Procedures and Requirements to Open a Business in Mexico

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There are many doubts that can arise in our heads at the moment in which we consider how to start our own business.

However, you should not worry about anything. If you are thinking of starting a business in Mexico, this article will help you to know what are the procedures and requirements to open a business there and some tips to get you started in the best way.

Requirements to open a business

The number of documents or requirements to open a business It will depend on the type of business, the state and, in turn, the locality.

In addition to the number of procedures specifically established for property registration.

These procedures include:

  • Federal procedure

Registration to the Federal Taxpayer Registry, according to the activities that your company is going to carry out.

  • State procedure

State Registry of Causers (REC). In each federal entity there is a Taxpayer Assistance Module to guide you in this regard.

  • Municipal procedure

On the other hand you need:

  • -Application for Land Use, Building and Construction Licenses before the corresponding municipality. To obtain the certificate, they ask you for a copy of the official identification and a copy of the last property receipt. They take approximately five business days to deliver.
It is important to clarify that the permit is issued for the property, not for the person. It is valid for two years, that is, the interested party has two years to complete the process to open their establishment.
  • Notice of Opening Declaration or operating license (as the case may be): The Opening Declaration is not valid. As long as the establishment does not change business, it is not necessary to renew this document. When it is going to close, notice must be given that it is closed or transferred.
  • Registration of the Business Registry before the IMSS. Registration must be made within a period of no more than five days from the start of the activities.

The employer will be classified in accordance with the Regulations for Classification of Companies and denomination of the Degree of Risk of Labor Insurance, the basis for setting the quotas that must be covered.

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  • Opening of Establishment before the Ministry of Health. This license is generally valid for two years and must be revalidated 30 days before it expires.
  • Registration in the Mexican Business Information System SIEM before the Ministry of Economy.
  • Registration in the Register of Importers before the Ministry of Economy.
  • Property Registry Procedure. It is used to verify the Legal Registry situation of a Property.

Basic documents to open a business

A few years ago starting or starting a business from scratch in Mexico was a very complicated task.

However, this has improved over the last decade. As in all states, there are a series of requirements and costs that you must take into account before starting to undertake.

However, they are very simple steps so you should not worry.

The documentation you will need is the following:

  • Permit for land use: This is one of the main requirements that you should know.

This permit is the responsibility of each municipality. The requirements vary according to the laws of each state, but it is not complex at all.

The process takes five days and the permit is valid for two years, renewable.

  • Declaration of opening of commercial establishments

It is immediate and free and in some states it can even be done online. In this way, it is only necessary to obtain the certificate, print it and keep it in the establishment.

  • License to sell beverages

Businesses that include the sale of alcoholic beverages, such as restaurants, bars, and hotels, for example, require a special operating license. The cost of these ratings varies by state and the document is valid for three years.

If you are not going to sell this type of liquor, you do not need to carry out this procedure.

  • external advertisements

This is the advertisement that you are going to place outside your establishment. Depending on the state you are in and the time, the cost will vary.

Entrepreneurs must request authorization from the municipality to place posters and external advertisements.

Be careful with the advertising or the message you transmit.

  • Registration in the Federal Taxpayer Registry

Finally, the entrepreneur must register with the Ministry of Finance and Public Credit to complete the procedures to open a business in Mexico.

You should also take into account the regime that best describes your business.

Steps to open a business in Mexico

These are, then, the steps that all entrepreneurs in Mexico must follow:

  • Application to the Ministry of Foreign Affairs. This is done to ensure that there is no company already incorporated in the country or abroad with the same corporate name.
  • Creation and notarization of the Constitutive Act. This document is the one that gives life and in which all the general and basic aspects of the company are stipulated: company name, objective, type of company, administration and control of the same, duration, etc.

Once the company is created, said Constitutive Act must be formalized before a Notary Public or Broker.

  • Registration with the Tax Administration Service
  • Registration in the Public Registry of Property and Commerce. Where the company and the real estate that make it up will be registered, as well as its purposes, objectives and commercial goals.

For this process, the documents mentioned above are necessary, as well as the power of attorney that allows the legal representative to carry out the company’s procedures.

  • Registration with the Mexican Institute of Social Security.

Even if it is a company in which only the employer exists as the only worker, since it will be necessary for him to make his personal contributions to his Social Security accounts.

  • Registration with the other required agencies. Depending on the line of business that the company has, registration with different organizations may be required.

At this point, the municipal or state permits that are required in the geographical area in which it seeks to establish itself also enter.

All these steps must be carried out in the order indicated since otherwise the appropriate procedures cannot be carried out.

It is important to take into account all those organizations that were not mentioned but that are important for the business of the company.

Otherwise, you may be creditor of fines or closures that will take longer in the long run.

Business types

There are many types of businesses and many ways to classify them, although the most common is differentiate the types of business based on the economic activity they perform, the legal partnership or the size of the company.

Types of businesses according to their economic activity

That is, depending on their sector or the economic activity they carry out:

  • Primary sector. Dedicated to obtaining raw materials. This sector is made up of economic activities such as agriculture, livestock, fishing or mining.
  • Secondary sector. These types of companies are characterized by being in charge of either the extraction of raw materials or the transformation of these materials into finished products.

