They say entrepreneurs are born, not made. That applies to all of our expat entrepreneurs in Mexico. Take 46-year-old California transplant Spencer McMullen, for example. He dropped out of college at the University of California Santa Barbara (UCSB) to start a successful real estate loan business before moving to Mexico to get his law degree and open a now-thriving practice in both Chapala and Guadalajara.
Born and raised in the San Fernando Valley north of Los Angeles, McMullen’s father was a test engineer at a local aerospace firm. His mother – of Spanish descent – encouraged him to speak Spanish at an early age.
McMullen enrolled in business and pre-law at UCSB in the late eighties but dropped out after three years to work in the fast-growing California mortgage business, get married and have two children.
When he got his broker’s license in 1999 he opened his own business – 1st City Savings and Quality Mortgage in Santa Barbara – and added an escrow service and employees.
Life was good for McMullen, but in 2005 he looked into the future and did not like what he saw. “I was foreseeing the crash, that’s why I decided to buy in Chapala,” he said. “I made an offer on a place and took possession in 2006. Everyone made fun of me and thought I was crazy for moving to Mexico. But I just couldn’t see how the real estate market could continue to climb.”
He bought a 4,000 square foot building that was the prior location of the courthouse in Chapala. It had plenty of room to live and conduct business, but he continued to spend most of his time running his business in Santa Barbara. When the real estate business finally collapsed in 2008, McMullen made Mexico his permanent home and began studying law at the Universidad America Latina in Guadalajara.
“It was definitely tough at the beginning even though I spoke Spanish,” he said. “You have to know legal Spanish to study law, which is a bit different. I was able to do most of my work online and in-person on Saturdays. I started an internship at the courthouse in Chapala in 2010, received my law degree in 2011 and opened Chapala Law that same year.”
He has both state and federal licenses and also is a court translator. His specialty is legal issues for foreigners and dealing with U.S. documents.
“My business is translation of documents, contracts, obtaining birth certificates and certifications of documents from foreign governments,” he said. “I also do a lot of translations in office deals as well probate and immigration work. Not much actual court work anymore.”
Divorced when he moved full-time to Mexico in 2008, McMullen met his wife, 39-year-old Cecilia, while they were both at a class for legal translators in Guadalajara.
“Her practice is much different than mine,” he said. “She does more corporate law, like preparing corporate documents and contracts.”
They both continue to take post-graduate specialty courses to broaden their portfolios. McMullen added notarial law, contracts, civil procedure, extraordinary constitutional writs, administrative law, corporate law and municipal law.
As attorneys, the couple had no problem forming their business as an SC in Mexico, which is similar to an LLC, or limited liability company in the U.S., but even for them the process was a bit frustrating.
“We had to do the corporate papers with the notary public and then register them in the public property registry, and then in the commercial registry,” he explained. “The process is pretty straightforward but the bureaucrats you have to deal with can be frustrating. We also had to register the company with Social Security for our employees and also register with the tax authorities to be able to pay our company taxes.”
McMullen recommends that expat entrepreneurs in Mexico consider the sole proprietorship business entity option because there is a tax structure for small businesses that provides generous tax breaks.
“As a sole proprietor you don’t pay taxes your first or second year and get a 90 percent tax break,” McMullen said. “Sole proprietors also can file their own tax information online every two months without the help and expense of a notary, or accountant. If you decide to form a corporation, you will need two people and do it through a notario although with new legislation there are now one-person corporations. You will also have to file monthly tax returns, which means accounting fees. Corporations also have to file reports with the Secretary of Economy under the foreign investment law if the foreign owner is not a residente permanente or is doing certain restricted activities.
McMullen pointed out that Mexico law is changing for business formations. New federal legislation will allow one-person corporations, instead of a minimum of two. Also, if the single shareholder has his/her digital signature from the tax authority, they can form their own corporation online within 24 hours.
Business has been good for the couple. In addition to the Chapala office, they now have an office in Guadalajara, where they live most of the time.
“I’m in Chapala on Monday, Tuesday and until noon on Wednesday of each week,” he said, “and then spend the balance of the week in our Guadalajara office.”
The couple and their two young children live in a gated community northwest of central Guadalajara on the road to Puerto Vallarta in a large three-bedroom, three-bath home. McMullen told us many expats live the Chapultepec or Providencia colonias, which are closer to city-center and Guadalajara’s nightlife.
“There are at least 12 gated communities within a few miles of our home but few expats live out here, which is fine for us because the majority of our friends are Mexican nationals,” he said. “Most of the couples we do things with are not expats because many of the expats in this area – especially along the lake – tend to be older. Since Mexicans are more family-oriented we attend more events like baptisms, first communions, birthdays and other family events. My wife has quite a lot of cousins, so there is always something going on.”
Next year, McMullen can apply for Mexican citizenship since he has Mexican children. He told us there are two rules for citizenship. First, you have to comply with the time requirements (a minimum of five years living in Mexico) and second, you must not be on a student visa or a tourist visa. When he married, he had already become a permanent resident of Mexico and after two years of marriage, he became eligible for citizenship in 2016.
McMullen’s biggest likes about living in Mexico are the low cost of living and, more importantly, the personal satisfaction he gets from helping people.
“I see a lot of expats and Mexicans who are crying because of their situation, because their interactions with the government did not go right,” he said. “I get a lot of satisfaction out of helping them out and they really appreciate it. I help Mexican people who were deported from the U.S. or their kids who were born there but can’t study in the U.S. because they have no identification and can’t get their birth certificates to prove their identity. I help a lot of American and Canadian expats who live along Lake Chapala or in Guadalajara solve a wide range of legal problems. That’s what makes my life so satisfying in Mexico.”