How to Start a Business in Mexico: A Step-by-Step Guide for Foreigners

Setting up a business in Mexico requires meeting certain legal and administrative requirements. This process can be daunting for those unfamiliar with bureaucracy, but a successful business can be created with patience and the right help. Below are the key requirements for establishing a business as a foreigner in this country. If you need to know more about doing business in Mexico, don't hesitate to read our article.

What legal documents do you require to start a business?

1. Choosing a Legal Structure: Before beginning any other formalities, choosing the appropriate legal structure for the company is important. In Mexico, options include a general partnership, limited partnership, limited liability company, corporation, limited partnership with shares, and cooperative company established in the General Law of Commercial Companies. Each structure has its own requirements and advantages, so it is important to evaluate which one is most suitable for the company's needs.

2. Choosing a company name: Once the legal structure has been chosen, it is important to choose a name for the company. This name must be unique and cannot be similar to another company name registered in Mexico. In addition, it is necessary to check that the name is available before continuing with the registration process by consulting the Mexican Institute of Industrial Property.

3. Required Documentation: To register a company in Mexico, many documents must be submitted, including a registration application, articles of incorporation, bylaws, and a shareholder registry. These documents must meet certain legal requirements and be signed by all shareholders and legal representatives of the company.

4. Registration in the Mexican Institute of Social Security (IMSS, for its acronym in Spanish): All companies in Mexico must register with this body and comply with the social security requirements for their employees, as established by the Social Security Law. This includes purchasing health insurance and paying a monthly fee for each employee.

5. Registration in the Federal Taxpayers Registry (RFC): To carry out commercial transactions and comply with its tax obligations, a company must register with the RFC and obtain a tax identification number.

6. Obtaining Permits and Licenses: Depending on the type of business and its location, additional permits and licenses may be required to operate.

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>> Read more: Frequently asked questions when expanding globally

How Long Would It Take to set up a Company in Mexico?

The process of establishing a new company in Mexico typically takes between 60 to 90 days. This timeframe applies to most businesses that follow the necessary steps and meet all the requirements for company formation in the country. Additionally, you can hire a legal representative to help expedite the process.

The type of entity you choose will influence how long it takes to set up your company. It's essential to have all the required documents ready to ensure a smooth registration process and avoid unnecessary delays.

Benefits of opening a business in Mexico as a foreigner

Being a foreigner does not imply insurmountable obstacles to opening a company in Mexico. However, there are certain aspects to take into account. First, it is necessary to have a valid work permit, which can be requested through a Mexican sponsor or the Mexican embassy in the country of origin. In addition, it is important to be familiar with local laws and regulations, including tax and labor rules, to ensure you comply with all legal requirements.

Secondly, it is essential to have a thorough understanding of the local market and culture, including competitors and potential customers, to ensure that you have a solid strategy and a well-defined business plan. It is also advisable to have a team of local advisors, including a lawyer and an accountant, to assist in the establishment process and make important decisions. In short, opening a company in Mexico as a foreigner requires planning and knowledge, but it is not impossible.

Tax compliance that companies must face

Companies in Mexico face various tax requirements that must be considered to comply with the Federal Tax Code and its regulations, Miscellaneous Resolutions, among others, to avoid sanctions and fines. Some of the most important tax compliances include:

• Tax Registration: All businesses must register with the Tax Administration Service (SAT) and obtain a Federal Taxpayer Registry (RFC) to operate legally.
• Filing and paying taxes: Businesses must file and pay their federal, state, and municipal taxes on time and in full, including Income Tax (ISR), Value Added Tax (VAT), among others.
• Maintaining accounting and tax records: It is mandatory to maintain accurate and up-to-date accounting, including income and expense records, to determine the tax base and calculate the taxes due.
• Communication with the SAT: Businesses must be aware of the obligations and requirements of the SAT and contact them promptly if they have questions or need help.

>> Learn about the benefits of our global expansion services that will help you enter the Mexican market

In summary, tax compliance in Mexico is important to ensure compliance with tax laws and avoid penalties or fines. It is advisable to have a team of tax advisors to ensure proper compliance with tax requirements.

How Can We Assist you?

At H&CO, we assist international companies every step of the way through their expansion into Mexico. Our local expertise and comprehensive approach allow us to provide a comprehensive solution for establishing your legal entity efficiently and in compliance with Mexican regulations.

Thanks to our presence in Latin America and in-depth knowledge of the Mexican regulatory environment, H&CO becomes your strategic partner for successful expansion.