Mexico Company Registration

Mexico Company Registration  

• At Tetra Consultants, we recognize that Mexico company registration can be challenging. Mexico ranks as the 4th most complex jurisdiction in the 2024 Global Business Complexity Index (GBCI) 2024. Maintaining the same position as in 2022 and 2023. This ranking reflects the extensive rules and regulations that continue to complicate business operations in the country.   

• In this guide, you will find essential steps for successful Mexico Company Registration. Tetra Consultants will assist you at every stage to ensure a smooth and timely Mexico company formation tailored to your specific needs. Our comprehensive services will include: 

• • Mexico Company Registration 

• • Corporate bank account opening 

• • Legal representative services 

• • Nominee director and shareholder services 

• • Business license and trade permits acquisitions 

• • Registered local address  

• • International trademark registration 

Advantages of Mexico Company Registration 

Ready access to a large and expanding market 

• Mexico has a population of more than 130 million people, which therefore opens up an extensive domestic market for goods and services. The country also boasts a constantly expanding middle class, making it a much-sought investment destination. 

Beneficial business environment 

• Mexico possesses a stable political and economic system, little corporate taxes, and an immense pool of skilled labor. The country has been on the reform path, privatizing, deregulating, and reducing the role of government. 

Free Trade Agreements 

• Mexico has free trade agreements with more than 50 countries, including North American Free Trade Agreement (NAFTA) with both US and Canada. This allows it to penetrate the market of over 450 million consumers. 

Low labor costs 

• Mexico has had lower labor costs compared with many other countries, which makes it an attractive destination for manufacturing and out-sourcing businesses. 

Strategic location 

• Mexico is located centrally between North America and South America which act as the gateway to the Latin American market. Infrastructure, transport, telecommunication, and energy systems are developed, making it appropriate for companies. 

Incentives for foreign investors 

• The Mexican government has established a wide range of incentives for foreign investors, such as tax holidays, subsidies, and investment promotion programs.  

Disassociation of personal and business assets 

• A Mexican company registered may be able to separate personal and business assets, a reduction of risks, and access to specialized financial products.  

Time required for Mexico Company Registration 

• Tetra Consultants will complete the company registration process in Mexico within 8 weeks. After receiving the necessary due diligence documents from the directors and shareholders, our team will verify the availability of your chosen company name with the relevant Mexican authorities. We will handle the incorporation process efficiently, requiring no travel on your part. 

• Within 4 weeks of forming your company in Mexico, Tetra Consultants will assist you in corporate bank account opening with a reputable local or international bank. Our team will provide all the necessary forms for this process, ensuring that you do not need to travel. If the bank requires any additional KYC verifications, Tetra Consultants will arrange an online video conference to facilitate communication among all parties. 

• As a result, you can expect to start operations and issue invoices with your Mexican company within 12 weeks of engaging Tetra Consultants. 

Are foreigners allowed to proceed with Mexico Company registration? 

• Foreigners are allowed full ownership of their businesses, and no local partner or shareholder is needed. However, foreign-owned companies are required to have a legal representative who must be either a Mexican national or a foreign national residing in Mexico with the corresponding work permit.   

• A Mexican company must have a registered physical address in Mexico and obtain a Tax ID number from the Servicio de Administración Tributaria (SAT). With their guidance, navigating these complexities becomes easier, enabling you to streamline the setup process and expand your business effectively in Mexico. 

Type of business entities allowed for Mexico Company Registration 

• The most direct way of capitalizing on these opportunities is to incorporate a company in Mexico directly into the local market. However, before doing this, you first need to know the most prevalent types of legal entities you can form in this nation. 

• There are various types of entities which are as follows: 
• • Stock Corporation (Sociedad Anónima de Capital Variable) 

• • Limited Liability Company (Sociedad de Responsabilidad Limitada de Capital Variable) 

• • Simplified Shares Company (Sociedad por Acciones Simplificada) 

• • Branch office 

• • Partnership 

• • Sole Proprietorship 

Stock Corporation (Sociedad Anónima de Capital Variable) 

• The Stock Corporation is the most common form of business structure in Mexico, providing several key advantages. At the moment of incorporation of a stock corporation, its value is divided into shares, and such shares are usually protected from creditors. One significant advantage is that no limit exists on the number of shareholders, allowing for relatively effortless capital-raising even for relatively young companies.  
• Key requirements for Stock Corporation in Mexico include: 
  • At least one director is required without residency requirements. 

• • A minimum of two shareholders without residency requirements. 

• • Minimum capital is MN$50,000 (approx. US$2,700). 

• • A statutory auditor is required to oversee the management of the company and ensure compliance with legal obligations. 

• • A local physical registered address.  

• • The company must appoint a legal representative who must be either be a Mexican national or a foreign national residing in Mexico with the corresponding work permit. 

Limited Liability Company (Sociedad de Responsabilidad Limitada de Capital Variable) 

Limited Liability Companies lag far behind Stock Corporations in popularity. Just like the SC, each LLC bases its value on shares. Other distinguishing features include the following: 

• An LLC will require a minimum of 1 member without residency requirements. 

