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Commercial Partnerships
Santiago Sanchez

Santiago Sanchez

7/16/2024

Imagine you have a brilliant business idea as a freelancer, but you need extra help to get it started. So why go it alone? You can partner with colleagues or friends interested in the project and create a commercial partnership in Mexico.

The ideal choice of business structure could make the difference between success and stagnation in your career. 

That's why you need to choose the right type. This necessitates understanding the different types of commercial partnerships in Mexico. Exploring these options gives you the opportunity to make informed decisions that can propel your freelance venture toward success.

Types of commercial partnerships in Mexico: A comparative view

What is a commercial partnership?

It's a legal form of business organization where a team of two or more people come together to do business and make money.

This is called a partnership, where partners contribute knowledge, skills, financial resources, or labor to the development and operation of the company. The idea is for everyone to work together in agreement and collectively so that the business is fruitful and profitable. It also ensures they are legally protected in case of problems, such as if debts accumulate, a partner does not have to pay more than they initially invested.

This is one of the many reasons why you should manage your finances, as it can help prevent excessive debt accumulation and protect the interests of the partners.

Advantages of forming a commercial partnership

The advantages of creating a commercial partnership as a freelancer are many, including:

  • Access to more opportunities. Commercial partnerships are often seen as more stable and reliable. This can facilitate obtaining contracts and new clients, financing, and bank loans.

  • Flexibility. Depending on the type of commercial partnership, you could achieve greater flexibility in business management, as you'll have the possibility to have partners, more complex structures, and more access to human and financial resources.

  • Tax advantages. There are cases where commercial partnerships benefit from taxes or deductions not available to individual freelancers. This could mean paying less in taxes.

  • Professionalization. Establishing a commercial partnership involves formalizing the business structure of your enterprise. This can contribute to a higher professional quality of activity and also strengthen your personal brand, presenting a stronger and more reliable image to clients.

There are many advantages to creating commercial partnerships in Mexico for your independent career. Just evaluate your situation, as each is unique.

Characteristics of commercial partnerships

These legal entities possess certain key characteristics that you should understand before choosing between one type of partnership and another.

Key characteristics include:

  • Legal capacity. Commercial partnerships have their own legal capacity. This allows them to acquire rights and incur obligations in their name, regardless of the partners they have.

  • Social denomination. Each partnership has a social denomination that identifies it, which is unique and registered with the corresponding authorities.

  • Assets. Commercial partnerships in Mexico have independent assets, separate from those of the partners. This means that the company's assets and liabilities are not linked to the personal assets of the partners.

  • Distribution of profits. The profits generated by the partnership are distributed among the partners, according to the company's regulations or the social contract.

  • Dissolution rules. They are subject to specific rules in case of dissolution, although these can vary depending on the type of commercial partnership.

The law establishes three mechanisms that must be specified in the statutes to avoid legal problems in case of resistance from a partner during dissolution:

1. Right of separation. Defines the cases and conditions for the dissolution of the partnership.

2. Right of exclusion. Describes the circumstances under which a partner can be excluded from the partnership.

3. Right of withdrawal. Establishes the procedures for a partner to withdraw their shares.

How to form a commercial partnership in Mexico?

If you are an independent worker looking to create commercial partnerships in Mexico, you must follow a 4-step process:

1. Get authorization from the Ministry of Economy. Request approval of the name or business reason online through the MUA portal of the Ministry of Economy. Have at least three name variants at hand.

2. Creation and authentication of the deed or articles of incorporation. All partnerships must be notarized, except for the Simplified Shares Company (SAS). This document is fundamental as it defines key aspects of the commercial partnership, such as activity, roles and agreements among partners, as well as legal representation and management bodies.

3. Register with the SAT. After legalizing the articles of incorporation, you can proceed to register the partnership with the Tax Administration Service (SAT).

4. Register in the Public Registry of Commerce. Finally, the partnership must be registered in the Public Registry of Commerce to obtain independent legal personality. At this stage, both the articles of incorporation and the real estate contributed must be registered.

Following this process, you can legally establish a commercial partnership in Mexico and start sending your freelance proposals.

Types of commercial partnerships in Mexico

There are different types of commercial partnerships, and it's essential that you know them to choose the right structure for your company.

7 Types of commercial partnerships every freelancer should know:

1. Simplified Shares Company (S.A.S.).

2. Public Limited Company (PLC.).

3. Limited Liability Company (LLC.).

4. Simple Limited Partnership (LP.).

5. Partnership Limited by Shares (KGaA).

6. Partnership in Collective Name (S.N.C.).

7. Cooperative Society (S.C.).

The Mexican government states that the law has these 7 types of commercial partnerships for business creation.

This diversity responds to some variables during the constitution, such as whether you are starting alone or in partnership, the size of the business, the amount of capital available, the revenue volume, among other aspects.

Comparative chart of commercial partnerships

Each type of commercial partnership has its own characteristics and legal requirements. Therefore, you should evaluate which one best fits the objectives and needs of your business as a freelancer.

Here is a comparative chart:

Partnership 1

Examples of commercial partnerships

If you want to start as an independent but still have no ideas, look at these examples of commercial partnerships:

  • Public Limited Company (PLC). Bimbo SA de CV is a clear example of this type of society, a leader in the food industry.

  • Simple Limited Partnership (S. en CS). The mining company Copper and Bronze S. EN C. exemplifies this form of society, dedicated to mineral extraction.

  • General Partnership (SNC). The Administrative Corporation of Companies, SC, stands out as a society of this type, focused on the marketing and distribution of LP Gas.

  • Cooperative Society (SC). Electric, agricultural cooperatives, and emergency and nursing services are common examples of this type of society.

Commercial partnerships in Mexico offer you a range of options to structure and expand your freelance business efficiently and safely. If you decide to start, consider DolarApp as a reliable means to make your online transactions, whether to receive money or pay your bills.

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