprehensive access to Mexico for foreign producers from the US and other countries. By partnering with these companies, US manufacturers can avoid and simplify many of the complex processes involved in establishing a prosperous foreign plant. Companies can sidestep the challenges of hiring a new workforce, familiarizing themselves with a new tax regime, adapting to a different culture, or understanding a new supply chain. Instead, they can focus on their core manufacturing operations and achieving their product quality goals while their trusted shelter partner takes care of the rest.

  • Easy labor recruitment
  • complete customs compliance guarantee
  • An easy experience
  • Quick interactions with Mexican labor unions
  • No income tax from the Mexican government

Manufacturing in Mexico can pose various challenges for individuals undertaking it independently. From obtaining construction permits and acquiring resources and equipment to managing labor and paying taxes, dealing with the complexities of operating a factory in a foreign country can be daunting. However, shelter manufacturing can streamline the process by eliminating these obstacles. By partnering with a Mexican maquiladora, US companies can enjoy exclusive access and a stress-free collaboration, making the most of the highly skilled and cost-effective workforce available south of the border, without incurring costly exports or administrative hurdles.

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Syed Qasim ( CEO IQ DEVELOPERS ) Is a highly experienced SEO expert with over three years of experience. He is working as a contributor on many reputable blog sites, including Filmdaily.co, Apnews.com, Businessinsider.com, and Timesbusinessnews.com. You can contact him on whatsapp at +923237711173

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