• The minimum capital required is MN$3,000 (approx. US$160). 

• The company must have a registered office address in Mexico. This address will serve as the official location for all correspondence and legal notifications. 

• The company must appoint a legal representative who must be either a Mexican national or a foreign national residing in Mexico with the corresponding work permit.  

Simplified Shares Company (Sociedad por Acciones Simplificada) 

• Another important company form is the Simplified Shares Company. You are not looking for these companies alone in Mexico, but in Argentina and Colombia too. This is a relatively new concept that has gained repute in 2016 as part of the newly reformed General Law of Commercial Companies. Mexico is taking important steps in opening its market towards foreign investments. The government modified commercial law to make it easier and encourage foreign business activities for this purpose. 

• Key features of a Mexican Simplified Shares Company include: 
  • There is an annual maximum allowable revenue of MN$5,000,000 (US$265,000).  

• • Every SAS must have a legal representative who acts on behalf of the company in all legal matters. The representative must be a Mexican national or a foreign national holding a valid residency visa. 

• • A SAS must have at least one director without residency requirements. 

• • A SAS must have at least one shareholder without residency requirements. 

• • At least 1 legal representative with a residency requirement is required. It can be appointed by our HR team. 

• • A registered physical address. 

Branch office 

• A branch cannot constitute a separate legal entity in Mexico, it may, however, be managed as a local branch or as an extension of the foreign companies. 

• Be registered with the Public Registry of Commerce and comply with any relevant regulations of the region. 

Partnership 

• Partnerships are one of the most common forms of business structure in Mexico. It allows two or more people to carry on a business under a common name. There are two major forms:  

• General Partnerships (Sociedad Colectiva), in which partners are liable without limit, and at least two partners are necessary, with no minimum capital, and;  

• Limited Partnerships (Sociedad en Comandita), in which there must be at least one general partner with liability without limit and one limited partner, and there is no required capital. Both require a representative authorized by law, this may be either a Mexican citizen or a foreign national with residence in Mexico. 

Sole proprietorship  

• A sole proprietorship in Mexico (persona física con actividad empresarial). It is most suitable for someone who would like to conduct business but does not want to really put up some separate legal entity. 

• Although registration at the Public Registry of Commerce is not mandatory, it is recommended for that purpose in addition to obtaining legal recognition. 

• Registration with the Mexican Tax Administration Service (SAT) serves the purpose of obtaining a Federal Taxpayer Registry (RFC), which is nothing but the Tax ID number. 

• This regime allows people whose annual earnings do not exceed MN$3,500,000 (US$190,000), to opt for the Regime for Individuals and Corporations (RESICO), which applies the lower tax rates. 

Steps to proceed for Mexico Company Registration

Step 1: Decide the company structure 

• Initially, to proceed with Mexico Company Registration our experts will start by assisting with assisting with the selection of the appropriate business structure. With a variety of options available, our experts will assist you in choosing the right structure that aligns with your business activities and objectives, ensuring compliance with local regulations and optimizing operational efficiency. 

Step 2: Decide the company name 

• Furthermore, we will proceed with submitting your preferred company name to the Ministry of Economy for verification of its uniqueness and harmonization as per the requirements of the regulations. Additionally, we also provide international trademark registration services which safeguard your company name globally. 

Step 3: Comply with company pre-requisites 

• Various company prerequisites depend on the company structure you have chosen. This is vital for the legal compliance of your company. The pre-requisites for stock corporation in Mexico include:   

• At least one director is required without residency requirements. 

• A minimum of two shareholders without residency requirements. 

• Minimum capital is MN$50,000 (approx. US$2,700) 

• A statutory auditor is required to oversee the management of the company and ensure compliance with legal obligations. 

• The company must appoint a legal representative who must be either be a Mexican national or a foreign national residing in Mexico with the corresponding work permit. 

• A physical registered address for your company. 

If you wish to have a local presence of your company in Mexico we also provide nominee director and shareholder services. 

Step 4: Draft the company bylaws 

• Furthermore, we will draw up the bylaws for the company which will detail its purpose and structure and other rules and regulations guiding operations. The documents will necessitate a notary stamp to remain valid under the provisions of the law. Additionally, we will provide legal drafting services for all necessary documents to ensure compliance with local regulations and to facilitate a smooth business operation. 

Step 5: Register with local authorities 

• Further to complete the Mexico company registration, we will submit all required documents to the Public Registry of Commerce, including the bylaws and proof of residence. Our team will manage the process efficiently, ensuring that all requirements are met. We are committed to establishing your business officially and promptly, providing you with peace of mind during this important step. 

Step 6: Obtaining a Tax Identification Number 

• The next thing to do will be to request a tax ID number from the Servicio de Administración Tributaria (SAT). This is an essential step to execute business dealings within Mexico. Our team will ensure that the process will be handled efficiently and correctly. Therefore, it will enable you to satisfy all tax obligations and begin business activities completely without any interruption. 

