Tag Archive for: Mexico

mexican SOFOM
Christian Reeves

Setting up a SOFOM in Mexico to Operate a Fintech, Financial Services, or Crypto Business

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A Mexican SOFOM, or Sociedad Financiera de Objeto Múltiple, is a type of financial institution that can provide a variety of financial services, including money transmission, cryptocurrency, loans, leases, and factoring. SOFOMs can be either regulated or unregulated, with regulated SOFOMs being subject to more oversight by the Mexican government.

Fintech, financial services, and crypto companies in Mexico are increasingly using SOFOMs to provide their customers with a wider range of financial services. For example, fintech companies may use SOFOMs to provide loans to small businesses, while financial services companies may use SOFOMs to offer investment products to their customers. Crypto companies may also use SOFOMs to provide services such as cryptocurrency trading and custody.

SOFOMs offer a number of advantages for fintech, financial services, and crypto companies in Mexico. First, SOFOMs can provide these companies with access to a wider range of financial products and services. Second, SOFOMs can help these companies to reach a wider customer base. Third, SOFOMs can help these companies to comply with Mexican financial regulations.

As the fintech, financial services, and crypto sectors in Mexico continue to grow, SOFOMs are likely to play an increasingly important role in these industries. SOFOMs offer a number of advantages for these companies, and they can help these companies to provide their customers with a wider range of financial services.

The Most Efficient Structure for a Financial Services, Fintech or Crypto Business in Mexico is a SOFOM

A Sociedad Financiera de Objeto Múltiple (SOFOM) is a type of financial institution in Mexico that is authorized to provide a wide range of financial services, including loans, leases, and factoring. SOFOMs are regulated by the Comisión Nacional Bancaria y de Valores (CNBV), the Mexican banking and securities commission.

There are two types of SOFOMs: regulated and unregulated. Regulated SOFOMs are subject to more stringent regulatory requirements than unregulated SOFOMs. However, regulated SOFOMs also have access to a wider range of financial services and products.

A SOFOM is the most efficient structure for a number of reasons. First, SOFOMs are authorized to provide a wide range of financial services, which allows businesses to offer a more comprehensive suite of products to their customers. Second, SOFOMs are regulated by the CNBV, which provides businesses with a high level of financial stability and security. Third, SOFOMs have access to a wide range of financial resources, which allows businesses to grow and expand their operations.

If you are considering starting a financial services business in Mexico, a SOFOM is the most efficient structure to consider. SOFOMs offer a wide range of benefits, including access to a wide range of financial services, products, and resources.

Here are some additional benefits of incorporating as a SOFOM in Mexico:

  • Flexibility: SOFOMs have a great deal of flexibility in terms of the types of financial services they can offer. This allows businesses to tailor their offerings to the specific needs of their customers.
  • Scalability: SOFOMs are well-suited for businesses that are looking to grow and expand. They offer a wide range of financial resources that can help businesses to finance their growth.
  • Reputation: SOFOMs are regulated by the CNBV, which gives them a high level of financial stability and security. This is important for businesses that want to build a strong reputation with their customers.

Here are some specific examples of how SOFOMs are being used by fintech, financial services, and crypto companies in Mexico:

  • Fintech company Konfío uses SOFOMs to provide loans to small businesses.
  • Financial services company Banorte uses SOFOMs to offer investment products to its customers.
  • Crypto company Bitso uses SOFOMs to provide cryptocurrency trading and custody services.

These are just a few examples of how SOFOMs are being used by fintech, financial services, and crypto companies in Mexico. As these industries continue to grow, SOFOMs are likely to play an increasingly important role in providing financial services to Mexicans.

Here are the steps on how to set up a SOFOM in Mexico:

  1. Obtain a corporate charter. The first step is to obtain a corporate charter from the Secretaría de Economía (Secretariat of Economy). The corporate charter will set forth the basic structure of your company, including its name, purpose, and capitalization.
  2. Register with the National Banking and Securities Commission (CNBV). Once you have obtained your corporate charter, you must register with the CNBV. The CNBV is the Mexican government agency responsible for regulating the financial sector. The registration process with the CNBV can be complex, so it is advisable to seek professional assistance.
  3. Obtain a license to operate as a SOFOM. Once you have registered with the CNBV, you must obtain a license to operate as a SOFOM. The license application process is also complex, so it is advisable to seek professional assistance.
  4. Establish a physical presence in Mexico. To operate as a SOFOM in Mexico, you must establish a physical presence in the country. This means that you must have an office or other location where you can conduct business.
  5. Obtain the necessary permits and licenses. In addition to the license to operate as a SOFOM, you may also need to obtain other permits and licenses from local authorities. The specific requirements will vary depending on the location of your business.
  6. Hire qualified staff. To operate a successful SOFOM, you will need to hire qualified staff. This includes employees with experience in the financial sector, as well as employees with experience in the Mexican market.
  7. Develop a marketing plan. Once you have established your business, you will need to develop a marketing plan to attract customers. This plan should include strategies for reaching potential customers, as well as strategies for building relationships with customers.

Here are some additional requirements for setting up a SOFOM in Mexico:

  • A business plan that outlines the company’s goals, strategies, and financial projections.
  • A financial model that details the company’s sources of funding and projected cash flows.
  • Background information on the shareholders, including their financial and professional qualifications.
  • A copy of the shareholders’ agreement.
  • A copy of the company’s bylaws.

We can provide local directors if that is your need, but they are not required. Local directors can be helpful in navigating the Mexican legal and regulatory environment. They can also help to build relationships with local businesses and government officials.

If you are considering setting up a SOFOM in Mexico, we encourage you to contact us for more information. We can help you to assess your needs and develop a plan to achieve your goals. You can reach me directly at info@premieroffshore.com 

cancun business
Christian Reeves

Businesses to Start in Cancun, Mexico

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Cancun, the jewel of Mexico’s Yucatan Peninsula, is not just a paradise for beach lovers, but also a thriving hub for various types of businesses. Thanks to its status as one of the world’s premier tourist destinations, a thriving expat community, and a steadily growing economy, Cancun offers a plethora of opportunities for entrepreneurs. Here are some of the best businesses to operate from Cancun, Mexico.

1. Tourism & Hospitality

Tourism is Cancun’s lifeblood. Each year, millions of tourists flock to Cancun for its pristine beaches, crystal-clear waters, and vibrant nightlife. This makes the tourism and hospitality industry a natural choice for businesses in Cancun. Opportunities abound in various sub-sectors such as hotels, vacation rentals, travel agencies, tour operators, and restaurants. From luxury to budget experiences, there’s a market segment to cater to every type of traveler.

2. Real Estate

As Cancun continues to grow in popularity, so does its real estate market. The demand for properties, both for residential and vacation purposes, has been on the rise. This opens up opportunities for real estate agencies, property management companies, and vacation rental services. Moreover, with many foreigners buying properties in Cancun, there’s a growing need for services catering to expats, such as relocation consultants and legal services related to property transactions.

3. Health & Wellness

Health and wellness are big business in Cancun. Given the city’s reputation as a place for relaxation and rejuvenation, businesses offering wellness experiences can thrive. This could include spas, yoga and meditation centers, health retreats, and alternative therapy services. There’s also a growing market for medical tourism in Cancun, with many visitors coming for procedures like dental work, cosmetic surgery, and other treatments.

