Being an entrepreneur is a hard road. Being an entrepreneur that looks to expand its services to other countries is even harder. For US companies and US investors, expanding its business to Mexico is one of the most attractive opportunities to grow.
Mexico has a strategic location in America, great macroeconomics, an unserved market willing to pay for new products and services. Also Mexico has its own technology ecosystem, based in Guadalajara, Mexico – known as the Mexican Silicon Valley. Where big US corporations have decided to move their software development due to the vast technological talent pool and its great costs.
If you are planning to start a business in Mexico, either to expand your actual business or to hire Mexican talent for your company, continue reading. This article will give you a step by step on all the legal procedures and requirements you will need to fulfill in order to start your operations in Mexico. Is it a hard process? The short answer is no. So please dig into the details.
Incorporation of a new company
The first question you might get by this topic is: can I incorporate a company in Mexico if I’m a foreigner? The answer is yes, and foreigners can own 100% of the company. There’s no need for you to partner with another Mexican company or individual. But keep in mind that in order to create a company in Mexico you do need to have a partner. Mexican companies have at least two partners in the cap table. Whether the partners are: 2 foreigner individuals, 2 foreigner companies, 2 mexican individuals, 2 mexican companies or any combination.
To do this you don’t need to have a special visa, you only need to prove your legal entry to the country or have someone to do the process for you via a Power of Attorney.
Using a legal tech startup is the best option to do the incorporation of your new business completely online. Mexico has a variety of startups focused on making this process as easier as the law allows it, specially for foreigners.
Here are some options for you to choose the one that best suits you: EasyLex, Tally Legal and Tracer.
The actual process of incorporation
So now that you know you can create and own a business in Mexico, let’s talk about the step-by-step in how to do it.
- Choose the best type of company for your business plan. Topic 3 details this step.
- Choose a name for your business. A permit by the Ministry of Economy is necessary in order to name your new company.
- Draft your bylaws/articles of incorporation. The rules of the game, as same as in the US the bylaws of the company state (i) the activities that the company can perform, (ii) the managing directives, (iii) voting rights, and other topics concerning the operations of the company.
- Formalization of the bylaws. In order to start a company, you need to get it formalized by a broker or notary public (these are people appointed by the government to formalize certain acts).
- Register your new company at the public register. Once the bylaws are formalized, it’s necessary to register them at the public register in order for them to be valid.
These steps are normally done by the notary public or broker, the lawyer or law firm or the legal tech startup you choose to create your company with.
Choosing the best type of company
Mexico has several type of companies you can choose from, the most common ones are:
- Sociedad Anónima de Capital Variable
- Sociedad Anónima Promotora de Inversión de Capital Variable
- Sociedad de Responsabilidad Limitada de Capital Variable
Here’s a quick test for you to choose the best type of company for you:
Getting your Tax ID
The final step to start any type of operations and have your company up and running is getting your Tax ID which is known as the RFC (Registro Federal de Contribuyentes).
In order to get the RFC you need to get an appointment at SAT (the Mexican IRS), take your incorporation deed and a document of proof of address in the name of the company or in the name of one of the partners.
This last step needs to be done by the legal representative of the company, and no one else can do it for you. It’s pretty simple if you have all the requirements on hand.
As you can see the incorporation of a new business in Mexico is a process that has several steps as part of it. With the correct guide it’s a process that is not as complex as it seems, and with the correct legaltech company you can do the whole process online.
By Yaritza Rodelo, Founder at EasyLex
Yaritza Rodelo is a former lawyer from Mexico’s top corporate law firm, Baker McKenzie. She became a lawyer to apply her skills and knowledge to help people. She soon realized she could have the most significant impact by using technology to democratize access to legal services, so she found EasyLex. Yaritza is also passionate about traveling and getting to know new cultures, and is a pet lover.