I’ve written extensively about the laws in Mexico in my blog over the last several years, but many of you have asked me to write a blog specific to setting up a business here. This blog will provide you with some useful guidelines for doing business in Mexico.
The good news is that despite the constant state of uncertainty due to COVID-19 and the political instability, there is a good healthy environment for start-ups.
So, what is it like doing business in Mexico today? Well, it is actually easy, since Mexico is making changes that are going to impact start-ups and businesses, attract more investors and restore consumer confidence.
If you’re reading this, you’re probably one of the many aspiring entrepreneurs who wants to understand how to build a business in Mexico. Check out our comprehensive guide below that will get you one step closer to your dream of starting a business in Mexico.
Idea and Planning
Before you can take your first steps into the business world, you need to understand what you’re passionate about. If you can convert your interests into a functional business, then you’re going to enjoy running it.
The more value you offer to the customer, the greater the chances of a customer purchasing from you and hopefully converting into a recurring and loyal customer
Research plays an integral role in your journey to start your business. You need to thoroughly research the market and your competitors to understand how your business is different. The information that you gather from your research will help you evaluate and lay down a solid business plan.
No successful business has ever begun without a good business plan. When planning your business, make sure you prepare a business plan for at least your first year. Your business plan should be able to answer the following questions:
- What problem are you addressing?
- What makes your business unique?
- Who is your audience?
- How is your business going to generate revenue?
- How will you market your business?
- What resources will you need to get started?
Your business plan should be so detailed that anyone who looks at it should be convinced that you have a business worth investing in.
Build Your Business Website
Once you’ve identified the business you would like to establish, the very next step would be to build your website. A website is the first and most important step in creating a successful online presence for your business.
Many believe that a website is only needed for an e-commerce business, but honestly, that’s just a misconception. Today, the majority of customers search for a website or an online review before entrusting their money to a business. Your website should be an excellent source of information for your potential customers and be designed to help convert them into purchasers.
The first step is to register a domain name, like www.yourcompanyname.com. While .com, .net and .co are some of the more popular domain extensions, you can choose from many of other domain extensions as well, but try to find a .com if possible because it is the most searched and has the most credibility. You then need to host your website on a web server. There are many hosting solutions available for different kinds of websites. An online search will show you many options to consider.
Register Your Business
The first step in creating a company is to submit a request to the Ministry of Foreign Affairs where five possible business structures are listed in order of preference for the company. This is done to ensure that there is no company already established in the country with the same corporate name.
Drafting the Constitutive Act
This next crucial step is to register your business with the government. You will have to go to a notary to have a company deed written up, certified and properly registered and recorded at the Registrar of Deeds (Registro Public de la Propiedad y del Comercio). There are many types of companies, so talk to your attorney about which one is right for you.
Once your company is registered, the next step is to do the tax registration at S.A.T. (Servicio de Administracion Tributaria). There are a number of registrations that you will need to do to get everything in place, so you should use a certified accountant.
Registration with the Mexican Institute of Social Security
If you plan to be a sole proprietor, you don’t necessarily need to register, but if you plan to hire employees in the future, you will have to register each one of them.
Yearly Mandatory Compliance
There are a few things a business needs to do every year. These activities are essential to smoothly running your business and avoiding any penalties from the authorities.
The first and most important task is to file your income tax returns at the end of each year. It is essential that you don’t delay this procedure as it will lead to hefty penalties from the government.
The next thing you need to really focus on is the accounting. You need to maintain a balance sheet where all your company’s details like profit and loss, money received and money spent are included. You can either hire an accountant to help you, or if you are a small company, you can use online tools like QuickBooks to do it yourself.
If you need assistance in setting up your business, we can help. You can contact me at email@example.com. Buena suerte!
(For additional information on starting a business in Mexico, read our EIM Entrepreneurs section).