4. Event Planning

Cancun is a popular destination for events, particularly weddings and corporate retreats. Therefore, event planning services that can organize and manage these events are in high demand. This could include wedding planners, corporate event coordinators, catering services, and companies offering unique experiences for events.

5. E-commerce

Given Cancun’s location and the digital nature of e-commerce, entrepreneurs can operate an online business from Cancun targeting customers anywhere in the world. This could be anything from an online retail store to digital marketing services. With a good internet connection and the right business model, you can enjoy the Cancun lifestyle while running a global business.

E-commerce in Cancun benefits from Mexico’s rapidly growing online market. Internet penetration in Mexico is on the rise, with more and more consumers turning to online shopping. This trend has been accelerated by the COVID-19 pandemic, as consumers have adapted to buying a wider range of goods and services online. E-commerce businesses based in Cancun can serve this growing market while also reaching out to international customers.

Running an e-commerce business from Cancun offers the advantage of lower operational costs compared to many other locations. Costs for things like rent and labor can be significantly less expensive, allowing businesses to operate more competitively. Additionally, living costs in Cancun can be lower than in many other cities, which can further reduce the cost of running a business.

Lastly, the lifestyle and environment in Cancun can provide a source of inspiration for e-commerce entrepreneurs. For example, businesses could sell products inspired by Cancun’s beautiful surroundings, such as beachwear, home decor, or artisanal crafts. Alternatively, digital nomads with skills in areas like web design, writing, or digital marketing can offer their services to clients around the world while enjoying life in Cancun.

In short, e-commerce can be an excellent business choice for those looking to combine the flexibility and potential of online business with the lifestyle benefits of living in Cancun.

6. Environmental Conservation

Cancun’s natural beauty is one of its biggest draws, and there’s increasing recognition of the need to protect this. Businesses focused on environmental conservation, sustainable tourism, or offering eco-friendly products and services can find a receptive audience in Cancun. This could include everything from eco-tours to consulting services for businesses looking to become more sustainable.

7. Language Schools

With a significant number of expats and tourists interested in learning Spanish, language schools or private tutoring services can be a good business option. Conversely, English language instruction is also in demand, as it’s a crucial skill for locals seeking employment in the tourism industry.

In conclusion, Cancun offers a wealth of business opportunities, many of which capitalize on the city’s status as a world-class tourist destination. But beyond tourism, the growing local economy and international connections also offer opportunities in sectors like real estate, health and wellness, e-commerce, and more. With its beautiful setting and vibrant business environment, Cancun is a place where business and pleasure truly can mix.

doing business in mexico
Christian Reeves

An Inside Look at the Business Climate in Mexico for FinTech and Crypto Businesses

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The dynamic business landscape in Mexico is offering fertile ground for both FinTech and crypto businesses. Driven by a potent mix of regulatory evolution, market potential, and consumer demand, Mexico has emerged as one of Latin America’s hotspots for these disruptive technologies. Here’s a look at the vibrant business climate in Mexico for FinTech and crypto enterprises.

Mexico’s Favorable Regulatory Landscape

In 2018, Mexico established itself as a regional pioneer by enacting the first FinTech Law in Latin America. This comprehensive legislation provides a regulatory framework for companies in the FinTech space, including crypto businesses, ensuring their operations’ safety, security, and transparency.

Under the law, FinTech companies can operate as Financial Technology Institutions (ITFs), while crypto-related businesses must be authorized by the Mexican Central Bank (Banxico). The law paves the way for increased consumer protection, fosters competition, and encourages financial inclusion.

While there are still aspects of the law that require further clarification, its presence symbolizes the government’s commitment to fostering an environment conducive to FinTech and crypto innovation.

Untapped Market Potential

Despite significant strides in financial inclusion, a substantial portion of Mexico’s population remains unbanked or underbanked. These individuals and businesses, underserved by traditional financial institutions, represent a considerable untapped market for FinTech and crypto businesses.

FinTech solutions, including digital wallets, peer-to-peer lending platforms, and microfinance services, offer a potential route to financial inclusion. Simultaneously, cryptocurrencies, by their decentralized nature, can provide an accessible alternative for individuals who struggle to access traditional banking services.

Consumer Demand

Mexico’s digital economy is growing, with increasing internet and smartphone penetration. The demand for digital financial solutions, from online banking and digital payments to investment platforms, is on the rise.

Furthermore, the younger demographics of Mexico are more open to adopting these new technologies, creating a vast user base for FinTech and crypto businesses. Crypto, in particular, is gaining popularity among millennials and Generation Z due to its potential for quick returns and its decentralized, global nature.

Crypto Climate

Despite regulatory uncertainty in many countries, Mexico’s attitude towards crypto has been mostly positive. While Banxico does not consider cryptocurrencies as legal tender, it acknowledges their use as a medium of exchange, unit of account, and store of value.

Mexico’s crypto market is rapidly growing, with several crypto exchanges operating in the country. Mexicans use cryptocurrencies for various purposes, including remittances, a sector where cryptocurrencies can offer quicker and cheaper cross-border transfers.

However, it’s important to note that crypto businesses must adhere to strict regulations, particularly concerning money laundering and customer protection. Crypto businesses planning to launch in Mexico should prepare for rigorous compliance procedures, including getting authorization from Banxico and implementing robust KYC (Know Your Customer) protocols.

Market Demand for Fintech and Crypto Businesses

The market for FinTech companies in Mexico has grown significantly in recent years, fueled by a convergence of economic, technological, and demographic factors. As of 2021, Mexico is considered the leader in the FinTech ecosystem in Latin America, boasting the largest number of FinTech startups in the region. This has primarily been spurred by the demand for digital financial services, which are more inclusive, efficient, and user-friendly compared to traditional banking methods.

Market Landscape

Mexico’s FinTech market is diverse, with companies specializing in a wide array of services such as digital banking, payments and remittances, insurance (InsurTech), personal finance, crowdfunding, and blockchain technology. Each of these sectors caters to different user needs, from offering unbanked populations access to financial services to providing small businesses with efficient and cost-effective banking solutions.

Significant progress has been made in regulations too, making Mexico an attractive location for FinTech innovation. In 2018, Mexico became the first country in Latin America to enact a FinTech law, aimed at promoting financial stability and defending against money laundering, while also nurturing innovation and competition in the financial sector.

Demand Drivers

A critical demand driver for FinTech companies in Mexico is financial inclusion. A sizable proportion of Mexico’s population remains unbanked or underbanked. Traditional banks often have stringent requirements or high fees that many citizens can’t meet. FinTech companies, with their flexible and accessible solutions, present an opportunity to address this issue by offering services such as mobile banking, microloans, and digital wallets.

Digital remittances have also emerged as a significant market, with Mexico being one of the largest remittance-receiving countries in the world. FinTech solutions for quick, cost-effective cross-border transfers are in high demand, opening up opportunities for startups in this field.

In addition, Mexico’s thriving e-commerce market is driving demand for digital payments solutions. Consumers are increasingly turning to online shopping, necessitating secure, efficient payment systems that traditional banking often fails to deliver.

