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How to start a business in Mexico: Requirements and steps
If you’re considering starting a business in Mexico, this guide shows you the administrative and tax costs and requirements to do so.
Mexico offers major advantages when opening a company, thanks to its proximity to countries like the United States and Canada. Moreover, it remains one of the main Latin American stopovers for airlines travelling to Asia or Europe.
This gives entrepreneurs greater flexibility when flying to global destinations, including the whole of Latin America.
However, to enjoy every benefit the country offers, you must understand its administrative structure, which requires several strict conditions before establishing your brand in Mexico.
Therefore, we created this guide to help you understand every step required to incorporate a company. Furthermore, you must understand how Mexico’s corporate tax system works and the costs involved in every procedure. Join us!
1. How Much Does It Cost to Open a Company in Mexico?
The costs of incorporating a company in Mexico remain moderate compared with other countries, especially European or Middle Eastern nations. First, you should know that costs vary according to the complexity of the articles of association and the company’s location. Here’s a detailed explanation:
Mexico divides the main expenses into registration fees ranging from $87 (€80.04) to $170 (€156.40) approximately, for registration with the Public Registry of Commerce and notarial fees, which usually range from $500 (€460) to $2,000 (€1,840) for drafting the incorporation deed.
Regarding the minimum investment capital, current legislation doesn’t establish a mandatory amount for incorporating a company. Nevertheless, we recommend holding minimum capital to simplify banking procedures during incorporation, around $1,500 (€1,380).
Additional Costs Foreign Entrepreneurs Must Cover
As a foreign entrepreneur, you must also pay for registration with the National Registry of Foreign Investments (RNIE) and, if you can’t attend personally, issue an apostilled power of attorney, which usually costs between $200 (€184) and $400 (€368).
Additionally, to protect your commercial identity, trademark registration with the Mexican Institute of Industrial Property (IMPI) carries an official fee of approximately $160 (€147.20) per category.
Immigration and Representation Costs
If you plan to manage the company personally in Mexico, you must consider the cost of a temporary residence visa, which, together with permission to perform paid activities, costs approximately $850 (€782).
On the other hand, if you prefer an organised process with someone familiar with local rules and procedures, agent or consultant fees may reach around $3,000 (€2,760), depending on the professional and the service scope, whether legal, accounting, or immigration-related.
2. What Types of Companies Can You Open in Mexico?
Incorporating a company in Mexico, from a small business to a major corporation, requires selecting the legal structure that best matches your operational goals.
Keep in mind that, for most company structures, Mexican law allows full foreign ownership, meaning you won’t need local capital and can retain full control of your company from day one.
However, for operational and tax purposes before the Tax Administration Service (SAT), the company must appoint a legal representative with official Mexican residency and a valid electronic signature.
To help you understand every structure better, we’ll now explain each one in detail, so you can choose wisely.
Limited Liability Company (S. de R.L.)
It’s mainly designed for small and medium-sized businesses in Mexico. Its key feature states that partners’ liability remains limited to their contributions, protecting personal assets against company debts.
Additionally, this structure requires between 2 and 50 partners and prevents share capital from dividing into negotiable shares. Instead, it uses partnership interests that can’t circulate freely, allowing partners to maintain strict control over new members entering the organisation.
Public Limited Company (S.A.)
This legal structure remains Mexico’s strongest and most common option, mainly designed for companies seeking national and international expansion and investment capital.
Within a Public Limited Company, share capital divides into negotiable shares represented by certificates, which simplifies investor entry and exit without amending the incorporation deed.
Furthermore, like the Limited Liability Company structure, shareholders’ liability remains strictly limited to their contributions, protecting personal assets against company obligations.
To establish this structure, you’ll need at least one shareholder, with no maximum limit. It’s the ideal option if you plan to list publicly.
Investment Promotion Public Limited Company (S.A.P.I.)
It’s a variation of the standard Public Limited Company. However, it differs because it specifically targets startups and companies with strong growth projections seeking venture capital or strategic investors.
It offers legal and operational flexibility, allowing shareholder agreements that standard S.A. structures usually wouldn’t accept.
This model supports corporate governance practices and allows you to maintain operational company control, even after receiving external investment.
