Aguascalientes Opina – January 27, 2025

Bureaucracy as an Obstacle to Business Formalization in Aguascalientes

By Aníbal Salazar @anibalosal

The news of the decrease of nearly 200 business units registered with the Mexican Institute of Social Security (IMSS) by the end of 2024 in Aguascalientes has raised significant concern in the business sector. This decline is a clear reflection of the difficulties faced by entrepreneurs, especially those from micro, small, and medium-sized enterprises (Mipymes), who, due to the fiscal burden and the complexities of the system, are forced to operate informally or even close their businesses.

Patricia Muñoz, president of the Business Coordinating Council, emphasized that the decline in employer registrations is a dangerous sign for the state’s economy, as employers represent economic stability and the generation of formal jobs, fundamental pillars of labor and social stability. And she is right—this is the reality in our country.

One of the determining factors in this phenomenon is the slow pace and bureaucracy surrounding the administrative processes to register a business and fulfill fiscal obligations. Entrepreneurs are often trapped in a slow, complex, and inefficient system, which makes them question the benefits of formalizing their businesses. For example, registration with the IMSS involves a series of procedures and requirements that, instead of simplifying the process, complicate it even further, generating distrust and discouragement among entrepreneurs. In many cases, delays and the lack of clarity in procedures make entrepreneurs opt for informality as a faster and more accessible way to keep their businesses afloat.

This bureaucratic trap, combined with fiscal and social security obligations, creates an environment where small businesses feel unable to meet all the requirements, pushing them to operate outside the law. Informality, although not the ideal scenario, seems to be, for many entrepreneurs, a more viable short-term solution, as it allows them to avoid complicated procedures and the immediate cost of fiscal and social security contributions.

To prevent bureaucracy from continuing to be an obstacle to the growth of businesses in Aguascalientes, it is necessary to implement the de-bureaucratization of administrative processes, speeding up procedures and simplifying the requirements to register and formalize businesses. Creating efficient digital platforms that allow these procedures to be carried out faster, more securely, and at a lower cost is one of the key factors in promoting formalization. If waiting times and unnecessary complications are eliminated or reduced, entrepreneurs will see formality as a much more attractive option. Additionally, this would not only benefit Mipymes but also strengthen the local economy, promoting a more competitive and fair environment for all.

It is essential to recognize that bureaucracy, instead of being a tool of control, can become an obstacle that limits economic growth and hinders job creation. Therefore, a joint effort between authorities and the private sector is required to simplify procedures and ensure that entrepreneurs can meet their obligations without feeling overwhelmed by a system that, many times, seems designed to make the process more difficult rather than facilitating it. Only with a more agile and accessible approach can the trend toward informality be reversed and ensure that more businesses are formally registered, which in turn will contribute to job creation and the economic strengthening of the state.

Time… and your opinion.