How to Open a Company in Mexico: Seven Essential Steps
Below are the seven steps companies must take to open a business in Mexico. Some companies, however, prefer to set up their operations in Mexico by partnering with a company like Intugo. Under Intugo’s nearshore cost reduction model, companies can bring their business processes to Mexico. At the same time, Intugo provides all the necessary services to initiate and maintain operations in the country. Intugo takes care of its clients:
Payroll and benefits function
Recruiting and human resources
Mexican accounting and taxes
Facilities and infrastructure management
Purchasing and vendor sourcing.
However, parties that open a company in Mexico without entering into a partnership with a nearshore service provider such as Intugo must follow the steps outlined below.
Request name authorization at the Ministry of Economy
For this procedure, a notary or public notary services are necessary. This individual will sign the application for the name of your company. This step can be done online with your signature; you can select the notary who will provide you with the service. Consider that there may be companies already established with your chosen name. To expedite the process, we recommend you request several different names when going through this process to open a company in Mexico.
Create the constitutive act of your company
It goes hand in hand with how to set up a company. Together with your partners and legal advisor, you will be able to make your articles of incorporation. This is an essential document since it will be the birth certificate of your company.
Notify use of denomination
Check that the notary who signed your articles of incorporation informs the Ministry of Economy of everything related to the new company, such as its partners, its name, and the formal presentation of the company.
Register the minutes with the RPPC
To open a business in Mexico, you must register your certificate before the Public Registry of Property and Commerce (RPPC). This governmental body is in charge of protecting and monitoring companies. The registration fee is paid according to the state where you register the company.
Register the company in the SAT
You must have your Federal Taxpayer Registry to obtain the RFC of your company. With the RFC number, you can issue or receive invoices and have your finances in order with Mexico’s tax authority, the SAT.
Register the company with the IMSS
It does not matter if there are only two people in the company; you need to register with Mexican Social Security (IMSS) to hire personnel or future partners, so you offer them this legal benefit and save a fine from the institution.
Register with the required organizations
Depending on the type of business activity, you may have to comply with additional registrations. For example, this could be with the Ministry of the Environment or the Mexican Institute of Intellectual Property.
It’s easy. You need to have your papers in order, define your goals, and start the paperwork to open a business in Mexico! According to a World Bank report, Mexico is the best country in Latin America to do business.
How much money is needed to open a company in Mexico?
According to BANCOMEXT data, 89% of entrepreneurs started their business with their own money, and only 3% received some investment. We know that finances are often a delicate subject, but if you are ready to open a company in Mexico, you must know how much money you need.
It all depends on the type of business you want to open in Mexico. The prices of procedures required to do this commonly range between USD 1,000 and USD 2,000, taking into account:
- Cost of preparation of the constitutive act: between USD 900 and USD 1,200.
- Registration to the RPPC: This expense is approximately USD 120.
- Other records (depending on the sector) cost between USD 200 and USD 300.
Now that you know how much it costs to open a company in Mexico, you may ask yourself, how long it takes to go through the process? This will also depend on the type of business and procedures to be carried out, but the approximate time is between 30 to 45 days. In less than two months, you can have your company established!
Types of companies you can create in Mexico
This classification is according to the business activity:
- Industrial companies: They are dedicated to manufacturing goods from raw materials.
- Manufacturing companies are in charge of transforming raw materials into production goods.
- Commercial companies sell the final product and are related to the producer and consumer.
We can also classify them depending on the level of shareholders and capital. They can be microenterprises, small or medium-sized companies ( SMEs ), or social and private companies. The established company type depends on the product or service you offer.
Establish a business in Mexico individually or in partnership: What is the difference?
This is one of the fundamental questions when someone is planning to open a company in Mexico. For this issue, we have two important terms to remember:
- Natural person: You remain the absolute owner of the company, taking complete charge of the business obligations before the law.
- Moral person: The company is constituted of partners and shareholders.
Here, it is crucial to verify the types of companies in Mexico. The Mexican General Law of Commercial Companies recognizes in its first article these:
- Public Limited Company (SA): It is the most used in Mexico since the amount of contributions determines the partners. Business decisions are made by vote based on the percentage of capital owned.
- Limited Liability Company (S. de RL): This type of business comprises a maximum of 50 members. Actions that limit or expand the distribution of profits between partners are allowed here.
- Sociedad por Acciones Simplificadas (SAS): This form of business can be established as a natural person, electronically, and without the need for a notary. You only need your electronic signature. This company does not require another monitoring body. It is ideal for small businesses since income can be, at most, approximately USD 300,000 annually.
- Cooperative Society (SC): This type of business requires at least five partners to be incorporated. All partners will have the same rights and obligations, regardless of contribution amount.
Seven main steps require completion to open a business in Mexico. This is, of course, to initiate and maintain operations as a stand-alone entity. By partnering with Intugo, however, all of these steps can be avoided. This is because by becoming a client of Intugo, your business operates under their legal umbrella. You are free to run your business in a way that will allow you to focus on your core competencies while Intugo takes care of all the intricacies of doing business in Mexico.