How to set up a business entity in Mexico | finder.com
Business entity in Mexico

How to set up a business entity in Mexico

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To incorporate in Mexico, start by choosing the right business structure and hiring knowledgeable liaisons.

Mexico has opened its doors to foreign nationals, providing incentives both across the country and in specific jurisdictions. Showing high consumer confidence within an economy that’s weathered the storm of lower oil prices, you have many reasons to do business with our southern neighbor.

As it stands, creating a business in Mexico can tricky. But with the right knowledge and expert help, you can incorporate to legally operate in one of largest and most open economies in the world.

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What kind of entity makes sense?

There are four common entities for foreign investors who want to do business in Mexico: limited liability company, joint venture, partnership enterprise and representative office.

Limited liability company

This is a company entirely controlled by you. You might not be able to set up a LLC in certain industries, and you may need government approval in other industries.

It’s not quick or easy to set up a WFOE. However, the WFOE is often considered an effective entity for foreign investors because it affords complete control over business activities.

Joint venture

In a joint venture, you partner with a Mexican citizen to start a business entity or contractual arrangement. This is a limited liability entity.

Experts warn that a joint venture is unwieldy because partners rarely hold the same business vision. Even still, many individuals choose to enter into joint ventures because they can’t start a WFOE.

Partnership enterprise (PE)

Unlike an LLC or a JV, you don’t create a legal entity by entering into a partnership. Instead, you simply create a contract between one or more partners to conduct business.

There are other major differences. For example, a PE is an unlimited liability company, so you could be on the hook for full costs incurred through your business. PEs may be excluded from certain Mexican industries.

Representative office

Creating a representative office is the easiest way to build a business entity in Mexico. It’s also an inexpensive option. However, a representative office excludes you from performing many operations in the country. For example, you can’t sign contracts or even earn money. Essentially, a representative office gives you a presence in Mexico, and not much more.

Should I hire a professional?

It’s an excellent idea to hire a liaison to navigate tricky incorporation waters. Work with someone from Mexico who speaks fluent Spanish. They’ll interact with officials on your behalf, and they’ll tell you the appropriate places to register your business entity.

The US–Mexico Business Council and US Commercial Service are great places to search for a qualified contact.

What kind of documentation will I need?

Here are a few documents you’ll need to register your business:

  • Certificates of incorporation
  • Bank reference letters
  • Passport copies
  • Resume and photo
  • Description of the scope of your business
  • Lease contracts of Mexican office address
  • Business license

You may need different documentation depending on where you’re registering and which officials you meet with. Strongly consider working with a company that helps foreign investors create businesses in Mexico.
Laws & Legal Docs for International Money Transfers to Mexico

Where do I file my information?

You’ll submit documentation to incorporate your business with the Secretariat of Foreign Relations. Your business may also need to be approved by other authorities.
Doing business in Mexico: economic snapshot

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Other factors to consider

  • Naming your business. You’ll need to get approval from the Secretariat of Foreign Affairs to use your company’s name.

International billing and payments

Your new business will require you to make and receive international payments, which means you’ll make transactions between currencies and across borders.

You can safely and affordably manage your business payments — with lower fees and stronger exchange rates — by comparing the services of a money transfer specialist.

Use a money transfer to manage your international business payments

Companies like Payoneer and XE can help you set up regular transfers to your vendors overseas.

I want to send

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I want to send

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Bottom line

It’s important to choose the right business entity to operate in Mexico. Consider working with an organization that specializes in helping foreign businesses incorporate in the country — this will streamline your progress and help you avoid pitfalls along the way.

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