Starting a business in Mexico
March 17, 2009. 09:19
Before launching a business in Mexico, it is wise to know the essential information on how to start it. The best advice is to have in mind the following: a roadmap of activities, which should be linked to legal considerations, and the timing involved. This guide presents the basic steps for starting a business in Mexico.
A Notary Public Notario Público or Corredor Público is indispensable to incorporate a company in Mexico. The process of incorporation regularly takes from four to six weeks to complete.
-The first step is to select the business name. The investor makes a hierarchical order list of three different names which are submitted for validation, in terms of non pre-existence, to the Mexican Foreign Affairs Office.
-The second step is to choose a business structure. The common options are: Corporation, Limited Liability Company, Persons Corporation, and Not-for-Profit enterprise.
-The third activity is defining the legal framework of the company: core business or purpose, the corporate governance organization, the legal representation and the specific powers of attorney, the dissolution rule, and the shareholders capital structure. It is important to consider that the legal representation of a company is allowed to nationals, and to foreigners holding the appropriate immigration grade.
-Once the company is incorporated the legal statements must get registered at the local Public Register of Commerce and Property Registro Público de la Propiedad y Comercio.
Business Tax ID
The tax ID Registro Federal de Contribuyentes (RFC) is granted by the Tax Administration Office. The tax ID files the specific taxes that affect the company operations, the company legal address data, and the legal representant personal details. The proceeding is made online, but the conclusion of the process is only achieved once a tax official validates the information supplied by doing a visit to the company´s location. The Tax Administration Office schedule differs from one city to another, but an estimated time of two weeks could be a conservative calculation. Additionally, it is needed to request for the Electronic Signature for Tax Purposes FIEL. This electronic code is needed for tax reports and online proceedings.
Foreign Investment Registration
Any company incorporated with foreign investors participation must register before the National Register of Foreign Investment Registro Nacional de Inversiones Extranjeras of the Ministry of Economy Secretaría de Economía.
The Mexican tax system rests primarily with the federal government, while the states are solely endorsed to tax the payroll of the companies up to a two percent. Some states have a no payroll taxation policy, others give the no taxation benefit only for a limited period on new investments.
Finding location is critical. Prices vary from one place to another with similar characteristics; a good scouting is recommended. An investor must take into consideration that a leasing agreement is a very important legal document in Mexico, which generally represents a long-term commitment. Two to three months leasing fee is usually requested as a security from the landlord.
The Mexican main cities are ruled by individual legal acts that classify the type of business activities allowed for specific territories; this means that industrial and commercial facilities are only permitted at certain locations. It is worth to validate the legal capacities of a building before buying land or establishing any obligation with a landlord. City license could be issued indefinitely or to be renovated on a yearly basis; this depends on each city regulation.
Utilities and Services
Mexico has a sufficient base of utilities´ suppliers offering a wide range of options and tariffs. It takes approximately four weeks to get the basic utilities installed or contracted; whether provided by state owned companies (Electricity, Water) or by private ones (Telephone Line, Cellular Phones, Internet Broadband, Gas). Based on job creation and business development, special infrastructure needs on electricity, communication, water supply, road access, etc. can be claimed for local government funding or supply.
Opening a Bank Account
Banking services in Mexico have come a long way with an offer of more than forty commercial banks. The retail banking is dominated by seven banks with branches covering the whole territory. Listed in order of capital assets are: BBVABancomer, BanamexCiti, Santander, Banorte, HSBC, Inbursa and Scotiabank.
A bank agent´s advice is needed for opening a company bank account. There are several elections to be made like account statements periodicity, checks´ format, transfer funds procedures, e-banking, corporate credit cards, payroll management, investment of free funds, etc.
The documents needed to open a company bank account are: an original of the incorporation documents, a copy of the tax ID, a proof of address document, and an ID of the person who holds the legal representation of the company (Passport or Mexican Voter Card).
Importing and Exporting
There is no registration needed to do exports. On the other hand, the imports are affected by an importer´s license. The proceedings to get the registration take three weeks and must be submitted to the Customs Office. Restricted goods associated to health and security (chemicals, radioactive and nuclear products) need an additional import license with a very strict tracking control from the authorities.
Other Business Issues
Copyright, Patents and Trade-Marks are an important topic to tackle from arrival. Labor union issues should also be addressed as a priority; strike calls are easily executed if the company is not enclosed by a labor contract. The company activities may be suspended until the conflict is resolved. Finally, getting a Maquiladora registration might be essential if the company intends to focus its business on exports.
This guide presents the basic steps for starting a business in Mexico; however, it is strongly recommended to seek for the assistance of professionals who can provide with valuable knowledge and expertise on specific topics.
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Published: March 17, 2009. 09:19 |
Last updated: March 17, 2009. 16:41