A Guide to Starting A Business in Mexico
Establishing a business in Mexico can be a lucrative option for investors who are considering the Americas as a market. Not only can you benefit from low operating costs in Mexico, but you also easily access markets in Latin America, the United States and Canada.
Mexico has a population of over 120 million, thereby providing a massive consumer market for your goods or services. As the country has signed several import-export treaties with countries across the globe, you can conveniently export your products to other countries.
How to Start a Business in Mexico
Mexico is one of the easiest countries in Latin America for foreign investors to do business. In certain cases, it only takes a single day and zero dollars to set up your own organization. However, there are some steps that you must take into account:
Spot Business Opportunities
It is critical to identify business opportunities before beginning your own venture in Mexico. This will help you steer clear of common mistakes, such as entering an already saturated market.
Pick Entity Type
Next, decide what kind of company would be most suitable for your business needs. Understand that corporate requirements,such as your tax burden, can vary based on the legal entity you opt for. The most popular types of companies are Limited Liability Company (SRL) and Sociedad Anonima (SA).
Decide Your Industry
It is best to identify the main economic activity of your organization in Mexico. Several local authorities have this requirement. Moreover, having a good know-how about your industry is necessary to gain expertise in it.
Submit a Request to the Ministry of Foreign Affairs
This is the first formal step towards establishing a company in Mexico. You will be required to submit a request to the Ministry of Foreign Affairs (SRE). You are supposed to list five business structures in order of preference for the organization. This way, you can ensure that no firm already exists with the same title.
Draft the Deed of Incorporation
Once you receive approval from the Ministry of Foreign Affairs, it is important to create the Deed of Incorporation. This document formalizes the business by listing down all the basic details, such as company title, type of company, objective, duration, and administration. Once the organization is formed, the Constitutive Certificate has to be notarized by a Notary Public.
Signing the Deed of Incorporation
The Deed of Incorporation must be signed in the presence of a notary. The following aspects need to be ensured for this purpose:
Not only do you need to be aware of the number of shares of each partner, but also the names of those you give power of attorney to, like accountants and lawyers. Power of attorney is important if you do not want to appear in person at government offices.
Register Company Address
Make sure to have a proper business address before establishing your business in Mexico. Acquire a registered address for your business where you can receive mail in case a government agency needs to contact you.
Register for Tax
You have to get your business in Mexico registered with the Mexican Tax Authorities (SAT) for tax purposes. You can get this done at any local SAT office once you complete the preregistration steps online.
You can either make an appointment or get in the line early morning. SAT typically requires most of the same documents that you submitted to the notary, a certified copy of the pending deed, and a letter issued by the notary confirming that the deed registration is in progress.
If you plan to hire employees, it is important to register your business with the Mexican Social Security Institute (IMSS), the National Worker’s Housing Fund (INFONAVIT), and the local state tax office. Certain states levy a tax on some types of business activities while others adhere to a small state payroll tax.
Register with the SIEM
It is mandatory for your business in Mexico to be registered with the National Business Information Registry (SIEM). The registry is operated by the Department of Trade, which is present within the Secretaria de Economia.
Register with Foreign Investment Registry
In case an owner or two of your business is a foreigner without permanent residency in Mexico, you will have to get your business registered with the Foreign Investment Registry. It is important to make a personal appearance in order to complete this step within 40 days of incorporation.
The person making an appearance must be someone who is mentioned in the Deed of Incorporation as having power of attorney. They must also fill in a form and submit it together with a copy of the deed and the identification documents.
Remember that as long as your business has foreign owners who are not permanent residents, you will have to do quarterly filings.
Mexico has a growing economy and a large consumer market. Establishing a business in Mexico can enable you to benefit from the country’s strong manufacturing and business infrastructure. Mexico gives you access to other Latin American countries through favorable trade agreements. Moreover, you can also cater to markets in the US and Canada as they are right in the neighborhood.
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