Expanding or starting a business in a different country carries multiple risks.
Designing a multifactorial strategy that minimizes these risks is essential to achieving the expected returns.
Next, you will find a list of four of the main topics to consider before starting a business in Mexico.
Legal
Corporate and legal analysis.
Carefully review the legal foundations that support the operation. In the case of starting a business, this includes the company’s legality, the possibility of importing or exporting the goods, taxes, and by-laws, among many other things.
Incorporation
Before putting money on the table, you should decide the type of legal entity to incorporate according to the benefits of each type and the applicable taxes.
Power of Attorney
It is necessary to prepare in advance the powers of attorney to execute the incorporation of the new entity and those that allow its officials to represent it in Mexico to start the business.
Name permit
A permit must be obtained from the Secretariat of Economics to use the new entity’s name.
In addition, the Secretariat of Economics will verify that such a name is not in use or is very similar, to the degree of confusing the public, to an existing name.
By-Laws
The By-laws will determine the internal legal rules of the new entity. A specialized lawyer should draft to comply with the legislation and not generate operational necks that reduce the organization’s competitiveness.
Taxes
Business Model analysis
To determine the applicable taxes, both national and international.
Corporate and transactional taxes
Analysis of the applicable corporate and transactional taxes determines which taxes to pay.
Authorized tax deductions analysis
Review tax deductions that could apply according to its business model and the correct compliance to avoid tax contingencies or deduction denials.
Accounting and Payroll
Financial Statements
The new entity must bookkeep accountant records in Spanish and Mexican pesos. The accounting standards are similar to those in use in the United States of America.
Monthly Tax Returns
Tax returns called “provisional tax returns” must be filed every month. However, there are some exceptions to this rule in specific cases.
Electronic Billing System
The business has to have an electronic invoicing system that complies with fiscal requirements.
Employers’ Registration
The company’s legal representative needs to obtain an employer registration number from the Mexican Social Security Institute for the company to be able to hire personnel
Expats
- Review or file your immigration status to be able to work legally in Mexico.
- Determine the country of residence for tax purposes.
- Review applicable tax treaties regarding purchases and investments in Mexico.
I will explain more about all the above topics in the following posts. Each of them has its complexity and requires the advice of qualified professionals to avoid risks.
Do not hesitate to contact me to review your specific inquiries and design the best strategy that protects your businesses and investments in Mexico.
Contact me at online@roelatam.com, and please drop a comment below.