Starting a Business in Mexico as a Foreigner: What You Need to Know

Mexico is the second-largest economy in Latin America and one of the top destinations for foreign direct investment. For entrepreneurs and investors from the United States and Canada, the country offers proximity, a large consumer market, competitive labor costs, and a legal framework that explicitly permits foreigners to own and operate businesses. But the process is different enough from what you know at home that going in without preparation is expensive.

Here is what you need to understand before you incorporate.

Choosing the Right Entity Type

Mexico offers several business structures. Two dominate for small and medium foreign-owned businesses:

Sociedad Anónima de Capital Variable (SA de CV)

The SA de CV is Mexico’s equivalent of a corporation. Key characteristics:

• Minimum two shareholders; no maximum
• Minimum capital: $50,000 MXN (a formality — it does not need to be deposited)
• Shareholders’ liability is limited to their capital contribution
• Requires a Board of Directors (or sole administrator) and a Comisario (statutory auditor)
• Shares can be transferred; structure supports outside investment

The SA de CV is the most flexible and commonly used structure for businesses that anticipate growth, outside investors, or eventual sale.

Sociedad de Responsabilidad Limitada de Capital Variable (S de RL de CV)

The S de RL de CV is closer to a US LLC. Key characteristics:

• Minimum two partners (socios); maximum 50
• Partners hold partes sociales (membership interests) rather than shares
• Somewhat simpler internal governance than an SA de CV
• Transfers of interests require partner approval (which can be an advantage or a limitation)

For small operating businesses, consulting firms, or real estate holding structures, the S de RL de CV is often more appropriate — lower administrative overhead and governance that fits smaller teams.

What About a Sole Proprietorship?

Foreign nationals cannot operate as sole proprietors (persona física con actividad empresarial) in Mexico without permanent residency. If you are operating on a tourist visa or temporary residency, you must use a corporate entity.

The SRE Permit: Your First Official Step

Before a Mexican notary can incorporate any company with foreign ownership, you must obtain a name authorization and foreign investment permit from the Secretaría de Relaciones Exteriores (SRE) — the Ministry of Foreign Affairs.

The SRE process involves:

1. Submitting three proposed company names (the SRE will approve one or request alternatives)
2. Completing the SRE application form, which includes a description of the company’s intended activities
3. Paying the SRE fee: approximately $1,500–$2,500 MXN (around $75–$125 USD)
4. Waiting for approval: 5–10 business days in most cases

The SRE permit is valid for 90 days — you must complete incorporation within that window.

Incorporation Before a Notary

With the SRE permit in hand, a Mexican notary public drafts and executes the Acta Constitutiva (articles of incorporation). This document establishes:

• Company name, purpose, and domicile
• Capital structure and shareholder/partner information
• Governance rules (board composition, voting thresholds)
• Fiscal year

Notary fees for incorporation typically run $8,000–$20,000 MXN depending on complexity and the notary’s office. The deed is then registered with the Registro Público de Comercio (Public Commercial Registry) — plan for 2–4 weeks.

RFC Registration: Your Tax Identity

Every Mexican legal entity must register with the Servicio de Administración Tributaria (SAT) — Mexico’s tax authority — to obtain an RFC (Registro Federal de Contribuyentes). The RFC is your company’s tax ID and is required to:

• Issue invoices (CFDI, Mexico’s electronic invoice system)
• Open a business bank account
• File tax returns
• Enter into contracts with government entities and many private companies

RFC registration requires a Mexican tax domicile (a physical address in Mexico where the company can receive official correspondence) and is done online through the SAT portal. If your company has foreign shareholders, those individuals will also need to register as foreign taxpayers in Mexico.

Banking: Often the Hardest Part

Opening a Mexican business bank account as a foreign-owned company is genuinely difficult and time-consuming. Major banks (BBVA, Santander, HSBC, Banamex) have extensive anti-money-laundering compliance requirements and often require:

• Certified copies of all incorporation documents
• RFC registration certificate
• Proof of address for the company and all shareholders/directors
• Identity documents (passport and proof of address) for all beneficial owners
• In-person appointment with all signatories present in Mexico
• A reference from an existing customer (at some banks)

Processing times vary from 2 weeks to 3 months. Some banks are more receptive to foreign-owned businesses than others — your attorney can advise on which institutions are currently more accessible.

In the interim, many businesses use fintech alternatives (Conekta, Clip, or regional platforms) while the traditional banking process moves forward.

Residency and the Nominee Question

Foreigners can own 100% of a Mexican company in most industries. However, certain restricted activities — radio broadcasting, domestic air transport, fuel distribution, and others specified in the Foreign Investment Law — require Mexican majority ownership or government permits.

For most service businesses, consulting, real estate development, hospitality, and retail: 100% foreign ownership is permitted without special authorization.

Nominee arrangements (using Mexican nationals as nominal shareholders to satisfy bureaucratic convenience) are a red flag. While they exist, they carry significant legal risk: the nominee retains legal rights over the shares, and disputes can be difficult to resolve. If your business structure genuinely requires a Mexican partner, formalize the relationship with proper shareholder agreements — do not rely on informal trust.

A qualified director or legal representative (apoderado) who is a Mexican resident is often sufficient for operational and government compliance purposes without the risks of nominees.

Timeline and Realistic Costs

Step	Time	Approximate Cost
SRE name/permit	1–2 weeks	$75–$125 USD
Notary incorporation	1 week + 2–4 weeks registration	$400–$1,000 USD
RFC registration	1–2 weeks	Minimal (attorney fees)
Business bank account	2–12 weeks	Varies
Total setup	6–16 weeks	$1,500–$3,500 USD in hard costs

Attorney and advisory fees are additional and vary by firm. Budget a total of $3,000–$7,000 USD for a properly structured, legally compliant setup including professional fees.

The Bottom Line

Starting a business in Mexico as a foreigner is entirely achievable — but the bureaucratic layers require patience and professional guidance. The temptation to cut corners (informal arrangements, nominee structures, unregistered operations) creates legal exposure that outweighs any short-term savings.

At Loyal Service, we guide North American entrepreneurs through every step: entity selection, SRE permits, notary coordination, RFC registration, and ongoing fiscal compliance. Our bilingual team understands both the regulatory environment and the practical realities of doing business on the Mexican Pacific coast.

Contact us to discuss your business plans before you commit to a structure.