In the actual economic environment, the globalization of companies is being indispensable for companies’ survival. There are several reasons to start a business outside the US, cost-cutting, explore new markets, increase of sales, search for new talent, etc.
According to a survey performed in 2019 by Consulting firm Price Water House and Coopers (PWC), Mexico is located in the 4th place of economic wroth for US companies, only overcome by China, United Kingdom, and Germany.
Also, I have identified the following benefits:
- Proximity; Mexico is crossing the southern border of the US.
- Responsive communication; there is not an important time zone overlap.
- Cultural affinity: Mexico shares with the US a lot of cultural values and American pop culture.
- Skilled workforce: You can find a lot of bilingual talent used to work in multicultural teams around the world.
- Lower total cost: increase your profits in the US
Mexico has commercial and non-double tax treaties with the US.
How to start?
First, you need to understand the figure of public notary according to Wikipedia definition “a public notary of the common law is a public officer constituted by law to serve the public in non-contentious matters usually concerned with estates, deeds, powers-of-attorney, and foreign and international business”
Now that you know what a public notary is you will need to follow the following steps:
- Is highly recommended to search for an accounting o lawyer´s firm in Mexico, where the staff is bilingual.
- The firm can refer to their trusty Public Notary to start the process.
- You will need a partner (it can be another US citizen or Corporation).
- Obtain the authorization of the company name from the Ministry of Foreign Affairs (Secretaría de Relaciones Exteriores).
- Sign the incorporation deed (bi-laws) before a public notary.
- Register the deed in the Public Register of Commerce (Registro Público de la Propiedad).
- Register the Company in the Ministry of finance and credit (Secretaría de Hacienda y Crédito Público).
- Obtain a bank account.
- Register with Mexican Social Security Institution (IMSS).
- Register for payroll tax in the local tax administration.
- Hire a local accountant o tax firm will help the company to ensure legal and tax compliance according to Mexican regulations and avoid penalties and government audits.
Do I need to travel to Mexico?
Of course, you can travel to Mexico and sign the Company deeds before a Public Notary, but you can also, save the trip by using a Power of Attorney (POA) notarized in the US embassy. The Accounting and legal firm in Mexico can sign the deeds in your behalf, once your US lawyers agree with the new corporation deeds.
In my next article I will write about the different corporations and tax compliance in Mexico; also, tax benefits you corporation can access to increase your profits.
Do you need help?
Any question or advisory please not hesitate to contact me, it will be a pleasure advising you and your business.