
Starting a business in Mexico is very easy. First you have to decide what type of corporation or incorporation you want to do. Most people decide to do a SADCV, which stands for Sociedad Anonima De Capital Variable. To do that, you need to have more than one partner; you cannot be by yourself. You can split the percentages between those partners however you would like. You would need to be a resident of Mexico. If you are a foreigner, you need to have either a permanent or a temporary residency. However, if it is a temporary residency, you have to be allowed to either work or be an investor, for which you need to show a certain amount of money in the bank.
If you are a permanent resident, you are free to do or open a business. You do not need any other work permits after that. These rules change from time to time but right now, I believe they want at least 5% of the business to be owned by a Mexican or a permanent resident. So if you are a foreigner, you need to have at least one Mexican partner or a permanent resident partner.
You also need to start off with at least 50,000 pesos (US $2,700) in the bank or inventory. You will need to go to a notary and tell them your activities. They incorporate you, which will vary on the amount of money that you start with. It is also going to vary on the municipality where you are incorporating, but typically, starting a business in Mexico is not very expensive. It is probably similar to what it would cost in the States.
Usually your local real estate brokers will be able to recommend a notary because every real estate transaction is done through a notary so certainly the brokers were aware of who are the notaries. The same notaries would do your real estate transactions and incorporations. Once you are incorporated, the notary should take care of all the registration process, taxes, and so forth.
There are really no ongoing costs related to the legal aspect of the business. You do have to become active with the Mexican IRS, which is called Hacienda. Once you are active, you need to start paying an accountant to make tax declarations monthly even if your revenue is zero. I am a foreign citizen but a permanent resident of Mexico and as a company owner, I need to declare as a company and I need to declare as myself as well even if all my income is through the company and my personal income is zero. You need to immediately get an accountant on board that will declare both you and the company.
In my case, I am 90% owner of the company and I could have been at least 95%. To do that you need the business to be SADCV and you need to have a partner, whether you are a foreigner or a Mexican because otherwise it is not a “sociedad” so because of that, the type of corporation alone, you need at least a 5% partner.
There are others types of companies as well. For example, if you are in real estate or if you are a chef, you could just become active at the Hacienda (Mexican IRS) as a physical person or as an entity.
(Artisan market,Lake Chapala, Mexico, pictured.)