Finally, Mexico’s young, tech-savvy population contributes to the increasing demand. With one of the youngest demographics in Latin America and high smartphone penetration, Mexico’s population is well-positioned to adopt digital financial services.

Conclusion

The combination of a growing need for financial inclusion, increasing digitalization, a thriving e-commerce sector, and a young, tech-oriented population sets the stage for substantial growth in Mexico’s FinTech market. As traditional banks struggle to meet evolving consumer needs, FinTech companies can step in to fill the gaps, leveraging technology to provide more accessible, affordable, and efficient financial solutions. Given these conditions, Mexico’s FinTech market presents considerable opportunities for existing companies and new entrants alike.

Mexico’s burgeoning FinTech and crypto sectors reflect the country’s broader commitment to embracing digital transformation and promoting financial inclusion. The favorable regulatory landscape, coupled with untapped market potential and increasing consumer demand, creates a fertile environment for FinTech and crypto businesses.

While challenges remain, including refining the regulatory framework and improving digital infrastructure, the momentum is clearly with FinTech and crypto. As these sectors continue to evolve, Mexico is well-positioned to be a leader in the FinTech and crypto revolution in Latin America.

For more information on where I recommend you set up a Fintech, financial services, or crypto business in Mexico, please have a read through Where to do Business in Mexico as a Fintech, Financial Services, or Crypto Company. For more on the suggested structure, see Incorporating a Financial Services Company in Mexico – the Mexican SOFOM.I hope you’ve found this article helpful. For more information on setting up a business in Mexico, and on forming a SOFOM, please contact me at info@premieroffshore.com

where to do business in Mexico
Christian Reeves

Where to do Business in Mexico as a Fintech, Financial Services, or Crypto Company

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In this post, I’ll explain why I believe Tijuana is the best business city in Mexico in which to set up a fintech, financial services, or crypto business. I’ve traveled and done business throughout Mexico for over 20 years and can say without a doubt that Tijuana is the most efficient option for setting up a fintech business. Here’s why. 

Mexico’s burgeoning FinTech landscape is diverse, innovative, and geographically rich, with Tijuana emerging as the city of choice for setting up a FinTech business. Here, a confluence of strategic location, global business acceptance, linguistic proficiency, cost efficiency, and regulatory allowances merge to create an environment that is uniquely supportive of FinTech growth. Let’s dissect why Tijuana is the best city in Mexico for FinTech enterprises.

Proximity to the U.S. Borde

Tijuana’s strategic location, sitting just across the border from the United States, renders it a natural nexus between two significant economies. This proximity is not just geographical but also deeply intertwined within the fabric of business and culture in the region, offering enormous benefits to the FinTech sector.

Being adjacent to the United States, Tijuana is ideal for businesses targeting a cross-border audience. With easy access to the U.S. market, FinTech companies in Tijuana can exploit the advantages of both countries, navigating market trends, consumer behaviors, and regulatory landscapes with ease. Furthermore, the proximity enables a seamless flow of knowledge, technology, and talent between the two nations, thereby fostering innovation and growth.

Accepting of International Businesses and Investors

Tijuana’s open-door policy towards international businesses makes it a hotbed for globalization. The city’s economic policies are geared towards attracting foreign investment, boosting its global competitiveness, and enhancing its status as a cosmopolitan city. For FinTech businesses, this translates into a supportive, innovation-driven environment that fosters both domestic and international success.

Moreover, Tijuana is home to numerous international tech conferences and events, encouraging networking and collaboration. Such gatherings generate opportunities for FinTech startups to forge partnerships, secure investments, and enhance their global visibility.

Ease of Finding English-Speaking Workers

With a large percentage of its population bilingual in English and Spanish, Tijuana offers a considerable advantage for FinTech companies. English proficiency is a critical factor in the global FinTech landscape, and having access to a skilled, English-speaking workforce is crucial for businesses that wish to operate on an international level.

Why are there so many English speakers in Tijuana compared to other large cities in Mexico? First, many of the people deported from the Western United States end up in Tijuana. They need jobs and have excellent English skills. Second, many in Tijuana middle class have US visas and families in America. They learned English from a young age and travel to San Diego frequently. 

Cost of Labor Compared to the U.S.

Labor costs in Tijuana are significantly lower than in the United States, even though the level of skills and expertise can be comparable. This cost advantage makes Tijuana an attractive location for FinTech startups looking to operate lean while maintaining high-quality services. By reducing the labor cost burden, companies can invest more in product development, marketing, and other critical areas to boost their competitiveness and growth.

Ability to set up a SOFOM (Sociedad Financiera de Objeto Múltiple)

In Mexico, FinTech companies have the option to establish themselves as a SOFOM – a non-bank financial entity that can operate in Baja and the rest of Mexico. This legal entity, dedicated to providing loans and credit, offers the opportunity to conduct financial operations without the need for a traditional banking license.

Setting up a SOFOM in Tijuana means your FinTech business can operate across Baja California and Mexico as a whole, delivering financial services and innovative solutions to a broad and diverse market. Additionally, the ability to set up a SOFOM underscores the flexibility and supportiveness of Mexico’s regulatory landscape towards the FinTech sector.

About Tijuana

Tijuana, an eclectic border city that melds Mexican culture with a dynamic international influence, is a bustling metropolis that attracts people from across the globe. Known for its vibrant cultural scene and burgeoning economic potential, Tijuana is a fascinating city that holds promise for the future. Here’s an overview of Tijuana’s size, population, and demographics.

Size and Location

Tijuana is situated in the Baja California Peninsula, the second-longest peninsula in the world, right at Mexico’s border with the United States. It is the largest city in the state of Baja California and covers an area of around 637 square kilometers.

The city’s strategic location on the U.S.-Mexico border plays a significant role in shaping its economic, cultural, and demographic makeup. Its proximity to San Diego, with which it forms an international metropolitan area, gives it a unique cross-border characteristic.

Population

As of 2023, the estimated population of Tijuana is over 1.8 million people, making it the sixth-largest city in Mexico. The population has seen substantial growth over the past few decades, largely fueled by internal migration from other parts of Mexico and an influx of international immigrants, particularly from the U.S., China, and the rest of Latin America.

The city has a high population density due to its role as a regional hub for employment, culture, and commerce. It also serves as a magnet for individuals and families seeking opportunities in the bustling border economy.

Demographics

Tijuana boasts a diverse demographic makeup, contributing to its rich cultural fabric. The majority of Tijuana’s inhabitants are of Mexican descent, but there’s a significant presence of residents with international roots, primarily from the United States, China, and other Latin American countries.

The age distribution of Tijuana tends to skew younger, aligning with the general trend in Mexico. The city’s median age is in the late twenties, a testament to the youthful energy that drives Tijuana’s economic and cultural dynamism. This young demographic is critical to the city’s labor force and its potential for innovation and growth.

Given its border location, a significant proportion of Tijuana’s population is bilingual, with proficiency in both Spanish and English. This linguistic capability is a valuable asset, particularly in the business and service sectors, fostering cross-border commerce and cultural exchange.

In terms of socioeconomic status, Tijuana exhibits a broad spectrum. The city houses affluent neighborhoods with high-income households, alongside areas characterized by lower income levels. Over the years, economic development efforts have been aimed at addressing these disparities and promoting inclusive growth.

