How to start a business in Mexico

Mexico has the 15th largest economy in the world, powered by a population ranked by the OECD as the hardest working in the world in terms of annual hours worked. It’s no surprise that many US entrepreneurs choose to set up a new business in Mexico.

If you're thinking of moving from the US to Mexico to start a new business, you'll need to know a few basics to get started. This blog post can help guide you along the way, and give you insights into what business ownership in Mexico entails.

Things to know before getting started

Registering a business in Mexico is a multi-stage process, and there are various fees involved. It’s common to have to present your documents in person at various different authorities.

The fees will vary slightly depending on the company structure. For example, there are mandatory notary fees and registration fees.

Since all documents and submissions are in Spanish, it’s advisable to have a legal agent or notary work with you during the registration process.

A notary public is often central to the business incorporation process in Mexico, so make sure to research your options in advance.

What types of corporate entities are there in Mexico?

There are several different options when it comes to establishing your business in Mexico. With very few exceptions, all of these corporate structures can be used by foreigners as well as Mexican citizens:

• Sole trader (Persona Física con Actividad Empresarial)
• Limited liability stock corporation (S.A, or S.A. de C.V)
• Limited liability corporation (S. De R.L.)
• Partnership (general SNC or limited SCS)
• Branch of an already established business

Sole trader (Persona Física con Actividad Empresarial)

As a sole trader you operate your business in your name, and as such, take on all the liability of your business personally. It’s one of the most common business structures for one-person companies and very small businesses.

You must register your activities for tax purposes, as a ‘persona física con actividad empresarial’ with the Mexican tax authority (SAT).

Limited liability stock corporation (S.A, or S.A. de C.V)

The S.A. (Sociedad Anónima) structure is like a public limited company, with fixed capital. It’s a common choice for entrepreneurs coming to Mexico to start a business.

There's a minimum capital requirement but this doesn’t have to all be paid initially, and shareholder liability is capped at the amount they invest.

The S.A de C.V offers the same structure but with variable capital, so you have more flexibility to increase your investment without the need for significant restructuring.

Limited liability corporation (S. De R.L.)

Limited liability corporations are also popular with foreign investors, and are similar to LLCs in other countries.

With this business structure, members have limited liability and are not personally liable beyond their contributions.

There’s a minimum of two founding members required to set up a limited liability corporation, and this type of company is taxed at corporate tax rates.

Partnership (general SNC or limited SCS)

Partnership structures in Mexico are similar to elsewhere in the world.

You can choose a ‘general partnership’ in which the partners take on full liability, or a ‘limited partnership’ in which tax and debt liability is capped.

In either case it's important to have the partnership agreement drawn up properly to ensure that you get the maximum benefit from this structure.

Branch (Sucursal)

If you already run a company in the US, you can open up a branch in Mexico so you don’t have to create a new entity.

With a branch office, you’ll have to register with the National Foreign Investment Registry (RNIE), and you can act as an extension of your parent company.

Choosing your company structure is an important step, and it’s a good idea to take legal advice to make sure you make the right choices for your business.

What’s the company registration process in Mexico?

To register your company in Mexico you'll first need to find a notary to help you draw up and certify the most important documents.

• Select and register your company name

You can choose and register your company name online with the Mexican Ministry of Economy through the Public Registry of Commerce. The process typically takes a few days from start to finish.

The website for registration is in Spanish, so if you’re not fluent, it’s advisable to work with a local expert or a notary.

To get a quickstart on your new business venture, consider using our Business Name Generator tool to find your company name.

• Prepare the Deed of Incorporation

Once your company name has been approved, you’ll need to work with a notary public to draw up the Deed of Incorporation (Escritura Constitutiva), which will be prepared in Spanish.

This is a legal document that outlines all the important details of your business, such as the names and addresses of shareholders, the business you intend to carry out, and the company name.

Usually, the description of your business activity is broad enough to allow you to grow your business over time and expand your operations without needing to make changes to the register.

• Sign the Deed of Incorporation

All of the company founders or shareholders will need to sign the deed of incorporation in front of the notary.

