What procedures are needed to establish a company and set it up to operate in Mexico? Data from the National Institute of Statistics and Geography (INEGI) reveal that The average life expectancy of a newly formed business in Mexico does not exceed 15 years. Part of the complications of establishing a company in this country lies in the swampy and extensive bureaucracy necessary to start a project legally.
These problems seem even worse for startups, on the one hand because they are fighting against the clock—to the extent that the ecosystem of their industries is highly competitive and an innovation must position itself quickly—and on the other, because being New creations generally lack the necessary operational capacity to carry out all the procedures requested by the authority.
According to Ignacio Bermúdez Casco, Head of Product and co-founder at Tally, a legaltech platform that helps companies carry out the procedures for their incorporation, “entrepreneurs, particularly the newest ones, are frequently affected by the amount of bureaucracy that they must sort out. The vast majority are unaware of the legal aspects involved in establishing a company, despite how important these requirements are. They focus on developing, perfecting and selling their product, it makes sense that they do not have the time or knowledge necessary for more specific aspects.”
The legal specialist adds that in Mexico, The lack of implementation of technology to make procedures more efficient has historically made these processes slow and cumbersome.. “The result is that many times companies lose risk capital or short-term opportunities to launch their products and services, while they wait for the conclusion of a procedure.”
What procedures are needed to establish a company and set it up to operate in Mexico?
On paper and in theory, it is not that difficult to create a business in Mexico, since the process consists of six steps:
- Request authorization for the name or legal name of the company from the Ministry of Economy (response time of 3 to 4 days).
- The drafting of the corporate statutes or the rules of the game between the partners
- The notarial protocolization and its registration in the Public and Commerce Registry (RPC).
- Register the company in the Tax Administration Service (SAT)
- Process the FIEL, for which you need proof of address in the name of the new company (this makes it difficult to obtain the FIEL, since it is a new company)
- The opening of the bank account for which the company’s LOYALTY is needed.
However, The excess of bureaucracy and documentation to present makes each step of the process a challenge. Most of the time it requires comings and goings, waiting times that can reach three months for each part of the process, as well as risks of facing corruption on the part of public servants.
General steps to establish a company in Mexico
- Define the legal structure of the company:
- Choose a legal form for your company, such as a Public Limited Company (SA), a Limited Liability Company (S. de RL), a Legal Entity, among others. This choice will affect legal liability, ownership structure, and registration requirements.
- Registration with the Ministry of Economy (SE):
- In the case of Public Limited Companies or Limited Liability Companies, you must obtain a name certificate and a unique population registration key (CURP) for the partners or shareholders. This is done online through the Electronic Business Creation System (SARE) portal.
- Preparation of articles of incorporation:
- This document must be prepared by a notary public and contain detailed information about the company, its shareholders, share capital, bylaws, among others.
- Obtaining the Federal Taxpayer Registry (RFC):
- You must register your company in the Federal Taxpayer Registry before the Tax Administration Service (SAT). This will allow you to comply with your tax obligations.
- Registration in the Mexican Social Security Institute (IMSS):
- If you plan to hire employees, you must register with the IMSS to provide social security to your workers.
- Employer Registration with the Institute of the National Housing Fund for Workers (INFONAVIT):
- If you have employees, you must register with INFONAVIT to comply with your workers’ housing obligations.
- Obtaining permits and licenses:
- Depending on the type of business and location, you may need to obtain additional permits or licenses at the municipal, state, or federal level. This varies widely by industry and location.
- Opening a bank account:
- You must open a bank account in the name of the company to keep proper records of your financial transactions.
- Hiring employees (if necessary):
- If you plan to hire staff, make sure you comply with labor laws and register your employees with the IMSS.
- Comply with tax and accounting obligations:
- You must keep adequate accounting records and comply with the required tax declarations, such as Income Tax (ISR) and Value Added Tax (VAT).
- Trademark and patent registration (if necessary):
- If your company develops innovative products or services, consider registering trademarks or patents to protect your intellectual property.
- Civil liability insurance (if necessary):
- Depending on the type of business, you may need to obtain liability insurance to protect your company from potential legal claims.
These are the general steps to establish and operate a company in Mexico. It is important to consult with an accountant or corporate law attorney to ensure you meet all legal and tax requirements specific to your business and location. Also, keep in mind that procedures may change over time, so it is always advisable to check the latest requirements with the relevant authorities.
Editorial Team The editorial team of EMPRENDEDOR.com, which for more than 27 years has worked to promote entrepreneurship.