The Bottom Line

Tijuana’s unique blend of size, population, and demographics creates a lively and dynamic city that serves as a nexus of cultures, economies, and opportunities. With its strategic border location, youthful population, and rich cultural diversity, Tijuana offers a vibrant environment ripe for economic growth and international collaboration. As Mexico continues to progress, the city of Tijuana is poised to play a significant role in the nation’s journey toward a prosperous future.

Conclusion

Tijuana’s strategic location, supportive environment for international business, English-speaking talent, competitive labor costs, and legal flexibility make it an ideal setting for a thriving FinTech business. By harnessing these attributes, FinTech entrepreneurs in Tijuana are well-positioned to drive innovation, foster growth, and pave the way for a robust, future-proof financial landscape in Mexico.


I hope you’ve found this article helpful. For more on setting up a fintech, financial services business, or crypto company in Tijuana, or on incorporating a SOFOM, please contact me at info@banklicense.pro

10 Reasons to do Business in Mexico
Christian Reeves

10 Reasons to Move Your Business to Mexico in 2020

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In this post, I’ll look at the top 10 reasons to move your business to Mexico in 2020. The current government is focused on bringing in new jobs and new businesses to the country. If you’re looking to set up a lower-cost international operation, an outsourcing team, call center, financial services or Fintech company, Mexico should be at the top of your list. 

By way of background, I have operated this business from Panama, San Diego, CA, and Tijuana Mexico. We now have offices in Puerto Rico and Mexico City (in addition to TJ). I’ve been in the offshore industry since 2003 and can tell you from experience that Mexico has become a top tier offshore business jurisdiction. 

If you ignore the political hype between the US and Mexico, you’ll find that the new President is pro-business and cutting red tape right and left to facilitate business in Mexico. This is especially true in Baja California, the state where Tijuana is located and where I chose as my home base. I like to say that we’re on the hard-working and fun side of Trump’s wall. 

Here are the 10 reasons to move your business to Mexico in 2020

Cheap Cost of Labor

Mexico is a top tier business jurisdiction because of the availability of cheap labor. Costs are a fraction of the United States and English is readily available, especially in Baja California. The further south you go, the more difficult it becomes to find low-cost English speakers. 

Note that I say, “low-cost” English speakers are more available in Baja. This is because English is common in the border region. However, if you’re looking for high-level English speakers, such as engineers and PhDs, they are more likely to live in Mexico City and Monterrey than Tijuana. 

The average annual salary for an engineer in the United States is $85,663 dollars. The average annual salary for a mechanical engineer in Mexico is $298,500 pesos or the equivalent of $15,514 US dollars. 

This means that an engineer without a specialty makes almost five times more than an engineer with a specialty degree in Mexico. This is just one of the many professions were salaries are substantially lower. 

You can save a lot of money if you move your business from the United States to Mexico, and thanks to the excellent universities that they have in the country you won’t struggle in finding quality employees for your business. 

Cheap Cost of Living

Living in the United States has become increasingly expensive in the past few years, especially in California. Americans are dropping their dreams of living in a big house with a big garden for living in a small crowded apartment. 

Mexico is a very cheap country to live in. The cost of rent in Mexico is nothing compared to one you can find in the United States. You can live in an excellent apartment for less than $800 dollars a month. I am talking about a two bed and two bathroom place. 

For this reason, it might come as no surprise that many Americans are choosing to live in Mexico, bringing their portable businesses with them or commuting to the United States as necessary. In fact, thousands of Americans live in Mexico and commute to the United States every day. 

This is what I do… live in Tijuana and drive into San Diego or Los Angeles for meetings. If you have a Sentri pass, border wait will be about 15 minutes. If you don’t have Senri, the wait will be hours if you drive. But, you can walk across and take a trolly into the city in a few minutes. 

You’ll find that the number of Americans in Mexico has pushed up the costs of living in cities like Tijuana, but it remains a fraction of San Diego. If you don’t need to commute to the US, the cost of housing and the quality of life is better further south. 

Strength of the US Dollar in the Country 

As I mentioned before, Mexico offers American entrepreneurs the cheap cost of labor, living, and rent, and all of this is very accessible to American entrepreneurs because the US Dollar has been going upwards in the country. 

One US Dollar equals approximately 18.50 pesos and this is probably going to go up. Because of the proximity between both countries, and the economic relationship, movement in the dollar has an impact on the peso. 

Luckily, the American economy has been doing great, meaning that the US Dollar has been very stable in Mexico. The US Dollar is accepted in most businesses around the country and sometimes they will even set their prices in dollars. 

Investing using American currency in Mexico is a great benefit that you won’t be able to find in many countries. What better way to manage your portfolio than to do so with the currency of your own country.

Entry into the Latin American Market 

Mexico is the largest Spanish speaking country in the world and the second biggest country in Latin America. By investing in Mexico you building a base from which you can sell into the Latin American market. 

There are many different treaties between Mexico and many countries in Latin America that are not shared by the United States. If you decide to open a company in Mexico you can use those treaties to your advantage. 

Latin America is a large and great place for an American to expand their portfolio. There are so many opportunities in that market that you won’t be able to find in the United States such as the vast natural resources found here among many other things. 

Similarities Between the US and Mexico

Culturally, Mexico and the United States could not be more different. Despite this, the way that business is done in Mexico is very similar to how it works in the United States as Mexico adopted many of its practices from the American economy.

It is a blessing for many American investors when they come to Mexico and realize that they do not have to make any changes in their business plan as the business and market strategy tend to be the same. 

The Mexican stock market also works quite similar to how the American does. Even to the point where if there is a drastic drop in Wall Street the whole Mexican stock market will feel the impact. 

Vast Natural Resources

One of the many attractive things about investing in Mexico that you will find is that there are a huge number of vast natural resources in the country. Meaning that you can establish a company in Mexico with the sole purpose of exporting natural resources back to the United States or anywhere else in the world. 

Thousands of American companies are already doing this and are thriving in great ways by doing so. Mexico might have a big number of natural resources, but they lack the machinery to exploit all of these. 

American investment is widely accepted because of this reason, as the country and the company benefit hugely. Just like in the United States a good proposal needs to be approved in order for you to continue operating in the country. 

There are 31 states in Mexico and every one of them has something different to offer depending on your needs. I would recommend a great deal of research before you decide to invest in Mexico’s vast natural resources. 

Promising New Presidency

Two years ago Mexico had a very polarizing presidential election, quite similar to the one that happened in the United States. A great number of Mexicans support the new president and hail him as a hero of change, and others loathe him and consider him the worst thing to happen to the country. As I said, very similar to the United States. 

Mexico’s new president is promoting innovation and the creation of new jobs in the country by cutting red tape and inviting foreign investors to consider Mexico. This has not had the quick reaction that his political party might have hoped for, but it is slowly gaining traction.

Many of the changes will apply to small businesses, new and more efficient structures, and great opportunities for FinTech businesses under the Mexican SOFOM. In my opinion, the best changes are related to financial services, crypto exchanges, money transfer and remittance businesses, etc. 

