Formation of a Mexican Entity

Formation of a Mexican Entity

The general procedure to form a Mexican Limited Liability Company (LLC) is as follows:

Step 1: Please provide the name for the new entity (provide 2 options at least).

Step 2: Application for the company’s name will be filed to the Mexican government (processing time: 2 days).

Step 3: Please provide the names of the members of the new entity (minimum 2 members, there is no maximum). Either an individual or an entity can be a member. The formation costs increase if you use an entity.

Step 4: I will prepare a power of attorney (POA) that will need to be granted to members of my firm by the entities or individuals that you choose to be the members of the Mexican entity.

Step 5: My firm will prepare the Articles of Incorporation and Bylaws of the new entity. We will provide an English version for your review.

Step 6: Upon notarization of the Articles of Incorporation and Bylaws the entity will be formed

Step 7: The company will be registered at the Commercial Registry

Step 8:  The company will be registered at the Foreign Investments Registry

It will take us 2.5 weeks to get the company formed from the date we receive from you the powers of attorney of the entities or individuals who will be the members of the new company.

Important notes

a) Obtaining a Mexican taxpayer number for the company is mandatory. Please be advised that in order to obtain a taxpayer number you need to provide a document showing your company’s physical address in Mexico (i.e. proof of address such as a phone bill). If you cannot provide a proof of address let us know and we will discuss options to obtain a temporary physical address

b) Tax representative. In order to obtain a taxpayer number for the company you will need one of the representatives of the company (e.g. the manager) applying for the taxpayer number. Thus, you need to appoint someone as your representative to apply for the taxpayer number. Whoever is named as representative he or she will be liable before the Mexican Tax Department for the tax returns to be filed by the Mexican company, as well as other tax reporting obligations. If the person you appoint as representative of the company for tax matters is a foreign resident he (she) would need both a visa and a Mexican taxpayer number for himself in order to apply for a taxpayer number for the company. In our experience the process with the Mexican Tax Department is faster if your representative is a Mexican citizen. The reason is that you do not have to go through the hassle of gettinga visa and a Mexican taxpayer number for the representative (2-4 months process). By the way, the process of getting a visa involves traveling to and staying in Mexico 3-4 weeks. My firm can provide a tax representative for a fee and a security deposit (reimbursable).

c) In order to open a bank account for the company you first need to obtain the company’s taxpayer number. If the representative of the company is a foreign resident he cannot open a bank account for the company unless he has a Mexican visa. Therefore, if your Mexican entity representative is not a Mexican citizen you need to apply for a visa soon after the company has been formed. In other words, if you appoint a foreign resident as the company’s representative he/she will need a visa to apply for the taxpayer number and to open a bank account.

d) Right after the company has been formed you need to retain an accountant to file the monthly tax returns that are required under Mexican law. The tax returns must be filed even if you have no operations or no sales. My firm has an in-house accountant and can provide this service for a relatively low fee. If interested in this option please let us know and I will provide a quote.

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