If you are interested in expanding into Latin America, Mexico should be on your radar. Thanks to its large and growing economy, pro-investment attitude, competitive labor pool, and status as a trade hub, many foreign investors seek to register a business in Mexico.
If you have a successful brand elsewhere that you would like to launch in this lucrative market, you may wish to form a branch in Mexico instead.
Mexico is the second-largest economy in Latin America, behind only Brazil, and in 2019 the North American country registered a gross domestic product (GDP) of $1.27 trillion (all figures in USD). That same year, Mexico’s gross national income hit $9,340 per capita — marking the country as an upper-middle income nation by standards set by the World Bank.
Mexico is a regional trade hub, and the 17th-largest exporter in the world, thanks in part to having major ports serving both the Atlantic and Pacific oceans, as well as its geographic status as a gateway between Latin America and the United States and Canada. Businesses based in Mexico enjoy preferential access to those two economies thanks to the country being party to the United States – Mexico – Canada Agreement (USMCA), while the country is also a member of the Pacific Alliance economic integration, alongside Chile, Colombia, and Peru.
Among Mexico’s major export goods are petroleum oil, of which it produces roughly two million barrels per day, as well as cars, medical devices, and fresh produce. While the United States receives approximately 76% of Mexican goods, other key destinations include Canada, China, Germany, and Japan.
If you are interested in taking advantage of the business opportunities available in this major market, read on to understand some important things to consider if you plan to register a business in Mexico, as well as a step-by-step guide on how to complete the process.
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Important considerations for company formation in Mexico
If you plan to register a business in Mexico, you will have a number of things to consider. Those include:
Find a legal representative: By law, you will need a legal representative in Mexico if you plan to open a business without living there permanently yourself. That legal representative can be any legal adult who is not otherwise prevented from occupying such a role. However, it makes sense to choose someone with experience in the local business community and knowledge of either corporate law or accounting, given that they will be important aspects of your business.
Your legal representative will have to either hold Mexican citizenship or have permanent resident status, as well as being in possession of a local tax ID. This individual will represent you in front of authorities, and hold certain powers to represent you in legal matters. By choosing someone with a good understanding of local business, they will also be able to offer you valuable advice.
Entity type: One of the first things that you can call on an experienced legal representative to help you with is choosing your entity type. Because depending on the nature of your business, the number of initial investors you have, and how you plan to manage it, there are a number of types of companies in Mexico to choose from.
Economic activity: When you register a business in Mexico, you have to accurately register your economic activity, because failure to do so could result in legal complications. Your legal representative will be able to advise you on how to properly define your activities in order to remain compliant with local regulations.
Business opportunities: If you are not entering the Mexican market with a specific business goal, but rather seek to take advantage of one of the many business opportunities in Mexico, you will need to do some market research to identify the sector you want to move into and business opportunities you wish to harness. Once again, an experienced corporate legal representative will be able to provide advice in this regard, or put you in touch with contacts who could assist.
How to register a business in Mexico in 6 key steps
To register a business in Mexico, you will need to follow these six steps:
1. Grant your legal representative power of attorney (POA)
Your chosen legal representative should be able to draw up a POA for you to sign, which will grant them power to act and sign official documents on your behalf.
2. Draft your entity’s company bylaws
The company bylaws outline the purpose of your business, as well as how it will be structured and function. To be accepted by local authorities, you will need to have them legalized by a notary public.
3. Register your business with local authorities
Once the company’s bylaws are legalized, your legal representative will be able to register your business in Mexico with the Public Registry of Property and Commerce. During this process, your legal representative must specify any real estate held by the company, as well as its commercial purposes, objectives, and goals.
4. Apply for your corporate tax ID number
Your corporate tax ID number will be crucial for identifying the entity on invoices and other official financial documents, and will be granted by Mexico’s Tax Administration System (SAT).
5. Open a corporate bank account
When you receive your tax ID, you will be able to open a corporate bank account. Your choice of provider may be informed by the type of business you are involved in, or the geographic location where you are based, and your legal representative should be able to provide guidance.
6. Deposit your initial investment
The final step to register a business in Mexico is to deposit your initial investment in your corporate account. Once that has cleared, and as long as it meets any requirements stipulated by the type of entity you have chosen, you are ready to do business.
Biz Latin Hub can help you register a business in Mexico
At Biz Latin Hub, our experienced multilingual team of company formation specialists can help you register a business in Mexico to explore business opportunities in the country. With our full suite of back-office services, including legal, accounting, recruitment, due diligence, and commercial representation, we are equipped to be your single point of contact for setting up a business in Mexico, or any of the 15 other countries in Latin America and the Caribbean where we are present.
Reach out to us now to discuss how we can help your business flourish.
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