It is essential that investors are aware of and comprehend the essential steps involved in business formation in Mexico so that they can start commercial activity successfully inside Mexico. Mexican economy.
Mexico is often cited as having the potential as a potential top ten economy around the globe in the coming decade. In recent years, Mexico has become an increasing low-risk high growth and high growth economy that offers an appealing business environment. This is due to the consistent growth in GDP, the weakening of the pesos, a growing middle classes, as well as a rise in safety and security. These elements have facilitated an increase in business activity within the country, while simultaneously receiving international investment. In June of 2019 Mexico’s FDI recorded a record-breaking surplus in the amount of USD5.1 billion.
These causes can lead to an increase in foreign investment by investors looking to do trade in Mexico. The most significant problem is that many foreign investors are unsure of where to start. Learn about the procedure to establish a company in Mexico to efficiently and effectively start commercial operations in Mexico.
Do I need a legal representative for company formation in Mexico?
Mexican law stipulates that foreign investors appoint an official representative for the company’s formation in Mexico.
The Legal Representative someone who is either an Mexican national or foreigner who has the legal right for employment in Mexico and who represents and represent the business. They also are responsible for communication between private and public companies. This is an extended and complicated process due to the specific requirements required. It is strongly recommended to hire an authorized representation in Mexico to work for you to set up your business with ease.
Six essential steps to take for company creation in Mexico
1. Choose the Mexican Legal Entity to use
One of the most important aspects of forming a company is the establishment of an legal entity. The majority of investors decide to form an stock corporation that is a profit-oriented company which means that each shareholder holds a portion of the company by purchasing the shares.
The process is an extended and complicated process due to the rules that are involved. It is highly recommended that you have an attorney in Mexico to work for you to create your company in a timely manner.
The two major corporations are Sociedad anonima (SA) as well as Sociedad de Responsabilidad Limitada (S de RL) which is which is known as in English in English as Corporation and Limited Liability Company (LLC). The main distinctions between the two legal entities are:
SA requirements are intended to help large companies, while S de RL is designed for small-medium businesses.
SA shareholders are liable for the amount of their investment plus personal assets. S De RL partners will only be accountable for the amount of shares that they have put into.
SA can have unlimitable number of shareholders. S de RL is limited to 50 partners. Both stock companies are limited to 2 members or shareholders.
2. Select a company name
Finding a name for your business is a challenging and time-consuming process since the company name you’re looking for might not be accessible in Mexico.
It is therefore important to create three or four names for the company and then order it according to preference prior to submitting it to Ministry of Economy. Ministry of Economy.
If you are planning to translate your existing company brand name into Spanish ensure you speak with a native Spanish speaker to make sure that the Spanish Business Name is well-read and is appropriate for the business
3. The company’s by-laws must be created.
Making company bylaws is an essential role in the process of creating a company in Mexico. The by-laws will define who within the company is able to take legal decisions on behalf of the business. It could also contain the details of day-to-day business decision-making process. The owners will draft and create bylaws which define the commercial activities of the business.
It is typical international investors sign an Power of Attorney (POA) in Mexico to serve on behalf of the company in executing these decision-making processes. A POA is a security net for investors from abroad knowing that they have a competent local expert working for them. This can help make sure there are no issues when implementing the by-laws.
When the by-laws have been approved The POA which has been granted the authority to sign bylaws, will sign the bylaws on behalf each shareholder. The Public Notary must be a witness in this. After this is done the Public Registry of Commerce will require the receipt of the company’s by-laws.
4. Finding an address for your business
It is a legal requirement for your company to set up an address for fiscal purposes in Mexico. The business must have a registration with Servicio de Administracion Tributaria (SAT) that is referred to within the US as the Internal Revenue Service (IRS).
All business communications, including tax-related and postal correspondence, the address is utilized.
5. The process of obtaining the Tax Identification
The newly-formed business will require an identification number for tax purposes to do trade in Mexico. Tax IDs can be obtained through an Mexican resident or citizen. If this is not feasible then you must appoint an POA within the By-Laws can get this tax ID for behalf of the company’s behalf. The individual must submit the tax authority with the certificate of incorporation.
It’s essential to have a tax ID during company registration in Mexico because it will be impossible to start your business without one.
6. Establishing an account at a corporate bank
The process for opening an account at a corporate bank will vary based on the bank’s policies. In general, you’ll have to submit your Act of Incorporation and company bylaws to the bank.
It is essential to be sure you have a legal representative who was granted the power to open and manage an account for a company bank account in order for this purpose on behalf of you.
After the documents have been scrutinized by the bank the legal representative needs to provide a photo ID, their tax ID of the company, as well as the ‘Proof of Fiscal Status, which is a document that shows that the tax ID is in use. The bank will review your application for opening an account for corporate banks.
It is vital to know that banks may ask authorized representatives to agree on the Anti-Money Laundering legal document in order to stop any unlawful activities that are committed by an organization by monitoring the transactions of financial transactions.
How do you think it will take to incorporate your business in Mexico
The time frame for company formation is between two and three months, dependent on whether the company procedures for forming are properly followed in conjunction with the company’s legal representative who is an expert local to the area.
The complexities of forming a company in Mexico is often overwhelming and nerve-wracking for investors. However, there are skilled and skilled local legal professionals who can help foreign businesses in incorporating successfully and work in total conformity to local law.
Menu