Company Registration in Mexico
Mexico has a lot of potential for people seeking business endeavors abroad. Being ranked 15th in the global economy, Mexico opens its gateway to the Latin American market to diverse businesses globally. In 2021, the nation’s GDP clocked a massive figure of $1.29 trillion. For most of the last decade, the nation’s GNI i.e. gross national income stayed positive, hitting a per capita income of $9,430 in 2019. Moreover, Mexico has signed 11 free trade agreements for promoting Exim activities.
By the end of 2019, Mexico’s FDI totaled $29 billion, showcasing its economic prowess. All in all, Mexico is the best place to launch a business. The article explores the legal aspects of starting a venture in this country alongside benefits, a process, dossiers, and taxes.
Benefits of Securing a Company registration in Mexico
- The Mexican government shines with its robust infrastructure fueled by transportation, telecommunication, and energy. Investments in these sectors can experience a significant hike over time.
- Mexico has the highest number of trade agreements (11 as we speak) than any other nation.
- The country has a strong consumer base and close connectivity with the US from a trade standpoint.
- Mexico’s finance system is a best-known for credit facilitation, making it the best nation for international enterprises.
- The nation has a strong tie-up with the USA and Canada thanks to the United States-Mexico-Canada Agreement. The said agreement has helped fuel key sectors like automotive, electronics, and energy.
- Mexican currency seems to be getting better each year, currently poising at MXN 20.15 per dollar.
- The IMMEX program has emerged as a boon for exporters as it reduces the cost of importing raw materials significantly.
- Mexican workforce is lauded for its industry-specific skills and cost-effectiveness, allowing for increased profit margins.
Checklist for Securing Company Registration in Mexico
Foreign Exchange and Foreign Trade Act (FEFTA) takes care of overseas funding in the nation. The authorities viz. the Ministry of Finance (MOF) and the Ministry of Economy, Trade, and Industry (METI) regulate all investments and employment. The Bank of Mexico probes overseas investment falling under the FEFTA. Investors are liable to intimate authorities via the Bank of Mexico concerning funding.
Steps to Secure a Company Registration in Mexico
Select a company name
Approach the Mexican Ministry of Economy with 4-5 proposed business names for approval. Rank these names as per the priority.
Decide on the governing body
A Governing Body refers to a member serving the BOD or a Sole Administrator. Depending on your management footprint, select the president, treasurer, and secretary. Upon selecting the governing body, secure the ID proof of the concerned member.
Economic activity
When catering to registration formalities, register your economic activity without fail or else you may stumble upon legal hindrances.
Legal representative
Foreign business owners must team up with a local agent to deal with registration formalities, including signing key dossiers. The agent should not be a minor and have a permanent resident status.
Information about shareholders (partners)
If an entity accommodates more than one owner or shareholder, you must secure the ID of each one of them. The shareholder can be a person or an entity.
Other Businesses
The Signing Officer must sign key dossiers if corporations serve as a stakeholders. They have the same rights as that of individual stockholders. The signing officer should clarify their visit’s purposes when going for business. An apostilled power of attorney and a passport may be required if an agent represents them.
Registration of Public Property and Commerce
An entity operating in Mexico must have approval from the Public Property and Commerce Registry. Documents like incorporation documents (Constitutive Act) and IRS Taxpayer Identification Number (RFC) are vital to apply for this registration.
Create a business bank account
You must have a Public Notary document to open a corporate bank account in Mexico. If possible, appoint an agent since they better understand the legalities concerning account opening.
Registration with the Mexican Social Security Institute
Since you will be paying the social security fund, approval from the Instituto Mexicano del Seguro Social (IMSS) is a must.
Business Structures for Company Registration in Mexico
The following structures are available for company registration in Mexico:
Stock corporation (Sociedad Anónima de Capital Variable)
- A stock corporation accommodates a number of shares that constitute its worth. These shares are safeguarded by creditors.
- There is no cap on number of shareholders in this company. Also, fundraising is easy with this company.
- 50,000 MXN is the minimum capital to form such a company
Limited liability company (LLC)
- LLC is a great option for small and mid-sized entities.
- LLC’s worth is defined by its shares
- A founding capital of MXN 3,000 is required to form an LLC
- Instead of a company, LLC members are liable to file tax returns.
- LLC supports the concept of limited liability
Simplified shares company
The Simplified Shares Company attracts minimal compliance for registration than LLC and SC.
The only setback of this structure is the limit on revenue generation. The current threshold has been capped at MXN 5,000,000, limiting the entity’s potential to expand.
Steps to Secure Company Registration in Mexico
Securing company registration in Mexico requires following the given steps:
1. Authorize your legal representative (POA)
Overseas business owners can tie up with a local agent to cater to registration legalities. The legal representative should be a local national and legally fit. They must have a local tax ID. Notably, a power of attorney (POA) is required to appoint an agent.
2. Select business structure
You can select a structure based on your operational footprint and compliance. The selected structure should resonate with your capabilities to handle taxes and operational norms.
3. Choose a company name and register
The next step is about selecting an apt company name. Opt for a name that reflects your brand image and is relevant to the offerings you are proposed to render. Visit the Ministry of Economy to apply for the name reservation.
4. Draft the company by laws
The company bylaws reflect the firm’s goals, operations, and structure. You must get them notarized via a notary public recognized by local authorities.
5. Declare your company to local authorities
Upon getting the bylaws notarized, visit the local authorities for entity registration. Leverage the professional aid of the legal counsel who can register your business with the Public Registry of Property and Commerce in Mexico. While applying for registration, you must provide key documents reinforcing the address proof of the entity and members.
6. Secure a tax identification number
The Tax Administration System of Mexico is entrusted with the onus of granting the corporate tax identification number, which is mandatory for all firm types. This tax ID must be reflected in a number of documents, including invoices and financial records.
7. Register with SIEM
The Department of Trade helps firms registered with the National Business Information Registry (SIEM).
8. Register with the Foreign Investment Registry
If the entity’s owner belongs to another nation and lacks a permanent residency, you must have the approval of the Foreign Investment Registry. Foreign business owners may pay a physical visit to the authority within 40 days of registration since it is mandatory.
9. Establish a business bank account
Once you get the tax ID, it is time to open a corporate bank account, which may require filing an application and submitting paperwork.
10. Deposit your original capital
Depositing your initial investment to the bank account is the final step of this process. Since you will be leveraging manpower, registering with local authorities like the National Worker’s Housing Fund is mandatory.
Conclusion
Company registration in Mexico is a delicate process that requires a cautious approach. Confronting rejection or delays is apparent with such processes. Hence, it is vital to team up with an expert well-versed in regulations concerning global incorporation. At Adviso, we help clients go global with zero hassle. We take the lead and cater to legalities to ensure a peace of mind for clients.
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