Want to Start a Business in Mexico? Read This First

Mexico has always been an attractive investment opportunity for big American conglomerates. But in recent years, the country has evolved into a new haven for smaller business owners, too. New start-up incentives have popped up, red tape is being lifted and the disposable income of Mexico’s rapidly expanding middle class has provided a wide range of business opportunities for U.S. citizens.

And although it might feel somewhat daunting to try and set up a small business south of the border, the truth is that it’s actually a relatively simple process. You’ve just got to do your homework.

In order to help you get started, here are a few crucial tips and tricks you can’t afford to miss when starting a small business in Mexico.

Starting a Small Business in Mexico as an American

Registering Your Company

Assuming you’ve already got a stellar business idea and a rock-solid business plan, your first order of business will be to register your company in Mexico.

Thanks to the North American Free Trade Agreement (NAFTA), there are very few restrictions on your ability to own and operate a Mexican business as an American. (Though it’s hard to know how the recent presidential election with the campaign issue of getting rid of NAFTA will affect this.)  You do not need to be a Mexican resident, nor do you technically have to travel to the country. There are a couple of business areas, such as the oil and gas industry, that are off limits or highly restricted. Yet for the most part, you will be free to register just about any type of company without hindrance.

First, you’ll need to obtain authorization to use your desired company name from the Secretaria de Relaciones Exteriores — which usually takes a couple of days. Next, you will be required to sign and submit an incorporation deed, and apply to receive a tax identification number for your new company from the Secretaria de Hacienda y Credito Publico.

If you’re planning on hiring employees at your new business, you’ll also need to register with the Instituto Mexicano del Seguro Social to set up pension accounts for your employees, and register for payroll tax with your company’s new local tax administration through the Secretaria de Finanzas del Gobierno del Distrito Federal.

Obtaining Permits

After you’ve incorporated your new business and set yourself up with the tax man, there will inevitably be some municipal permits you may be required to obtain before you are allowed to start trading.

No matter where you set up shop, you will need to advise your local authority of when you plan to start trading. In most urban areas, you’ll also be expected to apply for various zoning permits before you are allowed to carry out certain business activities. And if you plan on manufacturing anything from your Mexican premises, you must first submit an environmental impact statement to the Secretaría de Medio Ambiente y Recursos Naturales in order to ensure the work you’ll be doing complies with local rules on air or noise emissions and waste rules.

Likewise, if your business will be selling food or drink, you’ll be expected to obtain separate health licenses from both your municipal authority, as well as the Secretaría de Salud.

Visa and Immigration

Although you don’t need to be a Mexican resident to start a business in Mexico, you will need to obtain an immigration visa if you’d like to physically work at your Mexican business.

You can apply for both resident and non-resident visas at a number of Mexican consulates worldwide, or you can apply for a visa after arriving in the country through the Secretaría de Gobernación. The process normally takes around one month, depending upon the complexity of your individual circumstances. In all honesty, getting your hands on a Mexican work visa is typically the most cumbersome aspect of starting up a business in the country – but because you’re not allowed to work under a tourist visa, there’s simply no way around it.

The Bottom Line

At the end of the day, there are several hoops you’ll need to jump through in order to start a business in Mexico. But like Canada, it is another country bordering the U.S. with great small businesses opportunities. Bearing that in mind, you should always consult a legal professional before launching the process. It could ultimately save you a lot of time and stress.

But so long as you do your homework and follow all of the rules and regulations in place, starting up in Mexico can be a relatively quick and painless process — and once you’ve set up shop, the opportunities for expansion and success are virtually endless.

Mexico City Photo via Shutterstock 12 Comments ▼

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