Each individual should provide proof of identification and right to be in the country (such as a passport and valid visa) and proof of residence (usually a recent utility bill).

• Register the business with local authorities

Once you’ve signed the Deed, a notary will register your business with the local Public Registry of Commerce (Registro Público de Comercio), and retain a certified copy for future reference.

• Register with national and foreign investment authorities

Next, you’ll need to register with the National Business Information Registry (Registro Federal de Contribuyentes or RFC).

If you’re a foreign business owner without Mexican residence then you must also register with the Foreign Investment Registry at the Ministry of Economy (Secretaría de Economía).

Your notary can advise as to whether this last step is necessary.

• Obtain any other licenses and permits

Finally, it’s important to check if there are any licenses or permits you need to run your business in Mexico. Which licenses and permits you need, if any, will depend on the type of business activity and business you run.

Legal obligations and responsibilities

As the owner of a business in Mexico, you or one of the company’s named directors must register with the tax authorities (SAT). Once you’ve registered, you’ll receive a tax identification number for your company (Registro Federal de Contribuyentes or RFC).

Registration with SAT

You can register with SAT at your local SAT office, where you must present:

• A valid photo ID (eg passport)
• Proof of your legal immigration status (visa)
• A certified copy of your company’s Deed of Incorporation
• Proof of business address (eg recent utility bill)

Permits and local registrations

Some types of business in Mexico must obtain a permit to trade legally. For example, if you’re serving the public directly in a shop or restaurant, then you might also have to register your business with the local municipality.

You might also need special licenses from health authorities if you handle food or drink in your business.

Employee registration

If you intend to hire employees in your business, you’ll have to register with the Mexican Social Security Institute (IMSS) and the National Workers’ Housing Fund (INFONAVIT).

These institutions manage social security and housing benefits for employees.

You can register with both at your nearest IMSS office, and manage ongoing interactions through the IMSS online platform. Bear in mind that the system is only available in Spanish, so you might need a bilingual advisor on hand to remain compliant.

Employment contracts and labor obligations

With strict labor laws in place to project employees, Mexico has regulations for working hours, minimum wage, and severance pay.

As a business owner, you’ll need to comply with these laws.

The minimum wage in Mexico depends on the region, and is generally between ¹$250 MXN and $374 MXN per day.

The standard full-time workweek in Mexico is 48 hours, which is divided up into six 8-hour workdays.

Where can I find help to start my business in Mexico?

There's help on hand if you're starting a business in Mexico.

The Chambers of Commerce is a great place to start. Here you'll find others who have already taken this path and can help provide connections and recommendations.

Alternatively, an organization such as Startup Mexico might be helpful to you.

The most important thing you can do to promote your business is get out and meet people.

Once you’re in Mexico and ready to get going, look for local networking events on sites such as Meetup, Eventful and Eventbrite. Here you can meet like minded people and build your customer and business contact book.

With some planning, and a little help from your new network and friends, your business will get off to a flying start.

Need a business account that can handle MXN payments? Meet Wise Business

For conducting your business affairs in Mexico, it’s best to find a solution that adapts to your needs. Getting your business set up in Mexico can be time-consuming, but setting up a business account doesn't need to be.

Wise is not a bank, but a Money Services Business (MSB) provider and a smart alternative to banks. The Wise Business account is designed with international business in mind, and makes it easy to send, hold, and manage business funds in 40+ currencies. You can also send money to 160+ countries.

Importantly, you can get major currency account details for a one-off fee to receive overseas payments like a local. That means that you get get MXN account details and get paid in Mexican Peso, even as a US citizen.

Open a Wise Business account online

Here’s what you can expect with Wise Business:

• Major local account details to receive international payments with ease.
• No monthly account fees, just a simple one-off fee for account details.
• Receive payments from e-commerce platforms such as Amazon or via Stripe.
• Create invoices using the Wise invoice generator or invoice templates.
• Accounting integrations, including a QuickBooks Bill Pay connection.
• Batch payment options for fast payment of up to 1,000 people.

Read the guide on how to open a Wise Business account

Sources used:

¹ Gobierno de Mexico

Sources last checked on 15-November- 2024.