This structure works perfectly for technology companies because it follows international private investment standards, while offering genuine protection for minority investors and administrative transparency.
Branch Office
A branch office in Mexico operates as a legal and technical extension of your foreign parent company, meaning it doesn’t hold independent legal personality or separate assets from the headquarters.
Under this structure, the international company keeps full control over Mexican operations, but also assumes unlimited liability. Therefore, any legal, tax, or employment obligation acquired by the branch directly affects the global corporation, because both entities remain legally identical.
To operate legally, you must obtain authorisation from the Ministry of Economy and complete registration with the Public Registry of Commerce after formalising the foreign company bylaws.
Although legally dependent, for administrative and tax purposes you must obtain its own Federal Taxpayer Registry (RFC) and comply with SAT regulations as a permanent establishment.
This structure requires appointing a legal representative residing in Mexico so they can complete notarial procedures and represent the company before local authorities.
Simplified Joint-Stock Company (SAS)
It’s a structure designed to incorporate a company digitally, free of charge, and within one day, while also avoiding notarial appointments. Its main feature states that it allows single-shareholder companies, where one shareholder keeps full company control without additional partners.
Additionally, it includes limited liability protection, where personal assets remain protected against organisational debts, like most structures already presented.
However, this structure includes operational and scaling limitations because annual revenue remains capped, with limits updated regularly. Currently, the cap reaches approximately 7 million pesos, around $400,000 (€368,000).
To open this structure as a foreigner, you must hold legal residency in Mexico and a valid electronic signature, because shareholders can’t simultaneously control other Mexican commercial companies. Therefore, this structure (SAS) works as an ideal solution for early-stage businesses or small and medium-scale projects.
3. Requirements for Starting a Business in Mexico
To establish your company under any structure mentioned above, you must understand the main administrative and legal requirements. Unlike other countries, Mexico combines in-person and digital procedures, so you must know exactly when attendance becomes necessary. These are the requirements:
Mexican Residency
You don’t need Mexican residency to become a shareholder, but if you want to work and manage your company personally, you must apply for Temporary Residency with permission for paid activities.
Local Partner
Although most structures don’t require a Mexican partner because companies may hold 100% foreign capital, you should remember that certain highly specific sectors, such as domestic transport or broadcasting, require at least two partners to qualify for legal structures like the Variable Capital Corporation.
Tax Address
You must hold a physical address in Mexico where the Tax Administration Service can perform inspections. Mexico doesn’t allow fully virtual addresses for tax purposes. Instead, you must use a physical location where accounting records remain stored or business activities occur.
Bank Account
This remains the most complex step because Mexican banks require the legal representative’s physical presence, together with the Articles of Incorporation and the company’s Federal Taxpayer Registry. The process usually takes between 2 and 4 weeks because local banking regulations require detailed client identity verification.
Ultimate Beneficial Owner Identification
Under current regulations, companies must identify and report their real owners to the SAT. This improves transparency and helps prevent money laundering.
Business Plan
Although it’s not a legal requirement for notarial incorporation, it remains essential for opening a bank account and, in some cases, for supporting temporary residency applications before Mexico’s National Immigration Institute.
Minimum Capital
As mentioned earlier, the law no longer requires high minimum capital for company incorporation or partnerships. Nevertheless, starting with enough capital to cover initial operating expenses remains advisable.
Digital Signature (e.firma)
This tool must be requested personally by the legal representative before the SAT. Without it, companies can’t submit tax returns or issue invoices.
Incorporation Timeframes
The full process, from reserving the company name to operating the bank account, usually takes between 6 and 10 weeks.
4. Taxes for Opening a Company in Mexico
Mexico applies a worldwide income taxation system, where resident companies pay taxes on all income, regardless of origin. Below, we explain which taxes you must pay when establishing your company in Mexico.
- Corporate Tax (ISR): Mexico applies a fixed 30% rate on net profits, while digital tax monitoring remains stricter than in many countries.
- VAT: This indirect tax requires accurate accounting through electronic invoicing. The standard rate stands at 16%.
- Dividends and withholding taxes: When distributing profits abroad, Mexico applies an additional 10% withholding tax. However, thanks to Mexico’s extensive international treaty network, this rate may decrease significantly. Ultimately, reductions depend on factors like your residency country, beneficial ownership status, and keeping residency certificates updated annually.
