How to start a business in Mexico? Requirements, taxes & more

Mexico is a great place to start a business because it is close to countries like the United States and Canada. It is also a major aviation hub connecting Latin America with Asia and Europe.

As a result, business travelers can easily reach destinations throughout Latin America and other international markets.

However, before you can take full advantage of the opportunities Mexico offers, you’ll need to understand its legal and administrative requirements.

That’s why we’ve put together this guide to explain how to start a business in Mexico, from the initial planning stages to registering your company. We’ll also explain how the tax system works for companies and what costs you should expect along the way. Let’s begin!

1. How much does it cost to start a business in Mexico?

Starting a company in Mexico is generally more affordable than in many other countries. The overall cost varies depending on the type of company you choose and where you register it. Here’s what you need to know:

In Mexico, the main costs are registration fees, which are about $87 to $170, and notary fees, which can cost between $500 and $2,000 to prepare the company’s legal documents.

When it comes to the minimum investment capital, Mexican law does not require a specific amount to start a company. However, it is recommended to have around $1,500 in capital to make the banking process easier when setting up the business.

Additional costs for foreign entrepreneurs

As a foreign investor, you also need to register with the National Registry of Foreign Investments (RNIE). If you cannot be present in person, you will need a notarized power of attorney with an apostille, which can cost between $200 and $400.

To protect your brand identity, you should also register your trademark with the Mexican Institute of Industrial Property (IMPI). The official fee is around $160 per category.

Immigration and legal representation fees

If you plan to manage the company yourself while living in Mexico, you should also consider the cost of a temporary residence visa. Along with the work permit, it costs approximately $850.

If you prefer professional assistance, hiring a local legal or business advisor typically costs around $3,000. The final price depends on the type of help you need, such as legal, accounting, or immigration support.

2. What types of businesses can be established in Mexico?

Setting up a company in Mexico, whether it’s a small business or a large corporation, requires choosing the right legal structure for your business goals.

Keep in mind that most of these company types allow full foreign ownership, meaning you don’t need local capital and can have complete control of your business from the start.

However, for tax and operational purposes with the Tax Administration Service (SAT), the company must appoint a legal representative who lives in Mexico and has a valid electronic signature.

But to help you better understand each structure, we’ll explain them in detail here so you can choose the one that best suits your needs.

Limited Liability Company (S. de R.L.)

It is mainly designed for small and medium-sized businesses in Mexico. Its key feature is that each partner’s responsibility is limited to the amount they invest, protecting their personal assets from the company’s debts.

This type of company requires between 2 and 50 partners. Instead of shares that can be freely traded, the company’s capital is divided into ownership interests, allowing existing partners to keep control over who can join the business.

Corporation (S.A.)

This is the most common and widely used business structure in Mexico. It is mainly designed for companies that want to grow nationally or internationally and attract investors.

In a corporation, the company’s capital is divided into shares that can be freely traded, making it easier for investors to join or leave without having to change the company’s original incorporation documents.

Like a limited liability company, shareholders are only responsible for the amount they invest, which protects their personal assets from the company’s debts and obligations.

To set up this type of company, you only need one shareholder, and there is no limit on the number of shareholders. It is a good choice if you plan to list your company on the stock market.

Investment Promotion Corporation (S.A.P.I.)

It is a variation of a regular corporation. However, it is designed specifically for startups and fast-growing companies looking for venture capital or strategic investors.

It offers more legal and operational flexibility, allowing shareholders to create agreements that are usually not possible in a traditional corporation.

This structure helps you use better company management practices while keeping control of the business, even after receiving outside investment.

This structure is ideal for technology companies because it follows international private investment standards, protects minority investors, and provides greater transparency in company management.

Branch Office

A branch office in Mexico acts as an extension of your foreign parent company. This means it does not have its own legal identity or separate assets from the main company.

With this structure, the foreign company has full control over its operations in Mexico but is also fully responsible for any issues. Any legal, tax, or employee-related obligations of the branch also affect the parent company because they are treated as the same entity under the law.

To operate in Mexico, the company must get approval from the Ministry of Economy and register with the Public Registry of Commerce after officially filing its foreign company documents.

Although it is legally part of the parent company, it must have its own tax registration number and follow SAT rules as a permanent establishment for administrative and tax purposes.

This structure requires the company to appoint a legal representative who lives in Mexico. This person can handle official paperwork and represent the company before local authorities.

Simplified Stock Company (SAS)

This structure lets you set up a company online, for free, and in one day without going to a notary. Its main benefit is that one person can own and control the entire company without needing other partners.

It also offers limited liability, which protects your personal assets from the company’s debts, just like most of the structures we have discussed.

However, this structure has some limits on growth and operations because it has a maximum annual income limit that changes over time. Currently, that limit is around 7 million pesos (about $400,000).

To set up this type of company, foreign owners must have legal residency in Mexico and a valid electronic signature. They also cannot own or manage another Mexican company at the same time. Because of these requirements, this structure is best suited for new businesses and small to medium-sized startups.

3. Requirements for starting a business in Mexico

To start a company in Mexico, you need to understand the main legal and administrative requirements for each business structure. The process involves both online procedures and in-person visits to government offices, so knowing when you need to appear in person is essential. Here are the requirements:

Mexican residency

You do not need to live in Mexico to become a shareholder. However, if you want to work and manage your company personally, you must apply for temporary residency with a work permit.

