Types of Companies in Mexico - How to Register a Company

The general requirements for company incorporation may vary according to the chosen type of company. Our specialists in company incorporation in Mexico can help you choose the most suitable business type, according to your business needs.

Quick Facts
Types of legal entities in Mexico	There are many types of companies in Mexico, such as: the limited liability company, the stock company, the general/limited partnership, the sole trader, maquiladoras (factories operating under a special tax regime), the branch office/subsidiary, the representative office, etc.
The characteristics of the LLC	The LLC refers to the limited liability company (Sociedad de Responsabilidad Limitada), which has the following characteristics: – it is suitable for small and medium-sized companies; – it can be incorporated by minimum 2 shareholders; – the shareholders have limited liability against corporate debts, limited to their investment; – it allows 100% foreign ownership; – the company’s shares can’t be publicly traded; – it can have up to 50 shareholders.
The characteristics of the stock company	A stock company needs a minimum of 2 shareholders, who acquire ownership by purchasing shares in the company. The shares can be sold and the investors benefit from limited liability. There is no statutory minimum capital (the former MXN 50,000 minimum was abolished in 2014) and it is ideally suited for large companies.
The characteristics of the partnership	Partnerships in Mexico are established by signing a partnership agreement. They need 2 founders, who are referred to as partners. There isn’t any capital requirement for a partnership and the founders bear personal responsibility for the debts of the company.
The characteristics of the sole trader	The sole trader is known as Persona Fisica con Actividad Empresarial. The company can be set up by 1 founder who is a natural person. The entity is taxed following the rules for personal taxation, while the founder is fully liable for company debts.
The characteristics of the branch	A branch is a subdivision of a parent company which is registered for tax purposes in Mexico. It can develop the same business activities of the parent company and it must pay taxes in Mexico for the income generated in Mexico.
Legislation regulating company incorporation in Mexico	All types of companies in Mexico are governed by the Mexican General Law for Commercial Companies.
Corporate taxes	– corporate tax 30%; – VAT 16%, 8% (border regions, decree extended to 31 December 2026) and 0%; – excise tax (IEPS) on specific goods and services, whether produced locally or imported, from 3% up to 200% (tobacco); – state payroll tax paid by the employer, generally 1%–4% (4% in Mexico City); – employer social security, housing (5%) and retirement contributions, which vary with salary and risk class (well above 2%).
Foreign ownership rules	Foreign investors can set up companies with 100% foreign owernship, with the exception of few economic sectors.
Double tax treaties signed by Mexico	60
Main company registration steps	For all company types in Mexico, the following steps are necessary: – select a suitable trading name; – prepare the company’s founding document; – subscribe the minimum share capital, where required; – open a bank account at a local commercial bank; – have a registered address; – appoint directors/board of directors/administrators; – register for taxation.
Corporate tax number required (yes/no)	Yes
Resident director/shareholder requirements	No
Can investors modify the legal entity of a Mexican company?	Yes, it is possible to change a legal entity into another, if necessary.
Ways in which our team can assist investors	Our consultants can help you select a suitable legal entity, register it with local authorities, obtain certificates, permits, licenses. They can also assist in any business immigration matter as well as in post-incorporation formalities.

What are the main business forms in Mexico?

The General Law of Commercial Companies establishes several types of companies that can be constituted in Mexico. These include:

the general partnership;
the limited partnership;
the limited liability company;
the limited liability stock company, or corporation;
the association in participation;
the sole proprietorship.

What types of establishments are available for foreign companies?

The Mexican Foreign Investment Law allows foreign corporations to establish a branch in Mexico, subject to authorization from the Ministry of Economy. A similar structure to the branch office is the representative office, which is also a type of entity that does not have a separate legal personality from its founders. This structure can’t engage in economic activities.

What is the most common way to start a business in Mexico?

In general, both local and foreign investors opt to open a company in Mexico registered as a limited liability company, as this business form is designed for the needs of small and medium-sized companies, which represent the majority of businesses operating on the local market.

We invite you to watch a short video on the Mexican business forms:

What are the main steps in registering a limited liability company?

You can set up a company in Mexico as a limited liability company by following the next registration steps:

draft and sign the company’s bylaws – the document contains the provisions governing the legal entity, information on the shareholders’ shares, rights and obligations, details about the assets of the company and other important matters;
once the document is signed, it is necessary to register it with the Public Registry;
considering that the legal entity is set up for commercial purposes, it will need a tax identification number, which is issued by the Federal Taxpayer Registry;
another compulsory step during the process of company formation in Mexico is obtaining a corporate bank account (at any commercial bank preferred by the investor).

What are the main company incorporation services your team offers?

In the list below, you can observe the main types of corporate services we can offer to those who want to open a company in Mexico:

we will first require our clients to send us a set of documents necessary for the incorporation – we will prepare a list and send it to the client;
we will sign the power of attorney, which is the legal document through which our client can obtain legal representation from our team of specialists;
our team will reserve up to 3 trade names with the Ministry of Economy;
our team will also draft the company’s bylaws (in Spanish and English);
then, we will address a local public notary where we will sign the company’s bylaws;
after this step is concluded, we will register the company’s incorporation deed with the Public Registry of Commerce;
further on, we will register the legal entity with the National Foreign Investments Registry and with the Mexican Entrepreneurial Information System.

What are the fees you charge for company formation services?

For the company formation services we have listed above, our team charges a standard fee of USD 1,800. We invite you to refer to our team for further information on our full list of services and prices.

What is the minimum number of investors that can set up a company in Mexico?

It depends on the type of company you want to register. For instance, those who want to set up a sole trader, can incorporate the structure with only 1 founder, while for other types of companies, such as partnerships or limited liability companies, minimum 2 founders are necessary.

In the infographic below, you can observe a few important matters regarding the Mexican legal entities:

Can I fully own a company in Mexico?

Yes. The legislation allows foreign investors to set up a company in Mexico with 100% foreign ownership. Limitations in this sense can appear in specific sectors.

What are the accounting considerations for Mexican companies?

In the list below, our team of consultants in company formation in Mexico present some of the main aspects investors should know on corporate accounting:

some of the accounting obligations derive from the General Law for Commercial Companies 1934;
investors must also verify the provisions of the Federal Tax Code (1981);
the rules of the International Financial Reporting Standards (IFRS) are also applicable in Mexico starting with 2012;
companies must prepare and keep their financial documentation throughout the entire financial year, which, in Mexico, starts on 1 January and ends on 31 December.

We invite you to contact our team of consultants in company formation in Mexico, who can provide more information on the types of companies you can set up in this country, and can also assist in the registration formalities of any of the business form selected by our clients.