Want to Start a Business in Mexico? Read This First



Living in the US and want to open a small business over the southern border? Here are some details on starting a small business in Mexico as an American.

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



9 Comments ▼

Nash Riggins


Nash Riggins Nash Riggins is a Staff Writer for Small Business Trends and an American journalist based in central Scotland. Nash covers industry studies, emerging trends and general business developments. His writing background includes The Huffington Post, World Finance and GuruFocus. His website is NashRiggins.com.

9 Reactions

  1. Aira Bongco

    It really varies per country I guess. Thanks for pointing out the specifics for Mexico. It is really near the US and is a great place to expand to.

  2. I just moved to Mexico on a temporary residence visa. I applied as a retiree on my applcation. however, i would like to start a business here in Mexico. are there any ristriction for someone on temporary visa to open business here?

    I would appreciate a qulified reply.
    thanks,

    • Is pretty nice of you to open up, any type of business in Mexico. I would like to have the opportunity to have my own business in my own country. I am mexican, and I dont have a clue how to start my business also, I have my bussines plan currently working on, but also a partnership is always wellcome.

    • I am a Nigerian with a four years temporary visa. I have a small second store. You need to go to hacienda to register your business / business certificate, it’s not really complicated. You won’t be paying any tax the first year. You will be required to submit you financial records every 2 months.

    • The article sayas that if you want to work at your Mexican business, physically, you will need to obtain and Immigration Visa. If YOU do not intend to be there working and just have employees then you would not need that but you would have to set up with their version of Social Security for employer contributions and also set up a private Pension for them. However, the article does recommend professional help on the matter. you will want up-to-date information on the matter when you are actually ready to move forward. That’s good advice even in one’s own country.

  3. We had a restaurant in Mexico…..it became very successful……but it was a nightmare. The government does not help expats with any aspect of your business, in fact they only send in people to shake you down for money and they always have some new “rule” that you broke (that isn’t written anywhere) to extract more fees, fines and money from you. You do not get to write off any expenses, but they tax you at 30% of any profit you make. You need 3 receipts for every sale made by every customer or they disallow the sale (who does that?) and every permit can only be acquired through bribes. Employees can sue you at anytime for any reason and you are screwed and have to pay them off. We sold the restaurant and it was the best decision we ever made.

    • Inundated Underwater

      You nailed it- there are so many pitfalls there is NO WAY to operate a small business at all. After 20 years down here I have seen/heard/experienced it all. In fact, one would probably get a better deal by doing business with Russia or Turkey or Azerbaijani. Mexico is below these countries in quality of production per invested US dollar. And, to top it off with a caca cherry, the southern California small businessmen I just spoke with have their own US shop in California choked with Mexicans who are reluctant to run the shop the owners’ way or take directives. They set up their little Mafia in the owners shop.

  4. Yes, it is that bad. Wages seem low, but they have to be because small businesses are exposed to constant law suites even when the employees are at fault. You need to provision for law suites and even an employee quiting, they need to be paid extra. You practically need a lawyer on retainer just for that employee turnover. However the street vendors have no obligations except to pay off the mafia bosses and they can sell your very same products right outside your own door! And by the way, permits.-ARE VERY painful!!!!

    The newly passed fiscal reforms, only benefits the multinationals, but not small businesses. In fact, they have been closing left and right ever since they were passed.

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