In order to start a business in Mexico, the first thing you need is at least temporary residence.
Once you have the temporary residence you need to go to a notario (notary), and this notario is able to set up a corporation. The notario will need some information from the individuals opening the corporation, including about the shareholders and the name of the corporation, in order to register it. The owners pay a fee.
Everything is done by the notario, as opposed to an attorney. Sometimes the people forming the corporation will hire a lawyer in order for that lawyer to be the link with the notary if the founders aren’t aware of the laws and regulations surrounding company formation. In our case, I have an agreement with several notarios to setup a corporation, so in addition to my other activities, I provide guidance to my clients when they want to setup a corporation. I work with the notario, who prepares all the paperwork, I review all the information and give it to my clients just to sign. However, you can hire your own attorney, an attorney linked with the notario, or you can go to the notario directly.
Once you set up the corporation you need to go to the tax authorities, which we call “SAT”, for Servicio de Administración Tributaria. This is the part of the Mexican government that does inscriptions for individuals and corporation of Mexico. You need to take the notary paper with the ID, with your resident or immigration status.
You will need at least two shareholders in order to set up the corporation. It’s not like in the States where you can open a company as an individual. Currently, there’s a discussion in the Mexican Congress to approve a new law to allow a corporation to have a single shareholder. It’s an issue of debate because many people are against the law and many people are supportive of the law
You you need to decide what kind of corporation you want to open; a Sociedad Anonima de Capital Variable (SA de CV; an “anonymous corporation”; like a “C Corp” in the US) or a Sociedad de Responsabilidad Limitada de Capital Variable (S de RL de CV; something like an LLC in the States)
I generally recommend the Sociedad Anonima de Capital Variable (the “Anonymous Society)” as opposed to the notaries, who generally recommend the Sociedad de Responsabilidad Limitada de Capital Variable. In the Anonymous Society, shareholders don’t have a link between them except the idea to make business. Let’s say Jose and Pedro want to start a business and are shareholders. How does Jose know that Pedro is doing the proper things?
In the Anonymous Society, there’s a leader called a comisario, which is a third party in the corporation who is obligated to report to all shareholders how the business is doing. Corporations are obligated to do an annual meeting with all the shareholders so the shareholders are informed as to the status of the company, if the company has profit or losses, etc. That’s why I recommend the that the company is formed as an Anonymous Society; because those investors need to be sure that the company is being run or managed properly. Also, the Sociedad Anonima de Capital Variable provides a corporate shield to shield any shareholder from any liability or responsibility of the activities of the corporation, and the corporation exists as an independent entity from the shareholders.
If you choose a Sociedad de Responsabilidad Limitada de Capital Variable, you don’t need a comisaro.
(Urban scene, Merida , Mexico, pictured.)