Company Registration in Mexico: Eligibility, Steps & Taxes

Company Registration in Mexico

Mexico is blossoming across several sectors—its people, vibrant culture, rich natural resources, and growing economy all contribute to making it the second-largest economic power in Latin America, just after Brazil.

Its strategic proximity to the United States makes Mexico one of the most appealing locations for foreign entrepreneurs and investors. With a dynamic and flexible market, Mexico continues to gain interest as a business hotspot for global expansion.

However, the process of company registration in Mexico is not centralized and can vary by region. Each state may have its own rules and timelines, making professional guidance essential for smooth incorporation.

Why Register a Company in Mexico?

Here are some of the top reasons why business owners choose Mexico:

• Access to a 130+ million consumer market
• Favorable tax structures for small businesses
• Skilled labor and competitive wage structure
• Strategic location connecting North America and South America
• Nearshoring benefits for U.S.-based businesses
• USMCA (formerly NAFTA) enables tariff-free access to U.S. and Canadian markets
• Strong government support through incentives, tax breaks, and digital registration options

Eligibility for Company Registration in Mexico

To be eligible for setting up a business in Mexico, you have to meet the following:

• Foreign individuals or entities can own Mexican companies
• Minimum one director must be a Mexican resident (in most cases)
• A minimum of 2 shareholders are needed for most business types
• A local registered office is mandatory
• Industry-specific licenses or permits might be needed
• Must comply with Mexican labour laws, including employee contracts and social security
• Annual tax filings and regulatory compliance are mandatory

Steps for Company Registration in Mexico

The general procedure for setting up a company in Mexico covers the steps given below:

Step 1: Choose the type of company you want to form and verify that the legal structure aligns with your goals.

Step 2: Reserve your company name through the Ministry of Economy (Secretaría de Economía).

Step 3: Draft and prepare the incorporation deed with the help of a Mexican notary public or legal counsel.

Step 4: Sign the deed of incorporation in the presence of the notary public.

Step 5: Obtain a registered business address in Mexico.

Step 6: Register with the Mexican Tax Administration Service (SAT) to receive your company’s tax identification number (RFC).

Step 7: If you plan to hire employees, register with IMSS (Mexican Social Security Institute) and INFONAVIT (National Workers’ Housing Fund).

Step 8: Enroll your business in the National Business Information Registry (SIEM).

Step 9: Establish a business bank account in Mexico to begin operations.

Documents Required for Company Registration in Mexico

To register your company, the following documents may be required:

• Valid identification (passport or ID) of shareholders and directors
• Articles of Incorporation
• Proof of registered address in Mexico
• Tax ID (RFC) of shareholders and directors
• Power of attorney (if using a representative)
• Company bylaws
• Minutes of the incorporation meeting
• Notarized deed of incorporation
• Proof of government fee payments
• Official company stamp and legal publications (if applicable)

Types of Business Entities in Mexico

1. Limited Liability Company 

Popular among U.S. and international businesses due to limited liability and tax benefits.

• Requires a minimum of 2 shareholders
• No mandatory minimum capital, but often starts at MXN 3,000
• Profit distribution can be flexible

2. Corporation 

Ideal for large enterprises or businesses looking to expand.

• No limit on the number of shareholders
• Stock can be publicly or privately traded
• Minimum capital often starts at MXN 50,000

3. Simplified Shares Company 

Perfect for SMEs and solo entrepreneurs.

• 100% online incorporation
• Only one shareholder is required
• Revenue cap: MXN 6.1 million (~USD 360,000)
• If this cap is exceeded, it must convert to another structure

4. Partnership 

Consists of:

• Active partners (with unlimited liability)
• Silent partners (liable only for their capital contribution)

5. Mexican Branch 

A foreign corporation can open a branch in Mexico while retaining the legal personality of the parent company.

• Requires approval from the Ministry of Foreign Relations and the National Commission of Foreign Investments
• Must enroll with the Public Registry of Commerce

Taxes Applicable to Mexican Companies

When registering a company in Mexico, these taxes typically apply:

Cost of Registering a Company in Mexico

Costs vary depending on the type of structure, legal requirements, and location. Estimated breakdown:

Advantages of Doing Business in Mexico

Setting up a company in Mexico comes with a wide range of business-friendly advantages, especially for international entrepreneurs looking to tap into the Latin American market or nearshore to the U.S.

Here’s why Mexico is considered a strategic destination:

1. Strategic Location & Trade Access

Mexico’s geographic proximity to the U.S. and Canada makes it ideal for logistics and trade. As a member of the United States-Mexico-Canada Agreement (USMCA), businesses in Mexico enjoy tariff-free or reduced tariff access to a market of over 480 million consumers across North America.

In addition, Mexico has over 45 Free Trade Agreements (FTAs) with countries including the EU, Japan, and several Latin American nations—making it one of the most globally connected economies.

2. Cost-Effective Labor Market

Labor in Mexico is highly competitive in terms of cost, particularly compared to the U.S., Canada, and Western Europe. This makes it a preferred destination for manufacturing, BPO, and IT outsourcing. 

3. Robust Infrastructure

Mexico boasts modern transportation, communication, and energy infrastructure, especially in major industrial cities like Mexico City, Monterrey, and Guadalajara.

These areas are well-equipped with highways, international airports, ports, and access to industrial parks, making logistics and operations smoother for both domestic and international trade.

4. Open Economy with Foreign Ownership Allowed

Mexico welcomes foreign investment. Most sectors allow 100% foreign ownership without needing a local partner. This allows entrepreneurs to keep complete control over their firm. Only a few restricted sectors (like energy transmission or broadcasting) are reserved for state control or require special approval.

5. Government Incentives

The Mexican government offers numerous incentives to attract overseas investors, including:

• Tax exemptions or deferrals
• Investment grants
• Free trade zone benefits
• Simplified incorporation structures like the S.A.S. (Simplified Shares Company)

Additionally, startup ecosystems are gaining momentum in cities like Guadalajara (known as the “Silicon Valley of Mexico”), with support from accelerators, incubators, and funding programs.

6. Stable Economic and Legal Environment

Mexico has a relatively stable political and economic system, governed by transparent regulations and an improving legal framework that protects intellectual property, enforces contracts, and ensures fair competition.

Conclusion

Mexico has become a magnet for global entrepreneurs and companies looking to expand in Latin America. With minimal restrictions on foreign ownership, strategic trade access, and cost-effective operations, it presents one of the most appealing markets for doing business.

However, the company registration process in Mexico can be complex due to regional variations and regulatory nuances. To ensure compliance and efficiency, it’s highly recommended to work with a local legal and business expert.

Need help registering your company in Mexico? Contact OnDemand International today to get started with professional, end-to-end support tailored to your needs.