Business formation in Mexico is a popular choice among investors seeking to enter Latin America. Thanks to a business-friendly environment, preferential access to a host of key markets, and the relative ease of getting an investor visa in Mexico, the country is a magnet for international capital and boasts a host of lucrative investment opportunities.
Mexico has the second-largest economy in Latin America by gross domestic product (GDP), which reached $1.27 trillion in 2019 (all figures in USD). Meanwhile, gross national income (GNI) — a key indicator of prosperity — hit $9,430 per capita that same year.
The North American country is known as a regional trade hub, thanks to its geographic position as the gateway between Latin America, and the major economies of the United States and Canada, as well as a raft of free trade agreements (FTAs) providing preferential access to key economies around the globe. Mexico is also a founder member of the Pacific Alliance, an economic integration initiative that also includes Chile, Colombia, and Peru.
Those factors contribute to the country being the 17th-largest exporter in the world. Among Mexico’s key export products are automobiles, computers, petroleum oil, and fresh produce. While the United States receives around 76% of Mexican exports, other key destinations include Canada, China, Germany, and Taiwan.
If you are considering business formation in Mexico, read on to learn about some key considerations for doing business in the country, as well as the six steps involved in the company formation process. Or go ahead and contact us now to discuss your commercial options.
Key considerations for business formation in Mexico
If you are going to register a business in Mexico, you will need to do the following:
Find a dependable legal representative: While your legal representative can be any legal adult who is not prevented from occupying such a role, you will benefit from selecting a representative who has a sound knowledge of the local market and a strong track record assisting foreign investors with business formation. An experienced corporate attorney will also have good connections in the local business community that could prove highly valuable to your own enterprise.
Select the right entity type: One of the first jobs your legal representative will be able to help you with is the selection of the entity type that best suits your needs. While setting up an LLC in Mexico tends to be one of the most common choices among foreign investors, a PLC (known as a Sociedad Anonima, or S.A. in Mexico) is also a popular option.
Correctly register your activity: It is important to properly define your commercial activity when doing business in Mexico, because failure to declare a significant source of income can land you in trouble with local authorities. Your legal representative will be able to help you properly define your activities in order to avoid legal issues.
Identify business opportunities: Unless you have a clear and specific goal or mission when considering business formation in Mexico, you will want to do proper research to identify business opportunities based on government incentives, market saturation, and the skills and expertise of the personnel you have.
How to form a company in Mexico in 6 steps
Step 1: Draft and sign a power of attorney (POA)
Mexican law dictates that you have to appoint a legal representative, and as such you will need to sign a POA in order for them to be able to represent you in front of local authorities and sign documents on your behalf. Where you choose an experienced attorney to serve as your legal representative, they will be able to draw up that POA.
Step 2: Establish the company bylaws
You will then have to draw up your company statutes and bylaws, which will include your commercial intentions and the function of your business. The statutes you draw up will have to be legalized by a notary public before you can register the company.
Step 3: Register the company
With your bylaws and statutes drawn up and legalized, you will be able to register the company with the Public Registry of Property and Commerce. This step of business formation in Mexico involves a measure of repetition, because your commercial intentions, business functions, and other aspects of the business that were outlined in the bylaws will have to be explicitly laid out again as part of the registration process.
Step 4: Receive a corporate tax identification number
With the company registered, you are ready to request your corporate tax identification number from the Tax Administration System (SAT). This will be used to identify you on invoices and import/export orders, as well as other important financial documentation.
Step 5: Activate a corporate bank account
Your company will not be able to operate without a local corporate bank account. The legal representative you hired will be able to advise you on the best provider based on your location and the nature of your business.
Step 6: Deposit your initial investment to complete business formation in Mexico
With your company registered, your tax ID assigned, and your bank account opened, you are now ready to deposit your initial investment and get to work.
Biz Latin Hub can help you with business formation in Mexico
At Biz Latin Hub, our team of multilingual company formation experts has extensive experience assisting foreign investors with business formation in Mexico and ensuring a smooth market entry. With our full suite of back-office support, including legal, accounting, recruitment, and tax advisory services, we can be your single point of contact when doing business in Mexico, or any of the other 15 countries across Latin America and the Caribbean where we are present.
Reach out to us now for personalized assistance or a free quote.
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