Mexico is a country located in the southern part of North America, bordered by the United States to the north, the Pacific Ocean to the west, the Gulf of Mexico and the Caribbean Sea to the east, and Belize and Guatemala to the south. Mexico has a population of 130 million people and is the 3rd largest country in Latin America
Mexico is known for its rich history and diverse culture, which is influenced by its indigenous heritage, Spanish colonialism, and modern globalization. Its pre-Columbian civilizations, such as the Aztecs, Maya, and Olmec, have left a lasting impact on the country’s art, architecture, and cultural traditions. Mexico’s food, music, dance, and literature are also renowned worldwide. A majority of Mexicans are football lovers, a reflection of which can easily be seen during footballing events.
From an economic perspective, Mexico ranks 15th among the world’s largest economies with membership in the G20 states and OECD. The major industries of Mexico are large-scale manufacturing, agriculture, oil & gas, and energy.
Permissible business structures in Mexico
Entrepreneurs and investors can choose from a variety of business formats according to their needs and the nature of business. Local and foreign investors alike reap the benefit of a well-laid infrastructure and stable policies in this regard.
Some of the popular business formats are discussed here:
| S# | Type of company | Local name | Min.paid-up capital required |
| 1. | Sole Proprietorship | Persona Física | No paid-up capital required |
| 2. | Partnership | Sociedad en Nombre Colectivo | No paid-up capital required |
| 3. | Limited Liability Company (LLC) | Sociedad de Responsabilidad Limitada (SRL) | $150 |
| 4. | Public Limited Company (PLC) | Sociedad Anónima (SA) | $2,500 |
Sole Proprietorship
A sole proprietary business is the simplest and most common type of business structure in Mexico. The up-sides of this format are that all the profits go directly to the owner, and he/she is free to make any business decisions favorable to the business. The biggest drawback is that the owner has no legal cover against debts, losses, and liabilities.
Partnership
A partnership is formed by two or more individuals who agree to share profits and losses. Partnerships can be general (where all partners have equal responsibility and authority) or limited (where some partners have limited liability and no management role).
Limited Liability Company
this is a popular choice for small and medium-sized businesses. It provides limited liability protection to its owners (known as “socios”), who are only responsible for the company’s debts to the extent of their investment. An LLC offers the added benefit of a public limited company in that the capital can be raised by adding investors to the board of shareholders.
Corporation
A corporation in Mexico is akin to a public limited company elsewhere. It is recognized as a legal person that can raise capital through the public by offering shares. This business model is particularly for enterprises that require large sums of capital in a short period.
Each type of business structure has its own legal and tax requirements, and the choice of structure will depend on the company’s size, business objectives, and the level of liability protection desired.
Cost of registering and incorporating a company in Mexico
The cost of registering and incorporating a company in Mexico can vary depending on several factors, such as the type of company, the amount of paid-up capital, legal fees, and administrative expenses.
Here are some approximate costs associated with incorporating a company in Mexico:
Sole Proprietorship
There is no registration fee for a sole proprietorship in Mexico. However, the owner may need to pay fees for obtaining permits, licenses, or other authorizations, depending on the type of business activity.
Partnership
The registration cost for a partnership in Mexico can range approximately from $100 to $250 USD, depending on the complexity of the legal documents and the amount of paid-up capital.
Limited Liability Company
The registration cost of an LLC in Mexico can range from approximately $200 to $500 USD depending on the amount of paid-up capital and legal fees.
Corporation
The registration cost for a corporation can range from approximately $350 to $750 USD, depending on the amount of paid-up capital and legal fees.
In addition to registration fees, companies in Mexico are also required to pay annual renewal fees and taxes, which can also vary depending on the type of company and its activities.
Running expenditure of a company in Mexico
While it is difficult to predict the exact amount of expenses incurred by a company, it is safe to say that the expenditure depends on the location, nature of business, type of company, etc.
Here are some major expenses that investors should budget beforehand.
Labor costs
Labor costs in Mexico are relatively lower than in many developed countries, which can be an advantage for businesses. The minimum wage in Mexico is around 141 pesos per day (around 7 USD), but many industries pay higher salaries to attract qualified workers.
Taxes and regulations
Mexico has a complex tax system, and businesses need to comply with various regulations, including labor laws, environmental regulations, and others. These requirements can add to the cost of doing business in Mexico.
Infrastructure
The quality of infrastructure in Mexico can vary depending on the region, and this can affect the cost of doing business. For example, businesses that need to transport goods across long distances may face higher transportation costs due to the country’s less developed road and rail infrastructure.
Real estate costs
The cost of commercial real estate in Mexico varies depending on the location, but it can be relatively lower than in some developed countries.
Exchange rates
The value of the Mexican peso against other currencies can affect the cost of doing business in Mexico, especially for businesses that need to import or export goods.
Overall, Mexico can be a cost-effective location for businesses due to lower labor costs and relatively lower real estate costs. However, businesses need to be aware of the various regulations and taxes they need to comply with and carefully assess the cost of infrastructure and other factors that can affect their operations.