Local partner

In most cases, you do not need a Mexican partner because companies can be fully foreign-owned. However, some industries, such as national transportation or radio, require at least two partners for certain types of companies.

Tax address

You must have a physical address in Mexico where the tax authority (SAT) can carry out inspections. For tax purposes, Mexico does not accept fully virtual addresses, so the location must be a real place where the company keeps its records or operates.

Bank account

This is one of the most difficult steps because Mexican banks require the legal representative to be there in person, along with the company’s registration documents and tax ID. The process usually takes 2 to 4 weeks because banks must verify the customer’s identity.

Ultimate beneficial owner (UBO) identification

Under current rules, companies must report their actual owners to the SAT. This helps promote transparency and prevent money laundering.

Business plan

It is not required for the company setup, but you will need it to open a bank account and, in some cases, to support your temporary residency application in Mexico.

Minimum capital

As mentioned earlier, Mexican law no longer requires a significant minimum capital investment to start a company. However, it is recommended to have enough money to cover your first expenses.

Digital signature (e.firma)

This tool must be obtained by the legal representative in person at the SAT. Without it, tax returns cannot be filed and invoices cannot be issued.

Incorporation timelines

The entire process, from reserving the name to having the bank account up and running, takes approximately 6 to 10 weeks.

4. Taxes when starting a business in Mexico

Mexico uses a worldwide tax system, which means resident companies pay tax on all their income, no matter where it comes from. Below are the main taxes you need to know when starting a business in the country.

• Corporate Income Tax (ISR): A flat rate of 30% is applied to net income, and digital tax audits are much stricter than in other countries.
• VAT: This is an indirect tax that requires precise accounting through electronic invoicing. The standard rate is 16%.
• Dividends and Withholdings: If profits are paid to foreign owners, a 10% withholding tax usually applies. However, this rate may be lower under Mexico’s tax treaties. The final rate depends on your country of residence and whether your tax residency documents are up to date.
• Digital Obligations: In other words, every business expense must be supported by a valid SAT-approved XML invoice. Otherwise, you cannot claim it as a tax deduction, which could increase your tax bill.

5. Steps to start a business in Mexico

Setting up a company in Mexico involves following the right steps and dealing with the correct government authorities, including the Ministry of Economy, public notaries, and the tax authorities.

This ensures your company is legally established, can issue invoices, and complies with Mexico’s foreign investment rules. Here are the steps to set up your company:

1. Register your company name

Choose a name for your company and get it approved. You must apply to the Ministry of Economy to make sure the name is not already being used by another business.

You can apply online through the Ministry of Economy’s “Tu Empresa” portal. If the system approves your application, you’ll usually receive a response within 24 to 48 hours.

2. Drafting and notarization of the Articles of Incorporation

Once your company name is approved, you need to prepare the company’s bylaws. These include details such as the business activities, registered address, share capital, the partners’ rights, and the legal representative. All of this is included in the Articles of Incorporation.

You must sign the incorporation documents before a public notary in Mexico. If a foreign shareholder cannot travel to Mexico, they can give someone power of attorney from their home country to sign on their behalf.

3. Registration with the Public Registry of Commerce (RPC)

After signing the incorporation documents, the notary registers the company with the Public Registry of Commerce. Once the registration is complete, your company officially exists and receives its commercial registration number.

This step is usually handled online by the notary through the Public Registry of Commerce in the area where your company’s registered address is located.

4. Registration with the Tax Administration Service (SAT)

This is one of the most important steps because your company receives its Tax ID (RFC) and electronic signature (e.firma). Without them, you cannot open a bank account, issue invoices, or pay taxes.

You must apply in person at a SAT office. The company’s legal representative must attend, and they must be either a Mexican citizen or a foreign resident with legal status in Mexico.

5. Registration with the National Registry of Foreign Investments (RNIE)

If your company has foreign ownership or investment, you must register it with the Ministry of Economy. After the initial registration, you will also need to submit annual reports.

You can do this online through the RNIE portal of the Ministry of Economy within 40 business days after incorporation.

6. Registration with the Mexican Social Security Institute (IMSS)

Even if you do not have employees when you start, it is a good idea to register your company with the Mexican Social Security Institute (IMSS). This allows your business to hire employees and pay social security contributions when needed.

6. Internet for business trips to Mexico

If you travel often or work with partners or a legal representative in Mexico, staying connected is essential. Instead of buying a new SIM card every time you travel, you can use a monthly Holafly Plan to stay online wherever you go.

You can choose between a 25 GB plan for $49.90 or unlimited data for $64.90. Both plans work in over 160 destinations worldwide. You can also share your data with other devices, so you don’t have to rely on unsecured public WiFi.

You also get access to Always On, which gives you 1 GB of free data every month if you pause your plan or run out of data. This keeps you connected for emergencies in more than 70 countries.

Frequently asked questions about starting a business in Mexico

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Paula Henderson

Spanish-English Translator

Hi! I'm a Spanish-English translator working with Holafly, helping bring travel content to life for curious travelers. As a digital nomad with a passion for exploring, I'm always adding new spots to my bucket list. If you love to travel like me, stick around because you're in the right place to find inspiration for your next trip! ✈️🌍

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