Starting a Business in Mexico: a How to Guide

Starting a business in Mexico is a popular choice among investors looking to enter Latin America, with low operating costs and ease of access to markets in the United States and Canada being major driving factors. If you are interested in doing business in the country, the following how-to guide for company incorporation in Mexico could prove valuable.

Alternatively, if your commercial interests are of a limited-scale or shorter-term, you could still access that labor pool by hiring staff through an Employer of Record in Mexico — meaning that firm will hire staff on your behalf, so you do not need to go through business formation.

Mexico is the second-largest economy in Latin America and is a regional trade beacon, as highlighted by the more than 50 free trade agreements (FTAs) it has in place with nations and regional blocs in the Americas, Europe, and Asia.

The country is also ranked as the 17th-largest exporter in the world and enjoys special commercial access to the rest of North America, thanks to being party to the United States-Mexico-Canada Agreement (USMCA). Mexico is also a founder member of the Pacific Alliance, a political and economic association that also includes Chile, Colombia, and Peru, and which has ambitions to expand beyond the region.

Mexico has major seaports that offering access to both the Pacific and Atlantic oceans and is the fourth-largest producer of oil in the region, producing approximately two million barrels per day. Some of the country’s main export commodities include unrefined petroleum, automobiles, electronics, and medical equipment. Its main export destinations are Canada, Germany, China, Japan, and the United States.

If you are considering starting a business in Mexico, read on to learn how to form a company in the country, or go ahead and contact us now to discuss your market entry options.

Starting a business in Mexico: key considerations

While the business-friendly ecosystem and low labor costs are two good reasons for entering the market, anyone thinking about starting a business in Mexico should consider the following necessities that could affect the success of the operation:

• Identify business opportunities: Before starting a business in Mexico, it is strongly recommended to engage with an experienced company formation services provider, able to help you identify business and investment opportunities, to avoid entering a highly saturated market.
• Entity type: You must decide which type of company will best fit your business needs before starting a business in the country. Note that your tax burden and other corporate requirements may vary depending on the legal entity you choose. The most common types of companies chosen by investors in Mexico are Limited Liability Company (SRL) and Sociedad Anónima (S.A.).
• Identify the main economic activity: When looking to form a company in Mexico, it is important to identify and define the main economic activity of your company. This is not only a requirement set by the local authorities, but it is also a good way to become an expert in your industry.
• Appoint a dependable legal representative: All companies legally established in Mexico must appoint a legal representative, who will be in charge of representing the organization before governmental entities and signing legal documents to carry out business transactions with partners and clients. Note that this person must reside in Mexico.
• Corporate tax requirements: When establishing a company in Mexico, it is important to hire a local tax advisory provider capable of helping you navigate Mexico’s tax system to maintain your company in good standing with the local authorities.

In addition, keep in mind that according to Mexican regulations, your company must fulfill the following monthly tasks:

• Renewal of the commercial register before the Undersecretariat of Industry, Commerce, and Competitiveness
• Management of accounting books
• Employee payroll

How to form a company in Mexico: 6 key steps

The following steps will be key to starting a business in Mexico:

1) Draft and sign a power of attorney (POA):

Your legal representative must draft and sign a POA — a legal document that will allow you to incorporate a power of attorney on your behalf.

2) Create the company’s bylaws:

Your company bylaws are a document that will describe your business purpose and how it will function. Please note that these statutes must be legalized before a notary public.

3) Register your company before local authorities:

You must register your company with the Public Registry of Property and Commerce, specifying the real estate that makes up your business, as well as its commercial purposes, objectives, and goals.

4) Obtain the company and tax ID number:

Request and obtain your taxpayer identification number before the Tax Administration System (SAT).

5) Open and activate a corporate bank account:

Once you choose a legal representative for your company, they can take care of all the necessary procedures to open a corporate bank account at a local bank.

6) Make your initial investment:

Now you are set up and ready to do business, you can make your initial investment and get to work.

Biz Latin Hub can help with company formation in Mexico

At Biz Latin Hub, our team of multilingual company formation professionals has years of experience supporting foreign investors starting a business in Mexico. With our complete portfolio of corporate legal, recruitment, and tax advisory services, we can be your single point of contact to ensure the success of your commercial operations in the South Pacific, as well as 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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