Starting a business in Mexico might seem like a daunting task for any entrepreneur. However, with the right information and a clear guide, it becomes much easier to achieve. In this post, we will walk you through the steps to establish a business, from planning and structuring to obtaining the necessary permits to operate legally in Mexico.

Manual for Entrepreneurs: Steps to Start a Business from Scratch

Step-by-Step Guide to Starting a Business in Mexico

Establishing a business in Mexico requires organization and a series of procedures to ensure its legality in the country. Whether you decide to go through the process alone or with the support of others, here are the steps to start a business from scratch:

1. Develop a Business Plan

Before initiating the legal procedures to start a business in Mexico, it's essential to have a solid business plan. Create a detailed document that includes:

• Vision

• Mission

• Objectives

• Financing

• Market Analysis

• Products/Services Offered

• Marketing Strategies, etc.

This document will serve as a blueprint for how your business will operate.

2. Decide the Ownership Structure

Determine whether you will start the business alone or with others. This decision will affect the legal and tax structure of your business. Partnering with others can provide financial support and make it easier to tackle challenges. However, everyone involved must align with the business's goals, ideas, and direction.

Mexico offers various types of commercial partnerships that can fit different projects. On the other hand, if you choose to start alone, you will have full control over decisions but also bear all the risks.

3. Request the Company Name

This step marks the beginning of the legal procedures to start a business in Mexico. You must ask the Ministry of Economy to approve your company's name. They will ensure that no other company is registered with the same name. It's advisable to have 3 to 4 alternatives ready in case your first choices are already taken.

4. Create the Constitutive Act

The next step involves drafting this document with the help of a notary. If you decided, for example, to form a Collective Partnership, you must draft a constitutive act detailing the partners, the corporate purpose, registered office, contributed capital, operating rules, and other essential information. The document must be signed by all parties involved.

5. Notify the Use of the Company Name

The notary will notify the Ministry of Economy about the use of your company's name. This step informs them of the partners, the selected name, and other business details, ensuring the name is officially registered and protected from third-party use.

6. Register with the SAT and Obtain the RFC

Your company must be registered with the Tax Administration Service (SAT) to obtain the Federal Taxpayers Registry (RFC). This number is necessary for all fiscal operations, such as paying taxes and issuing invoices.

7. Register with the Public Registry of Commerce (RPPC)

It is essential to register the constitutive act with the Public Registry of Property and Commerce in your locality. This registration is crucial for legally publicizing the business and carrying out commercial activities.

8. Register Trademarks with the IMPI

Although not legally required, registering with the Mexican Institute of Industrial Property (IMPI) is highly recommended. This protects your brand, logo, designs, and all business-related elements from potential infringements.

9. Register with the IMSS

Registering your employees with the Mexican Social Security Institute (IMSS) is another legal requirement for setting up a company in Mexico.

Although initially it will only be you and your partners, in the case of forming a company, registration with the IMSS is mandatory. Failure to do so could result in a fine.

Whether you want to set up a Limited Partnership by Shares, whether the company is large or small, you must register it.

This ensures that your future employees have access to health and social security benefits.

10. Obtain Licences and Permits

This step is managed through your local municipality. Permits are necessary for your business or services to operate legally in your area. Depending on the type of business, location, and other factors, additional permits like safety, health, and zoning licences might be required.

11. Create a Business Bank Account

Open a specific bank account for your business to efficiently manage finances, access credits, pay salaries, and keep business finances separate from personal ones. Additionally, consider evaluating and choosing insurance to protect the business against risks, such as property damage and civil liability.

Plan and consider all possible operational expenses to keep the business running, including salaries, rent, supplies, and other recurring costs.

Legal Structures for Individuals

If you have the necessary skills and knowledge to run a business on your own or only need occasional support, individual structures might be a good option. They require less demanding administration and lower startup capital. Simply obtain the RFC and register with the SAT.

Highlighting the following options:

• Simplified Trust Regime (RESICO): Suitable for micro, small, and medium enterprises with annual income up to 3.5 million pesos.

• Rental Regime: For individuals renting out properties like stores, houses, or warehouses through specific contracts.

• Business and Professional Activities Regime: Perfect for small businesses or freelancers with no income limit, but requires monthly and annual declarations.

• Digital Platforms Income Regime: Ideal for businesses offering transportation, food delivery, or lodging services using technological platforms.

Choose the appropriate structure and tax regime for your business while ensuring compliance with all legal regulations in Mexico.

3 Benefits of Starting a Business in Mexico

Now that you know the steps to start a business from scratch, here are the advantages:

1. Access to Business Loans

Mexican banks often offer financing for SMEs with competitive interest rates. This helps acquire necessary tools for your business, from equipment to merchandise, and cover operational costs even before generating profits.

2. Ease of Exportation

Legally establishing your business allows you to expand operations internationally. While additional regulations apply for exporting, this step brings you closer to that goal, whether aiming to take your products or services abroad and scale your business.

3. Protection Against Fraud

Registering your business and completing the legal procedures provide a shield against fraud. This ensures your company has a unique identity and protects against intellectual property issues and fraud, safeguarding your commercial name from unauthorized use.

Seek professional advice to better understand each step and expedite the process. We also recommend using DolarApp to manage your financial transactions, including payments and withdrawals in pesos, while offering the opportunity to get a US account for receiving dollars and converting them to pesos at the best exchange rate.