Setting up a business in Mexico is no simple task. It involves a lot of paperwork and bureaucracy, which means applying for identification numbers, visiting government offices, and filling out forms. It may even involve some degree of corruption, depending on where you want to establish the business and which government officials you encounter.
Therefore, asking locals for advice is the most important thing you can do before you even think about starting a business in Mexico. Talk to Mexicans and expats, not only for insights into the process but also to get an idea about the local business climate, including possible competition. For instance, do similar businesses exist? How will yours be unique?
There are differences in the process from state to state, but you will need to satisfy these requirements in general.
The requirements
Get permission from the Ministry of Economy to use your name. This entity ensures that no other companies are using the same name. If you want to carry out this procedure online, you need an electronic signature.
Create the deed of incorporation of the company (Acta constitutiva) with the assistance of a notary public. This document establishes the general and particular legal aspects and must be signed by all the members of said company.
Make a notice of “uso de denominacion”. The staff that manages the company's constitution will inform the Ministry of Economy about the people who have collaborated in the company's constitution and the name that they will use to avoid the use of third parties.
Add the company to“Registro Publico de Comercio”. This body, dependent on the Ministry of Economy, is in charge of monitoring and also protecting companies. You must pay the registration fee, and the price varies from state to state.
The owner of the business, or the company itself, if it's a partnership or corporation, will need an RFC number, which is a tax identification number necessary for paying taxes. The number comes from the SAT, the Servicio de Administración Tributaria (Taxation Administration Service), and you can apply for it online here.
The two basic types of taxpayers in Mexico are personas fisicas and personas morales, which correspond to real people (including workers and business owners), and formal partnerships/corporations. There are various sub-categories of these two basic categories, and it is crucial to understand which sub-category applies to your business.
What is a “persona física”?
On the SAT website, a natural person is defined as “an individual who carries out economic activities with rights and obligations (vendors, merchants, employees, independent workers, etc.).” In short, everyone receives income for the work they do.
Key features include, among other things, the ability to retain dual nationality (in addition to Mexican nationality), tax obligations upon reaching the age of majority or entering formal employment, identification by name, marital status, etc.
Register yourself as a "natural person"
Only those interested must register with the SAT and do not need to carry out any additional procedures to comply with their tax obligations.(except when you register a trademark in the Instituto Mexicano de la Propiedad Industrial). Individuals, for their part, can obtain funds (credits or loans) based on their salary and the financial history they have created.
And what is a “persona moral”?
On the other hand, the SAT defines a moral person as “a legally recognized entity with rights and obligations.” They are usually formed by a group of people gathered for a specific purpose, such as commercial companies, associations, and civil society. He is and lives in Mexico. On the other hand, this type of person is obliged to pay taxes from the moment it is generated, is identified with a company name in the name of those who originated it, and has no marital history because they are not a natural person.
To register a “persona moral,” first determine which tax system is suitable for it (according to the business and planned activities), and then create an act through the notary's office to legalize said association. Corporations have more access to credit due to their financial and purchasing power when it comes to financing.
The federal taxpayer registry is, with some exceptions, the key required by Mexican individuals or corporations to carry out legal and economic activities that require the payment of taxes. These people are taxpayers.
The RFC Registry currently consists of many millions of individuals. There is only one form of registration, but the difference is the tax system in which each individual is registered. That is, it varies depending on the commercial activity of the individual.
You need a CURP number (general identification number in Mexico) to get the RFC. To get a CURP number, you need to be a permanent or temporary resident of the country. You can read about the different types of visas in Mexico and learn how to apply for the CURP on this website (in Spanish).
- Click the “inicio” button on the page
- Enter the data requested in the form: “Inscripción al RFC.”
- Select the type of tax system (Régimen fiscal)
Here you have some tax systems highlighted by the "Condusef" (Comisión Nacional para la Protección y Defensa de los Usuarios de Servicios Financieros).
Wages and salaries: There are the “personas fisicas” who obtain income from the provision of services to third parties (auxiliary personal services). This regime is aimed at those who work for a company or public body. Independent Service Provider: This group includes individuals who provide services independently.
Professionals: doctor, dentist, architect, engineer, etc.
Constitution: Small taxpayers are grouped here. In this administration, people are dedicated, among other things, to various aesthetic and mechanical workshops, grocery businesses, or commerce. This is a modality that offers the advantage that taxpayers have the possibility of requesting assistance, such as a loan to start or grow their business, without paying taxes or social security during the first year after opening.
Then, you have to send the procedure to the SAT and print the previous sheet using the assigned Folio number.
Take the processing document to the SAT office of your choice and send the documents to the tax authorities. The tax authorities will handle your case.