His presidency is still very young and we will have to wait to see if he fulfills his promises, but right now things are looking bright. His political party does not want to be a one-trick pony so they are doing whatever it takes to please the people of Mexico. Creating new jobs through foreign investment is a great way to have voters on your side. 

Growing Economy

Mexico’s economy continues to grow despite its change in the presidency and the impact that the American economy has on the country. Mexico has been growing at a rate of 0.3% for the past decade. 

That number might seem small, but it gives an insight into what is happening in the country. Small nonrisk investments govern the market at this moment and will continue to do so in the long run. 

Financial institutions all over the country have benefited greatly over the growth of their sector and will continue to do so. If your idea is to start a financial institution outside of the United States I recommend doing it so in Mexico. 

Proximity to the United States

The main reason why you are probably considering to invest in Mexico is because of its location. Mexico is attached to the southern part of the United States share one of the biggest borders in the world. 

Even though the United States has another neighbor, Canada, Mexico is very different in many respects to both of those countries to make it a very interesting and promising option for investment. 

All of the major American Airlines have direct flights to Mexico City so you can be in the country in less than 5 hours, depending on your location. Also, thanks to its proximity to the United States residents of Mexico already know how business is done in America so you will not have to alter your business plan in the slightest. 

From my office in Tijuana, I can walk to the border and be across in 15 minutes. The wait time and the pedestrian crossing is less than 5 minutes on weekdays and less than 30 minutes on weekends. The line to drive across is a different story unless you have a Sentri pass. 

The proximity is a great advantage as you can take care of your business without leaving the United States. It’s also excellent for nearshore outsourcing and those, like me, who need to go to meetings in San Diego and Los Angeles regularly. 

Complete Control 

The tenth reason to do business in Mexico is that you can now have complete control over your operations. In most industries (not including banking or financial services), you no longer need a Mexican partner. Likewise, you don’t need a “bankers trust’ fideicomiso to hold real estate investments. 

For Fintechs and financial services companies operating through a SOFOM, all you need is a local representative. You give them a few non-voting shares and give up no control. This is a great improvement from when a Mexican person had to own 25% to 50% of these businesses. 

It’s become much easier to set up and control businesses in the country. Back in the day, doing business in this country was a real challenge. Ease of business has improved greatly in the last two years and every sign is that this will continue throughout 2020. 

For more on setting up a company in Mexico, see Step by Step Guide to Incorporating a Business in Mexico

For these reasons, and improved quality of life, I have chosen Mexico for my business. I plan to continue to expand and invest in Mexico. I highly recommend this country as an efficient option for international expansion. 

I hope you’ve found this article on reasons to move your business to Mexico to be helpful. For more information, or for assistance on investing in Mexico, contact us at info@premieroffshore.com or call us at (619) 483-1708

Guide to doing Business in Mexico
Christian Reeves

Guide to Doing Business in Mexico

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As an American investor, you have a ton of opportunities to make a number of investments in many countries around the world. Europe and Asia have had a rise of foreign investment going into the country, but there is another country closer to the United States that has been in the eyes of investors and financial institutions. 

I am talking about the southern neighbor of the United States, Mexico. Although Mexico is very close to the United States and it shares many similarities in how they do business. There are still a lot of things you must know about the country before you decide to invest in it. 

Even though both countries are connected and share the world’s largest and most traveled border, culturally they could not be more different. Mexico is a country full of tradition and history and its population loves to embrace it and celebrate. 

Mexico is the largest Spanish speaking country in the world and has the second largest population in South America. It’s where I moved my business a few years ago and I suggest you consider doing the same. 

A couple of years ago Mexico’s Secretary of Education made it mandatory for college graduates to learn a certain level of English before they graduate. For this reason, many of the younger Mexican workforces speaks a decent amount of English. Thus, there is a great deal of English speaking labor, especially in Northern Mexico and Tijuana. 

Education in the country has also been on an upward swing as many of its public institutions have been placed in top lists of higher education especially in the fields of medicine and engineering. 

Mexico has one of the vastest amounts of natural resources of any country around the world. Many of these natural resources are not being exploited to gain as much as they could be because there is not enough infrastructure in the country to do so. 

American and foreign investment in the country has for the most part been responsible for managing these natural resources. Thanks to these investments Mexico has emerged as one of the top emerging markets.

American companies, banks, and other financial institutions have taken advantage of Mexico’s relatively low labor costs and the cost of living to open subsidiaries inside of the country. Do not be surprised when you see the same companies that manage your portfolio in Mexico. 

How cheap it is to live in Mexico is also one of the countries selling points. Mexico is in many ways cheaper than the United States. Americans are taking advantage of this and are coming into the country in packs to commute back to the US or retire and spend their years enjoying the beach, weather, and many other benefits they could never afford in the United States. 

Mexico has a population of 128 million people living inside the country which is 1,964,375 square kilometers. Its major cities include Mexico City, Guadalajara, Monterrey, Tijuana, Queretaro, and Juarez. 

Their currency is the Mexico peso, but dollars are widely accepted in the country, especially in Northern Mexico. In fact, the US dollar has had a substantial rise in value in the country over the past few years. Making it an excellent moment to invest in the country as an American. 

Major exports include manufactured goods which are made in maquiladoras, vehicles and automobile parts, oil, oil and energy products, silver and metal, a wide variety of fruits and vegetables, coffee, and cotton. 

Major imports include machines for the manufacturing of metal and metal products, steel mill products, machinery for agriculture, electrical equipment, automobile parts, aircraft parts, and many products designed for repair or assembly in the country.

As you can see by its major imports and exports, Mexico has a vast amount of resources inside of the country but they do not have the machinery to exploit the full potential that these resources can provide. 

In the past few years, Mexico has had consistent economic growth. The growth has been slow but steady. This is despite the new presidency that is making many changes and reforms to the country. 

The main reason behind Mexico’s steady growth is its focus on innovation. Innovation has been a key platform on how the Mexican economy will grow in the next few years and it has succeeded with that promise. 

Guadalajara has been considered by many as the Mexican Silicon Valley thanks to its huge number of startups and a lot of American tech companies setting shop there. This is a prime place for foreign investment if you are interested in tech.

Mexico also has the benefit of being in a ton of partnership agreements with other countries. Meaning that investing in Mexico will get you a front-row seat to the economy of multiple countries. 

An agreement between Mexico, the United States, and Canada that has been extremely beneficial for Mexico’s manufacturing industry is the USMCA (formerly known as the North American Free Trade Agreement). 

There is a lot that you need to know before investing in Mexico. Although it is the closest country to the United States and a great window into the Latin American market, you should definitely take a crash course and learn about the country’s culture and identity before investing in it. We will happily guide you through that process. 

I hope you’ve found this article on how to do business in Mexico to be helpful. For more information, or for assistance on investing in Mexico, contact us at info@premieroffshore.com or call us at (619) 483-1708

setting up a business in Mexico
Christian Reeves

Step by Step Guide to Incorporating a Business in Mexico

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Step One: You Must First Reserve the Name of Your Company

Your name must be authorized by the Secretaria de Economía in Mexico. You should provide 5 options in order of preference. The Secretaria de Economia will eliminate those that have already been taken and you will receive the name of your company based on your preferences. In some cases, this process can be done online. Your Mexican lawyer or Notario can do this step for you. It should be noted that this step is completely free, can be done online.

