How to Choose the Most Appropriate Business Entity in Mexico

Updated on Monday 18th December 2017

Selecting the most appropriate business entity in Mexico depends on several aspects. The owner’s financial status and future business plans are the most important ones. 
According to the General Law of Commercial Companies, there can be different types of companies which can be set up in Mexico, which are treated differently from a legal and tax perspective.
In this article, our Mexico company formation consultants provide a few details related to how to choose the most appropriate business form in Mexico.

The Sociedad Anonima in Mexico

The sociedad anonima (SA) in Mexico is the most common form of business entity here. It can adopt the form of a fixed capital business or the form of a variable capital company (SA de CV). 
The main difference between the two is that the last one can raise or decrease its capital within the limits set by a by-laws in a shareholders’ meeting resolution without having to abide by the formalities required for an SA.
However, both entities have to announce the National Registry of Foreign Investments and the other responsible government agencies of any capital amendment.
The main characteristics of both kinds of entities are:
The shareholder’s responsibility is limited to their stock interest in the business and the directors are fully responsible for a loyal and attentive management of the company;
There have to be at least two shareholders and a minimal capital of MXN 50,000 (USD 2,628), out of which 20% has to be acquitted at the incorporation of the company;
Other characteristics: our company formation agents in Mexico can provide further details on these characteristics. We can also help you in setting up a company in Mexico.

Opening a branch in Mexico

Sometimes, entrepreneurs might not want to set up a new business entity, but they would much rather open a branch of a foreign company in Mexico. Our Mexico company registration representatives can help you set up such an entity in the country.
The branch will benefit from the same treatment as a domestic business, if the company respects the legal requirements set out in the General Law of Corporations, the Commercial Code and the Foreign Investment Law.

In case you need to know more about the types of business organization in Mexico, or for assistance in opening a business in the country, please get in touch with our Mexico company formation executives.