These types of companies are also very varied and can be subdivided into different types, such as textile, wine, food or steel industries.

  • Third sector. Within this category, companies dedicated to the service or trade sector can be distinguished.

Types of Businesses based on their legal form

Companies according to the legal form in which it has been incorporated.

There are various types of companies according to this condition, however, here we are only going to highlight the three most common:

  • Individual entrepreneur. That person who decides to undertake an economic activity on his behalf.

Unlike the rest of the forms, he has the obligation to respond to his debts with his own assets.

  • Societies labor. The main characteristic of these companies is that most of the property of the company belongs to the workers.
  • Limited Company New Company.It is an SL designed to be established in 48 hours, with hardly any paperwork. The number of partners is limited.

Types of businesses according to their size

Another of the most used classification models is according to its size, that is to say, the number of employees it has and the income it invoices.

  • Big company. Large companies are all those companies that have a number of workers greater than 250.
  • Medium company. Medium-sized companies must meet three requirements: on the one hand, the number of workers cannot be less than 51 nor more than 250.
  • Small company. These types of companies are characterized by having between eleven and fifty workers.
  • microenterprise. As long as the number of permanent workers in the company is less than ten.

Opening and activity license

What is the opening and activity license?

Is a municipal license that any local must haveoffice or ship that wants to carry out some type of activity (commercial, industrial or services).

In other words, It is a document that certifies that your premises comply with everything necessary so that you can use it in front of the public.

It should be noted that the license is not granted to the premises, but to the business owner.

Therefore, every time the activity changes, the owner or the establishment is modified, the license must be requested again.

How to request an opening and activity license?

The usual application procedure for an opening and activity license consists of the following 5 easy steps:

  • Creation of the report and technical project: Preparation of both documents by the professional or contracted company.
  • Project visa: A visa from the Official College of the professional or company is required to certify the report and technical project.
  • Payment of municipal fees: payment at the City Hall or bank, depending on the operation of your city, of the corresponding fees.
  • Presentation of the opening request: Once you have paid the fees and delivered the project, you must go to urban planning or the environment with a receipt of all the documents and request it.
  • Visit of a competent technician from the City Council to verify that the premises comply with the stipulations and thus ratify the granting of the opening license.

Currently the term in which they answer you and give the request is quite long.

They can take from 2-3 months to 10-11 monthsdepending on the work that the City Council has at that time.

However, you can start working without the license under the so-called «administrative silence» without any problem.

As long as you meet all the requirements of your activity.

Tips when opening a business in Mexico

Entering the business world is not easy.

For those who are starting their first business, the difficulty is even greater.

Inexperience and lack of preparation can be big obstacles.

But don’t be discouraged, not everything can be bad; Know these tips to succeed and reduce risks If you are a first-time entrepreneur:

  • do what you know how to do

When starting the first business, you prefer to enter a area in which you are aware.

This reduces risks, since you will be on familiar ground.

If you don’t have financial or business experience, approach people who know the area.

  • make a plan

The business plan It is the starting point for any project. When it comes to the first venture, it is even more important.

Although there are those who say that it is not good to follow everything to the letter, at first follow your business plan and only do something different when you are more expert and confident.

  • keep focus

Staying focused in the business world is not always an easy task.

Mainly for those who are starting out, however this can be a mistake.

Before trying to innovate or vary too much your sales portfolio, remember that it is better to do one thing well, than to do ten in a mediocre way.

  • Find the right investors

You will need to money to start. It is best to start with your own resources, but that is not always possible. Financing can be obtained with credit in financial institutions.

Advantages of opening a business

  • Undertaking will allow you be the sole owner of your time, that is, you will work the number of hours you want, being able to spend more time with your loved ones or other activities.
  • All decisions will depend on you, as will the business rules or company culture. You need to make sure that you learn to make good decisions.
  • Starting your own business will give you the opportunity to turn your passion into a jobTherefore, you can earn money doing something that makes you really happy. Keep in mind that when you put your heart into the things you do, everything turns out much better.
  • Although achieving this point will depend on how well the business works, the reality is that if it is profitable You will gain financial independence.
  • Becoming an entrepreneur will force you to contact potential clients, which, in addition to allowing you gain various new abilities.

It will take you to meet people who can add great value not only to your business, but also to your personal life. Of going well for business you won’t have to worry about getting fired.

On the contrary, You can become a source of employment for a number of professionals. If you manage to establish a business with solid foundations, you will have the opportunity to guarantee your children and even grandchildren a better future.

Avoid penalties/fines

Although it is true that in the process of opening a company, entrepreneurs are more concerned with processing the land use certificate, the opening declaration and the trademark registration, than in Yoimplement a civil protection program, this oversight can put the company at risk.

However, remember that to avoid fines or sanctions You must have a Civil Protection Program that guarantees the well-being of staff and customers.