Step Two: The Deed of Incorporation 

For this process, we will use a Notario. A Notario is much different than it is in the United States. Anybody can be a Notary in the United States (I know because I was one), but there are only a few Notarios in Mexico and they are chosen by the Governor of the state. Before this process, you must already know what type of business structure you want to operate from. There are a number of types of business entities in Mexico and I suggest you review them or listen to your lawyer before you can make a decision. I suggest Sociedad de Responsabilidad Limitada as it gives control to the person that provides the most capital. Each Notario is different and they charge approximately $10,000 to $15,000 pesos to do this.

Step Three: The Signing of the Deed of Incorporation

A Notario must be present when you sign the deed of incorporation. You will need the following: 

  • Every owner mentioned in the deed present
  • Identification documents of each member
  • Every owner that is foreign to Mexico must present his passport and proof of legal presence in the country
  • CURP (Mexican equivalent to a Social Security Number)
  • RFC Number (Tax ID)
  • Proof of address (Must be from Mexico)

Included in the deed of incorporation must be the person whom you give power of attorney to. This person will represent you in litigation and will act under your name. The cost of giving power of attorney to someone ranges from $5,000 to $9,000 pesos.

Step Four: Registering the Business Address

You must register the address of your business. This can either be in the place where you are doing business or where you desire to receive notifications at. 

Step Five: Registering the Business with the Mexican Tax Authorities

You must register the business for Tax Purposes with SAT, the Mexican equivalent to the IRS. I highly recommend that you make an appointment online before visiting SAT as lines can be extreme at times. They are going to ask for the same documents that you presented to the Notario when he drafted the deed of incorporation including the deed itself. If the deed is not yet finished you need a letter from the Notario stating that the deed is in process. 

Step Six: Only Applicable to Businesses that are Open to the Public 

This step only applies to businesses that are going to be open to the public like a restaurant or a retail store, if you are opening an office, a call center, or a manufacturing business then you don’t have to worry about this step. Before you open your business to the public you are going to have to notify the government in order to obtain a municipal business license. At this step, you must also secure any other type of license that you might need in order to start operating. For example, if you are opening a business that is going to be making hazardous materials like chemicals you are going to have to apply for a number of distinct licenses. The same goes if you are opening a restaurant.  

Step Seven: Registering Employees 

You will register all of your employees with the IMSS (Mexican Social Security Institute) and with INFONAVIT (Mexican Housing Fund). You must show in their paycheck the amount of money that is going to these two funds along with the local state taxes. This process can be either fast or slow depending on the amount of employees and the complexity of their contract

Step Eight: Foreign Investment Registry if Applicable

This step only applies if one of the owners is a foreigner who does not have a permanent resident status. If this is the case then you must also register the business with the Registro Nacional de Inversión Extranjera. The government office that keeps track of all foreign investment coming into Mexico. This can be done by the Mexican national who you gave power of attorney to. 

I hope this article on setting up a business in Mexico has been helpful. Once you have your entity, you will be able to open a bank account and will need a local accountant to handle payroll and related filings. We can help you to set up a business in Mexico. We are focused on Baja California (Tijuana, etc.), Mexico City, and Monterrey. For more information, and a detailed quote, you can reach me directly at info@premieroffshore.com. 

Changes to the Mexican SOFOM in 2020
Christian Reeves

Changes to the Mexican SOFOM in 2020

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Mexican reform is in full stride as the new president implements his programs. Some of these changes affect the Mexican SOFOM. Here’s what you need to know about setting up a SOFOM in 2020. 

Reform regarding SOFOMs in Mexico is likely to pass as most banks and financial institutions have already felt the wave of change coming their way. Whether it is good or bad is for you to decide about changes to the SOFOM in 2020. 

The agency in charge of creating new reforms in the country is called CONDUSEF. The CONDUSEF has in its power the ability to review and to make modifications to contracts involving SOFOMs. 

This is not limited to the way SOFOMs works as a whole, the modifications this government institutions make can even alter the way SOFOMs deal with clients and realize their service among other things. 

Think of CONDUSEF as the constitution of how SOFOMs operate in the country. These 2020 reforms, rules, and regulations only apply to regulated SOFOMs. If your SOFOM is not regulated then you won’t have to worry about this. 

In order for a regulated SOFOM to remain in business in 2020 and beyond, 70% or more of its assets must come from the allowed activities that it is authorized to perform as stated in the bylaws. Such authorized activities will usually include mortgages, financing, factoring, and the approval and issuance of credit. 

If your SOFOM does not generate 70% of its assets from this manner, then the same percentage needs to come from the administration of its portfolio as a way to be considered part of the financial system. That is to say, 70% of its income should come from the management of its assets (such as is the case with an investment advisor or fund. 

When a regulated SOFOM is considered part of the financial system, it can receive tax advantages. An important tax advantage that comes with the SOFOM being part of the financial system is that its credit portfolio will not be included in the calculation of the tax on its assets. 

Another tax advantage that you and your clients can take advantage of if you form a SOFOM is that the interest that you charge to your clients shall not be subject to a value-added tax. VAT is 16% in Mexico, so this is a big deal. 

SOFOMs are one of the preferred ways for foreign investors to begin capitalizing in the Mexican and Latin American markets. These structures have fewer restrictions on how they can operate compared to the US and Europe and are very powerful financial entities within Mexico.

All of the previous restrictions on investments by foreign investors associated with the capital stock of the SOFOMs have been eliminated. One of the many benefits of the reforms whose one of its main goals is to promote foreign investment. 

This is great news as before, foreign investors needed to do a ton of due diligence before they could invest in Mexico, and even when everything was in order their investment was limited. The red tape on SOFOMs was intense and intended to keep foreigners out. 

As of today, a SOFOM can be formed entirely with foreign investments as long as they follow the same protocol a Mexican entity needs to follow to be structured and that they register with the proper government institutions. 

This presents a great opportunity for foreign investors to take advantage of the situation and set up a SOFOM to operate within Mexico. This structure might provide financial services or investment management throughout Latin America. The SOFOM might also operate as a cryptocurrency exchange or money transmission business.

When you establish a SOFOM, you are given the opportunity to register it as a regulated or nonregulated entity. As a foreign investor, you have the advantage of using the nonregulated version as a low-cost financial services entity. The setup costs and operational costs for this entity in Mexico are a fraction of those associated with an international bank in Puerto Rico, for example. 

For the same reason, financial institutions who own a SOFOM or individual foreign investors have the opportunity to offer their clients a lower interest rate on credit and loans. Also, the costs of labor and other expenses will be significantly lower than in competing jurisdictions. For example, see Sample Operating Expenses for an Offshore Bank in Puerto Rico.

SOFOMs are becoming extremely popular in Mexico and I expect this popularity to continue in 2020 as the regime of the new president continues to implement his reforms The CONDUSEF is already preparing for an influx of foreign investment associated with the registry of SOFOMs. 

I hope you’ve found this article on what is a SOFOM to be helpful. For more information, or for assistance in establishing a SOFOM on Mexico, contact us at info@premieroffshore.com or call us at (619) 483-1708

What is a Mexican SOFOM
Christian Reeves

What is a Mexican SOFOM?