Once you have the RFC, you'll need to keep records of invoices and register your income and expenses. You can read more about these steps on this government web page about opening a business in Mexico.
Register to the IMSS
Initially, the only collaborators of a company are usually the founding partners, but you must register with the Mexican Social Security Institute to report the hiring. Otherwise, you can be fined before this agency.
Another crucial requirement is the “uso de suelo,” a land-use permit, which ensures that the place where you want to set up your business is in a commercial area, and not a residential area. You get it from the Secretaría de Desarrollo Urbano (Secretary of Urban Development), and there is a fee to be paid, and the amount depends on where you live. You can expect it to be less than 1,000 pesos (USD 50).
When you are within the denomination of a natural or legal person, and you consult for permission to use a site with an "uso de suelo" assigned by your commercial situation, you will need the following documentation:
- "Statute"
- “Current official identification with photograph (IFE, INE, or Valid Passport)”
- “Professional title (if you have one)”
- "Proof of address"
- “Location Sketch”
- "Deeds of the property"
- "Topographic map"
- "Current property ticket"
- "Written free of request"
- “Application Letter”
- “Georeferenced map with transverse universal coordinates (UTM)”
- Notice of Opening of Commercial Establishments (Aviso de Apertura de Establecimientos Comerciales)
You will have to present the notice of the establishment's opening and the place of everyday use to carry out activities in front of the SAT. The procedure is free, and no documents are required. However, the entry requires a password or digital signature and a Federal Taxpayer Registry (RFC).
You'll need the “uso de suelo” to apply for the business license (licencia de funcionamiento), which is a complicated procedure that includes making an evacuation plan for the building. Ensure having the proper fire extinguishers and putting up the appropriate safety signs. An official from the licensing department may come to inspect the building to make sure everything is correct.
With a cost of 3,211 pesos for your application, you will have to have the original and a copy of the following documents.
What requirements must I meet to obtain the business license (licencia de funcionamiento)?
Accreditation of passing a certificate of joint security inspection, civil protection, or detailed or interdisciplinary technical inspection.
What to consider obtaining approval in the security inspection by the civil defense
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Know your property
Find the safest points and also those that can present dangers when operating in the workplace. It is essential to know if there are fire or emergency exits in general, as well as stairs and elevators. Find out the location of the fire extinguisher.
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Protective equipment
The installation of signs of escape routes, as well as of high voltage risks and other essential indications. This ensures that both staff and clients are aware of the procedure to follow for the prevention and execution in accordance with emergencies.
These are some of the necessary items that constitute security by civil defense:
- Extinguisher
The civil protection sector advises installing one of these extinguishers every 15 meters away and the extinguisher to be installed depending on the type of fire or combustion system that must be extinguished.
- Box with first aid items
A good example of first aid must conform to the following elements:
- First aid procedure manual
- Gauze
- Headband
- Elastic band
- preservative towel
- disinfectant soap
- Antibiotic cream
- Antiseptic solution, paracetamol, and ibuprofen
- Ordinary medicine
- Pair of scissors
- Alcohol
- Gloves
- Thermometer
- Flashlight with a spare battery
- List of emergency numbers
Ad installation permission
Make sure you get the Ad Install Permission. Generally, although the legislation varies from state to state, to place an advertisement in areas near federal highways, you must request a permit. We will explain how and where you can make your request.
Documents proving the legal personality of the applicant:
- A document that certifies ownership or ownership of an interface or permission to use it
- Descriptive copy of the announcement.
- Location sketch: Documents showing roads, sections, and kilometers where the construction or installation will take place
- Documents showing if there are advertising facilities in the area.
- Plan with dimensions and boundaries separating property locations
- Written request: A document that accredits the payment of rights.
The company's needs are what will set the cost of your process. For example, for an advertisement with a total area of around 50 square meters, it is USD 300. For ads with a total area of up to 75 meters, it is USD 460.
Finally, you must execute some other required procedures that will change depending on the state and municipality in which you are located, as well as the type of activity that the company will carry out.
It will be wise to research which bodies deal with related areas of the business you are considering creating, for example, the Ministry of Health or the Ministry of Ecology and Environment. (Secretaría de Salud, Secretaría de Ecología y Medioambiente).
It's common for small businesses in Mexico to open and begin operating without the proper license or while the license is being processed. But as a foreigner, it's a good idea to meet all the requirements for this license before you open the business in order to avoid potential problems.
Getting some help
If all this seems a little complicated (which it can be), then you can seek advice from the INADEM, the National Entrepreneur Institute. On their website (in Spanish), you can find a comprehensive guide to the process and information on all the paperwork and a directory of companies that offer legal advice and other consultations.
Useful links:
RFC number inscription from SAT
Steps to open a business in Mexico
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