Step 7: Corporate bank account opening 

• Last but not the least, our experts will assist you with corporate bank account opening in Mexico after your tax ID is issued. We also offer full services in corporate bank account opening through which our clients can have a bank account in 4 weeks after company incorporation.  

• Our team will provide all the necessary forms for the bank account opening process, allowing you to handle everything remotely. If the bank requests any additional KYC verifications, Tetra Consultants will coordinate an online video conference to ensure smooth communication among all parties involved. 

Documents required for Mexico Company Registration 

• To initiate Mexico Company Registration, various documents are required, including but not limited to the following: 

• Valid identification (copies of passport or national ID) of all directors, shareholders, and UBOs. 

• Articles of incorporation 

• Proof of registered address 

• A Federal Tax Identification Number (Registro Federal de Contribuyentes) for all UBOs, directors, and shareholders. 

• Notarized power of attorney 

• Internal rules governing the management and operations of the company. 

• Records detailing decisions made during the initial meeting of shareholders/directors. 

• Certified copy of the company’s official stamp. 

For corporate shareholders 

• A certified copy of the corporate resolution or bylaws that designate the individuals authorized to represent the company. 

• Corporate shareholders must share the Federal Tax Identification Number (Registro Federal de Contribuyentes). 

Accounting and Tax obligations 

Accounting obligations 

Maintain accurate financial records: 

• Companies should maintain proper books of accounts with complete and accurate records of all transactions including income, expenses, assets, and liabilities. 

Preparation of financial statements: 

• The company must prepare annual financial statements that show the balance sheet, income statement, and cash flow statement. The prepared statements are expected to be in compliance with NIF or Mexican Financial Reporting Standards. 

Bookkeeping: 

• Establish proper bookkeeping practices by considering the transactions that take place daily. It can be done internally or outsourced to accounting firms. 

Audit requirement: 

• This usually is compulsory only in cases where the firm is large or of a certain type, at which point an annual audit is performed by an external auditor. 

Tax obligations 

Corporate Income Tax (ISR): 

• A charge of ISR at 30% is applied to taxable income. The effective rate may vary due to deductions and credits. 

Value Added Tax (VAT): 

• The value of a good or service has a 16% VAT imposed on sales. The business has to collect the tax from its customers and then remit it to the government. 

Social Security Contributions (SSC): 

• Contributions to social security in Mexico are 2.5% to 7.5% of the salary paid to each employee. 

Property tax: 

• Where the business owns immovable property, it must pay real estate tax based on an assessment of the value of that property. 

Why to proceed for Mexico Company Registration? 

Political 

• Mexico is stable politically, with a democratic government willing to receive foreign investment. Policies are formed in a manner that attracts foreign companies while protecting foreign companies. Membership in NAFTA, and other free trade agreements, give access to large consumer markets.  

Economical 

• In recent years, Mexico’s economy has shown steady growth, with a growing consumer middle class as its base. Its relatively low labor costs and relatively low corporate tax rates of 30% make it an attractive destination for manufacturing and outsourcing. However, businesses will have to keep their eyes open to potential currency fluctuations and inflation risks. 

Social 

• Mexico is a big domestic market with over 130 million people, given its diversified and cultured demographics and divided consumer behaviors. Business in Mexico can only be done with an understanding of proper cultural norms since doing business here is more a question of a personal relationships and trust in the deal. 

Technological 

• The country is developing its telecommunications and transport infrastructure, thus making business activities more effective. There are incentives for some industries with technological innovation and research and development, while others may be bogged down by age with old legacy systems and processes. 

Environmental 

• Climate and geography really play a big role in the country, meaning that businesses face unique issues. Increasing importance of sustainability and environmental legislations, and risks from natural hazards such as seismic activity in specific regions. 

Legal 

• A Mexican company needs to register with several government offices that including SAT, Instituto Mexicano del Seguro Social (IMSS), and Sistema de Información Empresarial Mexicano (SIEM). Compliance with Mexican labor laws is essential, particularly regarding employee contracts and social security obligations. Additionally, the specific licenses and permits required will depend on the type of business activities being conducted. Companies must also consider the language and the distinct legal structure in Mexico, which may differ significantly from their home country. 

Looking for Mexico Company Registration 

• Tetra Consultants is committed to making your Mexico company registration process seamless and efficient. With our expertise, we not only assist with company incorporation but also offer a range of business-related services, including offshore company incorporation, digital marketing/SEO services, offshore financial license, and much more. Our goal is to support your business at every stage, ensuring compliance and helping you thrive in the competitive market. Partner with us for a comprehensive solution tailored to your needs. 

• Contact us to know more about Mexico Company Registration and our team will revert back in 24 hours. 

FAQs

What are the types of business entities that can be registered in Mexico?

Can foreigners establish a company in Mexico?

What are the minimum requirements for shareholders?

Do I need to use a representative in order to register my company?

What are the tax obligations for companies in Mexico?

Do I have any continuous compliance obligation after registration?

Can I do my business without registration?