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In this post, I’ll consider the question, “What is a Mexican SOFOM?” A Mexican SOFOM is a complex entity used for many purposes and the most powerful financial entity or structure in Mexico after a full banking license. In fact, a SOFOM is often the most efficient path to a banking license in Mexico. 

Mexico is a prime destination for American investors looking to grow their portfolios. Its proximity to the United States, secure banking laws, English speaking professionals, and the strength of the dollar of the country are all factors why American investors are doing business south of the border. 

One of the most powerful entities that you can use for your advantage is called a Sociedad Financiera de Objeto Multiple or SOFOM. There are a number of activities that you can do with a SOFOM such as financing, factoring, making loans, issuing credit, etc. The Mexican SOFOM is also used for cryptocurrency exchanges and money transmission businesses. 

Mexico is currently in the beginning of a new era as its President has promised a wave of reforms that will change many laws, one of the many reforms that have gone through is the way SOFOMs operate in the country. 

You do not need any special authorization to start operating as a SOFOM. Any person with proper Mexican identification can open a SOFOM. That is to say, the director and person responsible for the SOFOM must be a Mexican person. 

The Mexican federal government does not have to be involved at all in the process, so long as you register your financial institution as a non-regulated SOFOM, no license or special permission is required.

Establishing a SOFOM in Mexico works just like opening any other business in the country. Your company must be formed and authorized by a Notario. Do not get confused, a Notario’s role in Mexico is very different from the United States. A notary in Mexico is a very important person, where anyone can be a notary in the US.

Your Notario will create the bylaws of the SOFOM which will feature how the principal purposes of the entity will take place. It is important for you to have a business plan that explains in detail how your financial entity will work under a SOFOM. 

As part of one of its functions a SOFOM has the ability to act as a fiduciary in a guaranty trust that is formed to guarantee the credits that it issues, it should also be noted that trusts in Mexico do not work the same way as in the United States. 

One activity that cannot be done with a SOFOM receives deposits from clients as those are reserved for banks and financial institutions in the country. A partnership with a bank in Mexico is required. 

Partnering with a bank as a SOFOM is a great way to operate as a financial entity without an international bank license. The SOFOM structure allows you to hold client funds in your corporate bank account and transact as described above. 

There are two types of SOFOMs available, the regulated SOFOM and the unregulated SOFOM. If you will set up a regulated entity, within the bylaws of a the SOFOM you must include the phrase “financial entity with multiple purposes, a regulated entity”. 

Meaning that in your bylaws your SOFOM needs to be identified by the abbreviation S.O.F.O.M, E.N.R. Regulated SOFOMs are those that have business activities involving financial holding companies and credit institutions. 

Most regulated SOFOMs are owned or controlled by financial institutions and have a number of shareholders. This is because the SOFOM structure is often the most efficient path to an international banking license in Mexico.  

Unregulated SOFOMs work a little different than regulated ones. Unregulated SOFOMs are not overseen or are subject to any relevant banking or tax laws in a country such as the CNBV and SHCP.

Capital in unregulated SOFOMs is independent and does not include the participation of third party credit institutions and holding companies. You cannot use the word “bank” in the bylaws of an unregulated SOFOM. Also, an unregulated SOFOM does not have any minimum capital requirements. 

If you are establishing your SOFOM as an unregulated entity you must disclose to clients and possible investors that you are not subject to the supervision of Mexican Banking Laws or institutions such as the CNBV. 

The only government institutions that have the power to regulate unregulated SOFOMs are the Secretaria de Hacienda y Crédito Público (SHCP), CONDUSEF, and any other applicable anti-terrorism and money laundering laws. 

The bottom line is that the Mexican SOFOM is the most powerful structure to start a financial services business, mortgage or payday lender, to raise capital, or to operate a cryptocurrency exchange in Latin America. 

The setup process to start an unregulated SOFOM is burdensome and takes 3 to 4 months depending on the time of year. We will be happy to assist you throughout the process, including local representation, banking, and operational support. 

I hope you’ve found this article on what is a SOFOM to be helpful. For more information, or for assistance in establishing a SOFOM on Mexico contact us at info@banklicense.pro or call us at (619) 483-1708

For more up to date information on offshore bank licenses and financial services structures, see www.banklicense.pro

How to Open a Maquiladora in Mexico
Christian Reeves

How to Open a Maquiladora in Mexico

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My previous post was on how to start a general business in Mexico. In this section, I’ll focus on how to open a Maquiladora in Mexico. These Maquiladoras have huge economic importance for Mexico and the United States. Maquiladoras provide for hundreds of thousands of jobs for residents of border cities (on both sides of the border) and throughout Mexico. At one point in time, they helped to stabilize Mexico-USA relations.

Because of the massive deportations that occurred at the end of the Bracero Program in 1964 and Operation Wetback, a large number of factories were established along the US-Mexico border called maquiladoras to provide jobs for these newly relocated Mexicans.

The maquiladoras functioned as American assembly plants set up in Mexico’s border towns to provide jobs and a steady income for the deported. At the same time, they increased Mexico’s global exports and cemented the United States as its most important trading ally.

Maquiladoras made American companies competitive in global trade because Mexico’s wages were substantially lower than in the United States. The Maquiladora program strengthened the relationship between the United States and Mexico which at this point in time was quite strained.

Even though Maquiladoras have become ingrained in the lives of many Mexican and American citizens, many Americans fail to understand the economic advantage that opening an “offshore” assembly or repair plant in Mexico. 

  • Some refer to these plants as being offshore, as outside of the United States. The more modern definition is “near short” to leverage their proximity and ease of operation compared to more distant competitors like China and India. 

The IMMEX program allows US Companies to temporary import raw materials into Mexico for the preparation, repair, transformation of goods to be later exported to the United States as a final product. With this program, you make imports without paying the general import tax, value-added tax, and other compensatory payments. Then you export those finished products to the United States with no import duties or red tape.

To obtain the IMMEX program it is necessary to perform certain procedures fulfilling certain requirements, the applicant must have:

  • Advanced electronic signature certificate (SAT)
  • Federal taxpayer registration
  • Your tax domicile must be active and registered in the federal taxpayer registry.

