Mexico is one of the most open economies in the world, with a network of trade agreements allowing privileged access to more than 45 nations, with a potential demand of 1.2 billion people.
The country has more than 118 million consumers and possesses an advantageous geostrategic location. Mexico’s great proximity to the main ports of the world is convenient for export and import businesses. These aspects, combined with modernizing laws and regulations, encourage foreign investment and growth. This progress makes the country one of the most attractive in the world for investment.
For this reason, it is important to know the steps to form a legal company in Mexico and to take advantage of the great opportunities the country offers.
Incorporation: Brief Overview
Though a great place to do business, Mexico’s incorporation process still has its complexities. Briefly, incorporation involves the following steps:
- Appoint a power of attorney
- Choose your business structure
- Choose your shareholders
- Register your company
- Apply for tax identification
- Open your company bank account.
To avoid delays and setbacks, make sure you follow due process and reach out to the right people at the right time.
1. Appoint a Representative/Power of Attorney
It is important to note that in order to create the company inside Mexican territory, you don’t need to be in the country. Mexican law and regulations allow you to appoint a local representative, agent or power of attorney to represent your company. You can grant your representative the power to incorporate a company on your behalf inside Mexico.
This person can be someone in your company currently or an external provider. It’s wise to consider partnering with someone who has comprehensive knowledge of local legislative frameworks.
2. Apply with the Office of Foreign Affairs
Approach the Office of Foreign Affairs (SRE) to create your company’s application. With this office, you need to confirm there is no other company already constituted under the same name.
3. Notarize your Act of Incorporation
The Act of Incorporation – known locally as the Acta Constitutiva – stipulates the general and basic aspects of the company: company name, objective, type of company, administration and control, duration, etc.
The Act of Incorporation must be created and notarized with a Public Notary.
4. Register with Tax Administration Service
Once the Act of incorporation is created and legalized, you need to obtain the tax Identification number for your company. Complete this step with the Tax Administration Service (SAT).
Your number contains the Federal Taxpayer Identification Number (RFC). As a reference, SAT is Mexico’s equivalent to the IRS in the USA.
This is also a key step to hire and pay employees in Mexico.
5. Register with National Registry of Foreign Investment
The National Registry of Foreign Investment (RNIE) is the office of Federal Government that registers and records foreign investment into Mexico. This registry uses this information to produce statistics under international standards on the behavior of direct foreign investment flows into Mexico.
6. Present to the Public Registry of Property and Commerce
The next step is to present the company at the Public Registry of Property and Commerce (RPPyC), where the company and its assets will be registered. At this step, you’ll also be asked to provide information about the company’s purposes, objectives, and commercial goals.
7. Register with Mexican Institute of Social Security (IMSS)
This is a very important step to create individual accounts and make contributions to employees. As an employer, your staff will need their own social security numbers. Your company will also be responsible for organizing employee contributions to their social security accounts through payroll.
8. Find the Right Bank For You
Once your application is approved, you need to find the right bank to open your corporate account. Consider the costs of each branch over and above regulatory requirements. The process to open a corporate bank account in Mexico may differ to your country. Different banks may offer slightly varied account setups, so be sure to do your research or seek local expert opinion on which is most suitable for your company.
Consider the Benefits of Setting Up in Mexico
Mexico’s welcoming business environment and progressive government offer a number of key benefits to lure investors into the country:
- Mexican law allows 100% ownership
- There are no capital controls
- Foreigners can establish a limited liability company
- Mexico has strong property laws and protections
- Mexican professionals are highly capable and have a competitive advantage over many countries
- Mexico has cost advantages (over 19 sectors) compared to the US.
Taking all of this information into account will allow you to go into the Mexican market with better knowledge of who to talk to, and when, in order to get set up and operational with minimum delay.
Without a doubt, global attention is turning towards Mexico’s favourable business conditions and emerging markets. As investment and foreign business move into the area, the country’s growth boosts its economic power on the world stage.
Looking to Expand Into Mexico? Contact Us
With stabilizing economies and evolving legislation, Latin America will become a dominant region in terms of growth, development, and investment.
If you’re looking to incorporate into Mexico, we recommend consulting a local expert on the process. At Biz Latin Hub, our team of local and expatriate professionals provide customized business solutions to ensure your success entering a new market.
Reach out to our friendly Mexico team today via email at [email protected] for personalized support on your journey.