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How to start a business in Mexico
To incorporate in Mexico, start by choosing the right business structure and hiring knowledgeable liaisons.
Updated . What changed?
Starting a business in Mexico is possible because 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.
What's in this guide?
- What kind of entity makes sense?
- 5 steps to opening a business in Mexico
- Should I hire a professional?
- What kind of documentation will I need?
- Where do I file my information?
- Other factors to consider
- International billing and payments
- Use a money transfer to manage your international business payments
- Bottom line
- Frequently asked questions
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 you control independently. 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.
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.
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.
5 steps to opening a business in Mexico
- Get authorized. To use your desired company name, contact the Ministry of Foreign Affairs
- Plan it out. You’ll create a Constitutive Act, which is an incorporation deed, and it must contain:
- Your company name
- The Company Articles
- Details appointing members and shareholders
- Information about appointed board members and their powers
- The estimated duration of the company
- Get certified. You’ll apply for a tax identification number from the Secretary of Finance and Public Credit
- Get local. The Public Registry of Property and Commerce will help you register your business in the state and city where you’ll operate.
- Get employees. Before you can hire any employees you’ll have to register with the Mexican Institute of Social Security.
- Get paid. Compare international money transfer services to pay and get paid from your bank accounts in the US.
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.
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 and 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.
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
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.
Frequently asked questions
Are there other types of business entities in Mexico?
Yes. You may want to consider entities from a stock company to a simple branch. Even within joint ventures, you can establish a strategic alliance or joint venture. Speak to a professional to learn how each category can benefit you.
How can I finance my business?
Whether you’re looking to get off the ground, expand, or meet a temporary business shortfall, a business loan could help ensure your business success.
Why should I be wary of joint ventures?
Many experts recommend avoiding joint ventures because your partner will understand Mexican customs better than you do. This can be a good thing, but it often exacerbates conflict if partners disagree on business strategy. If you’re the foreign investor in the JV, you may find yourself effectively powerless.
What’s the best way to transfer money to Mexico?
Use an online transfer provider — it’s likely cheaper and more convenient than using your bank. Compare multiple providers and find the one that offers the best fee structure for your transfer amount.
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