In addition, the following documentation must be attached to the application for the procedure:

  1. Certified copy of the articles of incorporation of the company and, where appropriate, the modifications to it.
  2. Copy of the document that legally certifies the possession of the property where the operation of the IMMEX Program intends to take place, indicating the location of the property, attaching photographs of it. In the case of a lease or loan agreement, it must be proved that the contract establishes a minimum term of one year.
  3. Contract of maquila, orders of purchase that prove the existence of the project.
  4. Power of attorney (original or certified copy and simple copy); or exhibit a copy of the Unique Registry of Accredited Persons (RUPA).
  5. A written document by means of which the production process or the services which will fall under the guidelines of the program are detailed.
  6. A written document in which the detailed description of the production process or service is provided that includes the installed capacity of the plant to process the goods to be imported or to perform the objectives of the program. 
  7. Letter of conformity from the company or companies that will carry out the sub-manufacturing process where they express, under penalty of perjury and agree to joint and several liabilities for tax on temporarily imported goods (original).
  8. Additionally, for the IMMEX Business Controller Program modality, you must show:
  • Acts of Assembly stating the shareholding of the controlling company and the controlled companies (original and copy).
  • Certified entries in the shareholders’ registry book (copy)
  • The documentation referred to in points 1, 2 and 5 of this section, in addition to presenting a copy of the tax identification card. This documentation must be submitted to the controller and to each of the controlled companies.
  • The maquila contracts that each controlled company has with the controlling company or a maquila contract in which the obligations contracted must be established, both by the controlling company and by the controlled companies in relation to the objectives of the requested program, duly recorded before a Notary (original and copy)
  • Authorization as a certified company (copy), granted by the Ministry of Finance and Public Credit.
  1. Additionally for the modality of IMMEX Program for the use of a Third Party:
  • Letter of conformity from the company or companies that will carry out the process of tertiarization, where they manifest under protest, to tell the truth, the joint and several liability on temporarily imported goods (original).
  • The company or companies requesting the program under the Tertiarization modality must have the authorization as a certified company granted by the Ministry of Finance and Public Credit.
  1. If your maquiladora will operate in the textile sector other requests have to be met.
Setting up a business in Mexico
Christian Reeves

How to Open a Business in Mexico

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After the Panama Papers, and because it became impossible to deal with banks in Panama, I moved Premier to Tijuana, Mexico in 2017. While the move was challenging, both from a quality of life and a business perspective, things are now running smoothly. 

Costs are down significantly compared in Panama, the availability of English speaking and well-educated workers is much better here, and our proximity to the United States and the ability to take meetings in Los Angeles and San Diego has improved sales. Our bottom line has grown significantly since the move and it was well worth the learning curve.

There are two groups that set up shop in Mexico. First, those who will open a physical office with employees in Mexico. Second, those that need a Mexican company and virtual office because they’re selling into Mexico. 

The second group is mostly US and Chinese companies selling through Amazon and other online platforms in Mexico. All of these websites now require a Mexican tax ID or RFC & SAT. To get these numbers you will need a Mexican corporation, a physical address (virtual office), and a local representative (local director / legal representative of the company). 

The first group covers a very wide range of clients. For example, entrepreneurs such as myself who moved to Mexico for lower costs and a better quality of life (to be on the fun side of the wall). Then there are the manufacturers or maquiladoras that move to Mexico for the trade benefits available when importing into the United States. Also, we get calls from all manner of business, such as tourism agencies, restaurants, clubs, service businesses, etc. 

So, without any more ado, here is how to set up a company or other business structure in Mexico. 

Opening a business is quite different in Mexico than it is in the United States. For instance, you rely entirely on a Notario to get the process started. A Notario in Mexico is not comparable to a Notary in the United States. The main difference being the importance and the power that a Notario held in Mexico. You will need to know this and other crucial details of you want to open a Corporation in Mexico. 

Opening a business in Mexico can be a complicated task. Even though in recent years Mexican Legislation has fastened the process, there is still a lot that needs to be done. Your company needs to have a stable planned structure before any of the governmental permits are requested. 

To register a business before the corresponding instances in Mexico it is necessary to carry out 7 or 8 procedures in different government institutions, which will take an approximate period of 8 days. The cost of making this record is 17.8% of the per capita income in Mexico, around 8,200 pesos.

In Mexico, as in many countries in Latin America, you will need the intervention of a Public Notary or Notario. The Notario is in charge of creating the Acta Constitutiva or Constitutive Act.
Basically, through this notarial act, the name and business of the new commercial entity is established, and at the same time, the business model is defined. There are a number of different business models in Mexico. 

The six types of companies or mercantile organizations in Mexico, to be analyzed are: Sociedad en nombre colectivo, Sociedad en Comandita Simple (S. en C.), Sociedad en Comandita por Acciones (S. en C. por A.), Sociedad de Limited Liability (S. de RL), Sociedad Anónima (SA), and Sociedad Cooperativa (SC). We will give a detailed description of each one in a different article. 

The steps you need to follow to open a business in Mexico are as follows: 

  1. Present a Request to the Ministry of Economicos (SE). The first step in creating a corporation is to submit a request to the Ministry of Economics where five possible corporate names in order of preference for the company. This is done to ensure that there is no company already established in the country or abroad with the same corporate name.
  2. Creation of the Acta Constitutiva (Constitutive Act). Once the Ministry of Economics gives the approval or delivers the proposals of available company names, the Constitutive Act must be drafted. This document is the one that gives life and which stipulates all the general and basic aspects of the company: company name, objective, type of company, administration, and control thereof, duration, etc. Once the company is created, the Constitutive Certificate must be notarized before a Notario.
  3. Registering the Business Address. You must register the address of your business. This can either be in the place where you are doing business and not just a registered agent for service of process. This address can be a full office or a virtual office. 
  4. Register before the Tax Administration Service (SAT). When the Constitutive Act is completely created and certified, the next step is a registration with the Tax Administration Service. The Tax Administration service is the equivalent of the IRS in the United States. From this register, the Tax Identification Number is obtained, which contains the Federal Taxpayer Identification Number (RFC).
  5. Register before the Public Registry of Property and Commerce. The next step is to appear before the Public Registry of Property and Commerce where the company and the location where the business will operate will be registered, as well as its purposes, objectives and commercial goals. For this process, the presentation of the Constitutive Act, the RFC, and the power of attorney that allows the legal representative to carry out the procedures of the company will be required. The power of attorney is also given by the Notario.
  6. Register before the Mexican Institute of Social Security (IMSS). When all of the above has been completed, the next step is to register before the Mexican Institute of Social Security. Even if it is a company in which only the employer exists as the only worker, it will be necessary for him to make his personal contributions to his Social Security accounts. Also, if you do not complete this process in time, you may be given a fine by the IMSS. 
  7. Only Applicable to Businesses that are Open to the Public. This step only applies to businesses that are going to be open to the public like a restaurant or a retail store, if you are opening an office, a call center, or a manufacturing business then you don’t have to worry about this step. Before you open your business to the public you are going to have to notify the government in order to obtain a municipal business license. At this step, you must also secure any other type of license that you might need in order to start operating. For example, if you are opening a business that is going to be making hazardous materials like chemicals you are going to have to apply for a number of distinct licenses. The same goes if you are opening a restaurant.
  8. Registering Employees. You must register all of your employees with the IMSS (Mexican Social Security Institute) and with INFONAVIT (Mexican Housing Fund). This is required by law. You must show in their paycheck the amount of money that is going to these two funds along with the local state taxes.
  9. Foreign Investment Registry if Applicable. This step only applies if one of the owners is a foreigner who does not have a permanent resident status. If this is the case then you must also register the business with the Registro Nacional de Inversión Extranjera. The government office that keeps track of all foreign investment coming into Mexico. This can be done by the Mexican national who you gave power of attorney to.
  10. Registration before any other applicable governmental institutions. Depending on the commercial activity that your corporation will be participating in, it may be required to register before different organisms, the most common being: Ministry of Health, Secretariat of Ecology and Environment, Mexican Institute of Intellectual Property, etc. 

It is highly advisable that when opening a corporation in Mexico you hire a group of experts. The process might seem long, but we can help you cut through the red tape and get up and running in the most efficient manner possible.