How to Set Up a Company in Mexico: Company Formation Mexico

You are looking to register a company in Mexico, but don’t know where to start? In this article, Easyco shows you the essential steps to form a company in Mexico.

1. Select the appropriate company type in Mexico

When establishing a business in Mexico , there are many benefits, regardless of how small or big the company is:

• Foreigners can establish a Limited Liability Company

• 100% foreign ownership

• No capital controls for repatriation of profits

• Strong property rights and protection

• No mandatory paid-in capital requirements

When choosing the best Mexican company type, we need to take into consideration the number of shareholders (minimum 2 shareholders required), the flexibility desired in managing the company, and the level of formality required. In Mexico, the two major types of companies used for business are:

• Stock Corporation (Sociedad Anónima, S.A.) – Most used by domestic and foreign investors

• Limited Liability Company (Sociedad de Responsabilidad Limitada, S. de R.L.) – Used frequently

Both grant limited liability to shareholders, where liability is limited to their capital investment.

For a large-scale operation or a business with various investors, we recommend an S.A. For a small business like a restaurant, store, or small-scale manufacturing operation, you may choose the S. de R.L. For both the S.A. and the S. de R.L. the option of variable capital (capital variable, CV in Spanish) can be established, thus permitting the increase or decrease of capital with minimum formalities.

2. Request the company name from the Ministry of Foreign Relations (SRE)

Once you have selected the type of company that you want to incorporate in Mexico, the next step is to submit an application to the Ministry of Foreign Relations (Secretaría de Relaciones Exteriores, SRE in Spanish) where five possible company names are to be provided in order of your preference, for the company. This is carried out to ensure that there is no company already incorporated in the country or abroad with the same company name.

3. Preparation of the Articles of Incorporation

Once the SRE approves or delivers the proposed company names, the Articles of Incorporation (also known as corporate charter) must be created. For this step, the legal advice of a lawyer in Mexico will be necessary. This document is the foundation of all the general and basic aspects of the company, they stipulate:

• Information regarding the company founders

• Company Type

• Company name

• The purpose of the company

• Authorized capital

• Bylaws

Once the company is created, said Articles of incorporation must be notarized before a Notary Public or a Public broker. Previous to completing this process, the Notary Public will ask for “Know your Client” (KYC) requirements that include completing a questionnaire, providing proof of legal existence, and Powers of attorney (POA) granted by the shareholders, if applicable.

Note: In Mexico, a stock corporation requires:

• A sole administrator (also known as the legal representative) or a board of directors.

• Statutory auditor (known as Commissioner in Spanish).

• Registered office address for tax purposes.

The shareholders may elect either a sole administrator or a board of directors to manage the affairs of the stock corporation. The charter and bylaws will specify the powers and responsibilities of the administrator or board, as well as any specific acts that might require a resolution of the shareholders. A sole administrator is occasionally preferred during the organizational phase of a business, and the company elects a board of directors later.

4. Obtain your Tax ID (RFC) from the Mexican tax agency

The next step of your company formation in Mexico is to obtain your company tax ID, known as the “Registro Federal de Contribuyentes” (RFC) in Spanish. To complete this step, you will have to visit the offices of “Servicio de Administración Tributaria” (SAT), which is the Mexican tax authority.

5. Register the company in the Mexican Public Registry (RPPC)

Subsequently, you have to register the company before the Public Registry of Property and Commerce (Registro Público de la Propiedad y Comercio, RPPC in Spanish). For this process, you have to provide:

• Payment of registration fees

• The notarized Articles of Incorporation.

• RFC of the company.

• Power of Attorney that allows the legal representative to carry out the company’s procedures (if applicable).

Once your company is registered in RPPC, it officially exists!

6. Register with the Mexican Social Security Agency (IMSS)

Now you proceed to register the company with the Mexican Social Security agency (Instituto Mexicano del Seguro Social, IMSS in Spanish). Even if it is a company in which only the partners exist as the only workers, you must go to the IMSS to request their registration and be able to make the personal contributions of the future employees of the company or that of the current partners.

Take into account that if this step is not completed on time, you may receive a fine from the IMSS.

7. Register in the Mexican Registry of Foreign Investment (RNIE)

Mexican law establishes that companies with foreign participation must register in the registry of the National Registry of Foreign Investments (Registro Nacional de Inversiones Extranjeras, RNIE in Spanish). In addition, companies with very high capital, are required to submit annual financial reports to the RNIE.

Note: For a foreign-owned company, it is important to take into account:

• In Mexico, regardless of the immigration status of a foreigner, you are generally allowed to sign the corporate charter as a partner in the company. The fact is that there are certain activities where participation is prohibited or limited, therefore, you have to work closely with your experienced local providers when registering a company in Mexico.

• An International Power of Attorney (POA) can be drafted that allows a local attorney or representative to act on your behalf, without you having to travel to Mexico. Once the corporate charter of your new company is ready to be signed, the attorney will require a POA to sign the related documents. The POA must be legalized in order to be officially accepted and recognized in Mexico. In order to be legalized, the POA must be previously authenticated (certified) by the proper authorities. Once the POA is authenticated, the next step is to sign on behalf of the shareholders.

• Take into account that any document that comes from abroad has to be apostilled or legalized, and officially translated into Spanish once in Mexico (if applicable).

8. Register with the other required Government organizations

Depending on the business of your Mexican company, you may be required to register with different organizations. The most common are:

• The Mexican Institute of Intellectual Property

• The Ministry of Health

• The Ministry of Ecology and Environment

This step also includes requesting the municipal or state permits that are required depending on the geographical area in which you seek to establish yourself.

9. Open the corporate bank account

As a final step, you can proceed to open a company bank account. The legal representative of your company can complete this step, the bank will require the company RFC and your company information. Choose a local bank that offers you the best pricing structures regarding international transactions and other processes that you consider important. It’s recommended to contact a local professional who is knowledgeable about this process.

Get Assistance from Easyco Experts!

Mexico is a great country to start your business, being a country open to foreign investment with a favorable legal structure for companies. Our experts can help you register your company in Mexico and assist with the formalities and compliance along the process.

Easyco also provides additional services to guarantee your company’s compliance, which include:

• Appointment of legal representation,

• Providing a registered office address

• Handling tax and accounting

• Hassle-free Payroll Services

• Manage your Company bank account opening

• Manage your Trademark Registration

• Recruiting and Hiring Talent

• Corporate Legal Services.

At Easyco, we make company formation in Mexico easy; our team of corporate experts has vast experience helping companies and individuals register their business in Mexico, with a proven track record of success across all of our services. Easyco aims to tackle the complex company formation processes across LATAM and makes business registration easy by providing a hassle-free online company registration experience.