The Basics of LLCs in Mexico (S. de R.L.)
You probably have heard of an LLC or Limited Liability Company if you have been involved in business over the last two decades anywhere in the world. Let’s take a moment and look at the basics of LLCs in Mexico. We at MexicanIncorporation.com are personally big fans of companies with this form because of their simplicity. If you are reading this and from the United States you have probably seen companies with names that end in “My Copmany, LLC” or “My Company Limited.” Well the suffix “, LLC or Limited” is how you identify a Limited Liability Company. In Mexico, a Limited Liability Company ends with the following abbreviation, “S. de R.L.” So, that would look like “My Company de Mexico, S. de R.L.” S. de R.L. is the abbreviation for Sociedad de Responsabilidad Limitada.
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The Basics – Mexican Limited Liability Companies
Is a Mexican Limited Liability Company right for me?
If your company is a small operation with a limited number of owners, where your business partners are looking for a flexible less restrictive arrangement, than we would consider a Mexican Limited Liability Company a good option. Even if you have a large-scale operation like a factory, so long as there are small numbers of owners, this company form could suite your needs. Consider the following:
- Do you and your business partners have a close working relationship?
- Do you tend to deal with each other on an informal basis?
- Do you not want to be required to hold formal shareholder meetings frequently and value flexibility?
- Will your company have 1-5 owners who are looking for less hassles and flexibility?
Are you getting the point here? If the later points characterize the type of business you will be running, than a Mexican Limited Liability Company might be the form for your business. Mexico envisioned this company form as a model for “small businesses” or business with few partners. Why? Because basically the owners of a Mexican Limited Liability Company can structure the company’s operations according to their own specific needs.
Let’s say one of your business partners is providing most of the capital investment and wants the final say on certain specific matters. The Mexican Limited Liability Company form lets that partner choose in what instances his voice will override the other partners’. If you find that what we spoke of in this section characterizes your business model, then a Mexican Limited Liability Company might be your best bet.
What are the basic characteristics of a Mexican Limited Liability Company or S. de R.L.?
Here are some basic characteristics of a Mexican Limited Liability Company you should consider. First, minimum capital to start a Mexican Limited Liability Company is about $227 United States Dollars. Second, the Company must have at least two people (or companies) that will be shareholders. Keep in mind that this is different from a place like the United States where a single person can own all of the shares of a company. Third, the company must hold an annual meeting of shareholders. Fourth, the company requires a permanent address in Mexico.
Limited Liability for Lawsuits
Nobody likes getting sued. The most important characteristic of a Mexican Limited Liability Companies is, of course, limited exposure of shareholders if the company gets sued. So, in the case of a lawsuit, the shareholders individually are not held liable. That means, no one can come after your home, your car or your other personal assets. However, the company itself is on the hook for any assets registered in its name such as bank accounts, equipment or other things of value.
Where to find more Information!
We’re not trying to bore you, but you can read in more detail about the list of legal requirements and characteristics of Mexican Limited Liability Companies in our Resource Library or check out our Frequently Asked Questions Page. As always, give us a call and we’ll be happy to answer any of your questions.