Are you looking to register your company in Mexico However, you aren’t sure how to begin? This article we’ll show you the most important steps to start a business in Mexico.
1. Select the appropriate type of company formation in Mexico
When you start an enterprise in Mexico there are numerous advantages, no matter how big or small the company may be:
Foreigners are able to create an Limited Liability Company
100% foreign ownership
No capital controls to prevent repatriation of profits
Protection of property rights with strong property rights
There are no capital requirements that must be paid in.
When deciding on the most suitable Mexican business type we must be aware of the amount of shareholders (minimum 2 shareholders are required) as well as the degree of flexibility required when managing the business, and the degree of formality that is required. In Mexico the two primary types of companies used in business are:
Stock Corporation (Sociedad Anonima, S.A.) The stock corporation is utilized by foreign and domestic investors
Limited Liability Company (Sociedad de Responsabilidad Limitada, S. de R.L.) It is frequently used.
Both provide limited liability for shareholders, with liability restricted to the capital they invest.
If you are operating a large-scale business or a company that has multiple investors, we suggest using an S.A. For a small enterprise such as the restaurant, shop or manufacturing company with a smaller scale You can select an S. de R.L. In both these options, S.A. and the S. de R.L. the possibility for the variable capital (capital variable CV, in Spanish) is available that allows for the increment or decrease in capital with minimal formalities.
2. Get the company’s names from Ministry of Foreign Relations (SRE)
After you’ve decided on the type of business you would like to establish in Mexico the second step would be to make an application for incorporation to the Ministry of Foreign Relations (Secretaria de Relaciones Exteriores or SRE which is Spanish) in which five possible names for the company are required to be listed in the order you prefer for the business. This process is done to make sure that there isn’t a existing company that is incorporated within the country or overseas using the same name.
3. The Articles of Incorporation
When the SRE approves or releases the company’s proposed names The Articles of Incorporation (also called corporate charter) need to be drafted. To complete this step seeking legal advice from an attorney in Mexico is required. The document serves as the base of all the fundamental and general aspects of the business, it outlines:
Information on the founders of the company
Type of company
Company name
The goal of the business
Capital authorized
Bylaws
When the company is established and the Articles of Incorporation are signed, they need to be notarized by the Notary Public or Public broker. Prior to the process is completed you must go through the Notary Public will ask for “Know your Client” (KYC) conditions which include filling out the questionnaire, supplying proof of legal status as well as the power of Attorney (POA) issued by shareholders, if applicable.
Note: In Mexico a stock corporation requires:
The sole administrator (also referred to as”legal representative) (also known as the board of directors).
Auditor sworn in as a Statutory Auditors (known by the name of Comisario on Spanish).
Registered office address to be used for tax purposes.
The shareholders are able to elect an administrator who is sole or an executive board to oversee the business of the stock company. The charter and bylaws outline the responsibilities and powers of the board or administrator as well as any specific acts that could require a resolution from shareholders. Sometimes, a sole administrator is preferred in the early stages of the organization of a company, and the business elects the board of directors in the future.
4. Get the Tax ID (RFC) from the Mexican tax authority
The next step in the process of forming your business in Mexico is obtaining the tax ID of your company which is commonly referred to as the “Registro Federal of Contribuyentes” (RFC) and in Spanish. To get this done you’ll need to visit the office of “Servicio of Administracion Tributaria” (SAT) (SAT), which is the Mexican tax authority.
5. Incorporate the company into the Mexican Public Registry (RPPC)
In the next step, you need to make sure that the company is registered with you can apply for registration at the Public Registry of Property and Commerce (Registro Publico of Propiedad and Commerce, RPPC in Spanish). To complete this procedure, you will need to furnish:
The payment of registration fees
These notarized documents are the Articles of Incorporation.
RFC from the firm.
Power of Attorney that allows the legal representative to implement the business’s procedures (if appropriate).
Once your business is registered with RPPC It is now officially established!
6. Make an appointment for registration with The Mexican Social Security agency (IMSS)
You must now create a company account with the Mexican Social Security agency (Instituto Mexicano del Seguro Social, IMSS in Spanish). If it’s an entity in which the partners work as the sole employees and you are not able to register the company, you need to visit the IMSS to apply for registration. You will then be able to pay the personal contributions for the new employees to the business or the partners currently employed.
Consider that if this process is not completed by the deadline and you fail to do it, you could be subject to a penalty from the IMSS.
7. Sign up to the Mexican Registry of Foreign Investment (RNIE)
Mexican law stipulates that businesses that have foreign participants must be registered on the register in the National Registry of Foreign Investments (Registro National de Inversiones Extranjeras, RNIE in Spanish). Additionally, companies that have extremely high capital levels, must provide annual financial statements for the RNIE.
Note: For foreign-owned business, it is crucial to consider:
In Mexico regardless of status of an immigrant You are usually able to join the corporate charter as an employee of the company. There are certain areas where participation is either prohibited or limited and, as such, you need collaborate with local experts when you register a business in Mexico.
A International Power of Attorney (POA) can be written that permits an attorney or representative in your local area to take action on behalf of you and without the need the expense of traveling to Mexico. Once the corporate charter for your company has been prepared to be signed by the attorney, the attorney will need an POA for signature on the relevant documents. The POA must be legally endorsed to be legally recognised and accepted by Mexico. To be legally recognized the POA must first be certified (certified) through the appropriate authorities. After the POA has been authenticated then it is then time to make the signature on behalf of shareholders.
Consider that any document issued from outside must be legalized or apostilled and translated officially into Spanish at the time of entry into Mexico (if the case).
8. Join the other necessary organizations of the government.
Based on the nature of your Mexican firm, you might be required to join various organisations. Most commonly, they are:
The Mexican Institute of Intellectual Property
The Ministry of Health Ministry of Health
The Ministry of Ecology and Environment. Ministry of Ecology and Environment
This is also the time to apply for permits from the state or municipal authorities which are required based on the area the area you want to establish yourself.
9. Create a corporate bank account
In the final step, you can establish a bank account for your company. The authorized representative of your business will be able to complete this process The bank will request the company’s RFC along with your company’s details. Choose a local institution that has the most favorable pricing structure for international transactions, as well as other processes that you think are important. It is recommended to speak with an expert in your area who has experience in the process.
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