To find out if your company’s line of business requires an Internal Civil Protection Program, you must answer a questionnaire which is available on the page of the National Civil Protection System of Mexico.

If your company does not require an internal program, It must have some basic elements such as a fire extinguisher, signage of which are the emergency exits and a first aid kit.

In the event that the company you plan to start requires an Internal Civil Protection Program, you must make a risk and vulnerability analysis of the entire businesstrain your employees and present documents, among which are:

  • Establishment operation permit
  • Land use permit
  • Opinion of electrical and gas installations, if it is your case
  • The report detailing whether you have elevators or escalators
  • Property vulnerability risk analysis
  • Training certificates in evacuation of premises, fire fighting and first aid.

Do not fall into the temptation of not carrying out the procedures to open your business because it seems boring or a waste of time.

If after opening your company you do not have all the necessary licenses, permits and authorizations, and the authorities hunt you down, it can have very serious consequences for you and your business.

The first is that they will completely close your venture until everything has been resolved.

You will have to continue paying all the expenses you have in those days, but you will not generate profits because your business will be closed.

Ideas to start a business in Mexico

In recent decades there has been a great upsurge in the wake of undertake in Mexico since private equity funds, in addition to institutions that allow you to develop your creative ideas.

Entrepreneurship means taking risks and facing challenges, however, the outlook greatly influences the success or failure of the business.

In Mexico, 99.8% of the business units are SMEs and the possibilities of undertaking exist.

The growth of businesses, in general, is conditioned by the market to which they are directed.

Because consumers are increasingly demanding and they prefer products and services that meet their needs.

Some of the most favorable sectors to start a business idea are:

  • Health sector

Due to the large number of people who, due to their work or personal activity, need alternatives to remedy their illnesses.

Based on this, the options to invest are businesses in rehabilitation, physiotherapy, chiropractors or specialized medical offices.

  • healthy gastronomy

People’s eating habits have changed, which is why they increasingly demand healthier options, which is why the gastronomy sector has become a good investment option.

But, it must be borne in mind that in these businesses, the consumer seeks cleanliness, quality and trust.

  • fitness industry

Another alternative within the health sector is fitness, since consumers are looking for spaces to keep fit.

Currently, in Mexico there are 12,376 fitness facilities that generate approximately 1.8 billion in revenue, thanks to its 4.1 million members..

  • Sustainability

Another promising market is one that is related to the environment and sustainability.

An example of this are the ‘green’ franchises, so a great business opportunity is in ideas related to reduce, recycle or reuse.

Cost of starting a business in Mexico

If you want to start a company or business, you will know that in addition to a business plan you will need financing. This is vital to start working, therefore, you must calculate it from the beginning.

Once the business idea arises in the creative mind of an entrepreneur, it is impossible for him not to focus on thinking about the costs and amounts of money that he will need to invest to turn it into a thriving company.

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If you are an applied entrepreneur, from the beginning you will worry about elucidating all the costs that you will need to cover to obtain financing.

The cost of the procedures to start your business as well as the time you will invest in carrying them out depends on each state and entity.

meeting among the most expensive the State of Mexicowhere the cost of opening a company represents 73.9% of the per capita income and the time dedicated to it is three months.

Chihuahua is another of the most expensive states to set up a business, since it represents 32.3 percent of the per capita income, taking a period of 2 months to approximately one week to process it.

The cost of opening a business in Veracruz represents 35.6 percent of per capita income, managing to cover all the relevant procedures in two and a half months.

Aguascalientes and Jalisco are placed among the states where the cost of starting a business is minor.

One of the highest payments that are carried out when starting a company is when it is constituted in a commercial society. and another is to register a brand before the Institute of Industrial Property, with a cost of 2,500 pesos.

Among the smallest payments are the one of the obtaining land use certificate, with 600 pesos. And that of the procedures before the Political Delegation on establishment opening notice mercantile, which are free.

What laws do you have to know to open a business in Mexico?

The entrepreneur who starts a business must take into account a series of rules. behold the basic laws that should be followed by everyone who starts a business.

  • General Law of Commercial Companies

It is the basic norm that regulates commercial companies, whether they are anonymous or not.

It is essential that you know the types of commercial companies that exist. Also the way in which they distribute their profits among the partners and the scope of the responsibility before third parties.

  • State codes or laws and municipal regulations on the opening of establishments

The state or municipality where the entrepreneur wants to open the company is the one that regulates the issue of licenses.

  • Income Tax and Flat Rate Business Tax Laws

All companies are required to pay ISR and IETU.

  • Value Added Tax Law

This tax has effects on the final consumer, but it also affects the entrepreneur. On the one hand, in the invoices that he issues, and on the other, in the receipts that he has to pay.

  • Industrial Property Law

A brand is the symbol or sign that serves to differentiate products or services of the same species or class in the market.

  • Social Security and Infonavit Laws

As a consequence of a labor relationship, other employer obligations arise, including the payment of social security contributions.

Even if after reading all the above the paperwork seems somewhat complicated, relax.

You just have to organize yourself well, write down all the documents you need, where to present them, and then do the corresponding paperwork.

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