Starting a Business in Mexico FAQ

Answer:In Mexico, the two major types of companies are called the Sociedad de Anónima and the Sociedad de Responsabilidad Limitada. They are basically the equivalent of a Corporation and a Limited Liability Company in the United States. There are other company forms such as the Sociedad Civil, which is similar to a professional partnership that your doctor or lawyer might have for his or her office. There is also the Asociación Civil, which can be compared to a non-profit company. Mexico has additional types of companies but they are not commonly used.

Answer: No. All Mexican companies are required to have at least two shareholders, unless they are a sole proprietor ship. Remember, this is a big difference from many other countries around the world that permit a single person to own the entire company.

Answer: No.  MexicanIncorporation.com uses an international power of attorney, specially designed for businesses in Mexico, that allows us to act on your behalf without stepping foot in Mexico. No flights, no visas, no complications.

Answer: No. The company can have either a board of directors or what’s called a sole administrator. The sole administrator individually will retain all of the powers over the company. The sole administrator does not need to be a shareholder.

Answer: Yes. All Mexican companies must have by-laws and articles of incorporation. The by-laws determine the individual powers of the officers and directors. The by-laws also provide an outline of internal day-to-day decision making of the company. For example, the by-laws will determine what powers each director or officer may exercise – like opening bank accounts versus selling property. Or for example, the power to represent the company in legal actions or file the company’s taxes.

Answer: Yes, in some cases. With a Mexican Corporation or Sociedad Anónima as it is called, there is no limit to the number of shareholders. However, there is a 50 shareholder limit for Limited Liability Companies or Sociedades de Responsabilidad Limitada  as they are called.

Answer: Yes, with some limitations. Foreign investors are required to register with the Foreign Investment Registry without exception. Most companies in Mexico can be wholly foreign-owned except within several industries such as communications and transportation among others.

Answer: All companies importing to Mexico must register with the Importers Registry. Likewise, exporters within certain limited industries like tobacco, minerals… etc must register with the Exporters registry.

Answer: Yes. All Mexican companies, even if foreign-owned, must pay taxes on Mexican source income. These taxes include sales tax, income tax and corporate flat tax if applicable.

Answer: Not necessarily. Mexico has agreements to avoid double taxation with the following countries: Germany, Australia, Austria, Belgium, Brazil, Canada, Chile, China, Korea, Denmark, Ecuador, Spain, Finland, France, Greece, Indonesia, Ireland, Israel, Italy, Japan, Luxembourg, Norway, New Zealand, the Netherlands, Poland, Portugal, the United Kingdom, the Czech Republic, Slovenia, Romania, Singapore, Sweden and Switzerland. Find out more at the following link available in both English and Spanish.
Mexican Double Taxation Treaties – http://www.sat.gob.mx/sitio_internet/servicios/noticias_boletines/33_10771.html

Answer: Yes. A Mexican Corporation or Sociedad Anónima may issue different classes of stock with preferences for voting and dividends… etc. However, a Mexican Limited Liability Company or Sociedad de Responsabilidad Limitada cannot.

Answer: Yes. In the case of both Mexican Corporations and Limited Liability Companies (Sociedades Anónimas and Sociedades de Responsabilidad Limitada, respectively) annual shareholders meetings are required.

Answer: In most cases it takes 3-5 weeks from the time we receive the required paperwork from the customer.

Answer: Yes. In the case of both Mexican Corporations and Limited Liability Companies (Sociedades Anónimas and Sociedades de Responsabilidad Limitada, respectively), the liability of the owners extends only to the company’s assets and not to the individual assets of the owners themselves.

Answer: That depends on how many shareholders there will be, the flexibility desired in managing the company and the level of formality required. For a small business like a restaurant, store or small-scale manufacturing operation, we recommend a Limited Liability Company or Sociedad de Responsabilidad Limitada as it is called. For a large-scale manufacturing operation or a business with more than say 5 investors we recommend a Mexican Corporation or Sociedad de Responsabilidad Limitada as it is called. In either case, a Sociedad de Anónima offers certain legal protections for shareholders that are not necessarily available with other corporate forms. There is no easy answer to this and if you have questions, you should really contact us directly to identify the type of company that suits your needs.

Answer: Absolutely. We are able to incorporate both small and large companies in Mexico… and everything in between.

Answer: Yes. Particularly for small and medium-sized businesses, we can help keep your costs down and get up and running quickly.

Answer: It depends on the type of business.  For example, if you plan on opening a restaurant, you’ll need a local business license, liquor license and other applicable health permissions. If you are planning to start a business dealing with medicines, for example, you’ll need to obtain safety approval for the medicines, register warehouse or location where they will be stored, and obtain other authorizations from the Ministry of Health. MexicanIncorporation.com can consult with the required additional steps on a client-by-client basis.