Starting a venture in Mexico is a favored option among investors seeking entry into Latin America, thanks to the affordable operational costs and convenient access to markets in the United States and Canada. For those interested in doing business in the country, the following step-by-step guide on incorporating a company in Mexico could be helpful.

If your business interests are limited in scope or duration, you can still tap into the available labor force by employing staff through a Mexican Employer of Record. This means that the company will hire staff on your behalf, eliminating the need for business formation.

Mexico, the second-largest economy in Latin America, is a hub for regional trade, as evidenced by its over 50 free trade agreements (FTAs) with countries and regional blocs in the Americas, Europe, and Asia.

Ranked as the world’s 17th-largest exporter, Mexico enjoys unique commercial access to the rest of North America through the United States-Mexico-Canada Agreement (USMCA). As a founding member of the Pacific Alliance — a political and economic partnership that also includes Chile, Colombia, and Peru — Mexico aims to expand its influence beyond the region.

With major seaports providing access to both the Pacific and Atlantic oceans, Mexico is the region’s fourth-largest oil producer, generating roughly two million barrels per day. Key export commodities include crude petroleum, vehicles, electronics, and medical equipment. The main export destinations are Canada, Germany, China, Japan, and the United States.

If you’re considering launching a business in Mexico, continue reading to learn how to establish a company in the country or contact us now to discuss your market entry options.

Starting a business in Mexico: essential factors

The business-friendly environment and low labor costs are two major reasons for entering the market. However, anyone considering launching a business in Mexico should take into account the following essential factors that could impact the success of the venture:

Identify business opportunities: Before launching a business in Mexico, it is highly recommended to work with an experienced company formation service provider, who can help identify business and investment opportunities and avoid entering an oversaturated market.

Entity type: Before starting a business in the country, decide which type of company best suits your business needs. Keep in mind that your tax liabilities and other corporate requirements may differ based on the legal entity you choose. The most common types of companies selected by investors in Mexico are Limited Liability Company (SRL) and Sociedad Anónima (S.A.).

Determine the main economic activity: When aiming to establish a company in Mexico, it is crucial to identify and define your company’s main economic activity. This is not only a requirement set by local authorities but also an excellent way to become an expert in your industry.

Appoint a reliable legal representative: All legally established companies in Mexico must appoint a legal representative, responsible for representing the organization before government entities and signing legal documents to conduct business transactions with partners and clients. Note that this person must reside in Mexico.

Corporate tax requirements: When setting up a company in Mexico, it is important to engage a local tax advisory provider to help you navigate the country’s tax system and maintain your company’s compliance with local authorities.

Additionally, Mexican regulations require your company to complete the following monthly tasks:

Maintenance of accounting books

1. Employee payroll management
2. How to establish a company in Mexico: 6 crucial steps

To start a business in Mexico, follow these key steps:

1. Draft and sign a power of attorney (POA): Your legal representative must draft and sign a POA — a legal document that grants them the authority to incorporate the power of attorney on your behalf.
2. Develop the company’s bylaws: Your company bylaws are a document outlining your business purpose and how it will operate. Note that these bylaws must be legalized before a notary public.
3. Register your company with local authorities: You must register your company with the Public Registry of Property and Commerce, specifying the real estate comprising your business, as well as its commercial purposes, objectives, and goals.
4. Obtain the company and tax ID number: Request and obtain your taxpayer identification number from the Tax Administration System (SAT).
5. Open and activate a corporate bank account: Once you’ve chosen a legal representative for your company, they can handle all the necessary procedures to open a corporate bank account at a local bank.
6. Make your initial investment: With your company set up and ready for business, you can make your initial investment and begin operations.

Investing in Mexico presents a remarkable opportunity for expanding your business in Latin America. By following the essential steps and partnering with reliable company formation experts like AFT Ingeniería Jurídica, you can ensure a smooth and successful market entry. Don’t miss out on the chance to capitalize on Mexico’s thriving economy and extensive trade network.

Let AFT Ingeniería Jurídica guide you through the process and pave the way for your business success in Mexico.