- Digital Obligations: Accounting remains fully electronic. Therefore, every expense must include an XML file validated by the SAT. Otherwise, authorities won’t deduct the expense, artificially increasing your tax burden.
5. Steps to Open a Company in Mexico
Following the correct process when opening your company in Mexico requires proper order and suitable procedures before the relevant administrative authorities, including the Ministry of Economy, notaries, and tax authorities.
This way, you guarantee your company’s legal existence, invoicing capacity, and compliance with foreign investment regulations. Below, you’ll find the detailed steps for establishing your company:
1. Application for Company Name or Corporate Name Approval
Choose your company name and obtain official approval. This procedure requires requesting authorisation from the Ministry of Economy to use your chosen company name. Consequently, you ensure no registered company already uses an identical or similar name.
You can complete this online, through the Ministry of Economy’s Tu Empresa portal. If the system approves your request, the response usually arrives within 24 to 48 hours.
2. Drafting and Formalising the Articles of Incorporation
Once your company name receives approval, you must define the company bylaws, including the corporate purpose, registered address, capital, partners’ powers, and appointment of the legal representative. All details appear within the Articles of Incorporation.
You must visit a public notary in any Mexican city. If your partners are foreign nationals and can’t travel to Mexico, they must send an apostilled power of attorney from their country.
3. Registration with the Public Registry of Commerce (RPC)
After signing the incorporation deed, the notary must register the document with the Public Registry so the company officially exists before third parties and authorities. Here, your company receives a commercial registration number.
The procedure usually gets managed electronically by the same notary before the Public Registry corresponding to your company’s tax address.
4. Registration with the Tax Administration Service (SAT)
This remains the most important step for company operations because the company receives its RFC – Federal Taxpayer Registry – and e.firma here. Without them, companies can’t open bank accounts, invoice clients, or pay taxes.
You must complete this procedure personally at SAT offices. The company’s Legal Representative must attend, and remember, they must be Mexican or a foreign national with legal Mexican residency.
5. Registration with the National Registry of Foreign Investments (RNIE)
Since the company includes foreign shareholders or foreign capital, Mexican law requires notifying the Ministry of Economy about this investment. You must complete an initial registration and later submit annual reports.
You can complete this online through the RNIE portal of the Ministry of Economy within 40 working days after incorporation.
6. Registration with the Mexican Social Security Institute (IMSS)
Even if your company initially has no employees, we recommend completing Employer Registration before the IMSS – Mexican Social Security Institute, which identifies your company as an entity authorised to hire staff and pay future social security contributions.
6. Internet for Business Trips to Mexico
Doing business and expanding internationally requires constant communication with partners or your legal representative in Mexico. Therefore, if you travel frequently and don’t want to keep changing SIM cards in every destination, we recommend Holafly’s monthly plans.
You can choose between 25 GB for $49.90 (€45.90) or unlimited data for $64.90 (€59.70), while both options cover more than 160 international destinations. Additionally, they provide the advantage of sharing your internet connection with other devices, helping you avoid insecure Wi-Fi networks.
Additionally, you can access the Always On benefit, which gives you 1 GB free every month whenever you pause your plan temporarily or exhaust your data. Consequently, you’ll still have emergency internet access across more than 70 countries worldwide.
7. Frequently Asked Questions About Opening a Company in Mexico
No, you don’t need to live in Mexico if you own or partner in the company you want to open. However, certain procedures, such as notarial formalities, require the legal representative’s presence, and that person must legally reside in Mexico.
You may apply for Residency through Investment, which requires proving an investment equal to or above $250,000 (€230,000). If your investment remains lower, you may obtain residency through a job offer from your own company.
The process of opening a company in Mexico may take up to 10 weeks. One of the slowest stages involves bank verification procedures for opening the corporate account.
The Tax Administration Service requires your tax address to be a physical location where accounting records remain stored and where authorities can locate you physically.
It’s a digital file holding the same legal validity as a handwritten signature. Without it, you can’t submit tax returns, issue invoices, or complete procedures before institutions like the IMSS or the Ministry of Economy.
