If you plan to start a business in Mexico, one of the first steps is choosing the right legal structure. This decision will impact your taxes, liability, company organization, and even how you're perceived by partners and clients. Here's an overview of the main options and who they’re best for.
1. S.A. de C.V. (Variable Capital Corporation)
Similar to: Joint-stock company.
One of the most popular forms for foreign entrepreneurs.
Best for:
Medium and large businesses
Companies with multiple partners or investors
Key points:
Requires at least two shareholders
A Statutory Auditor (Comisario) must be appointed in the bylaws
2. S. de R.L. de C.V. (Limited Liability Company)
Similar to: LLC
A great option for small and medium-sized businesses.
Best for:
2 to 50 partners
Family-owned or partnership businesses
Key points:
Transfer of shares to third parties can be restricted
Fewer formalities than an S.A., no Auditor required
3. Sole Proprietor (Persona Física con Actividad Empresarial)
Similar to: Individual entrepreneur
Best for:
Freelancers, consultants, digital entrepreneurs
Those wanting to start quickly without partners
Key points:
Registered under your personal name
Unlimited personal liability
Can be registered online with a Mexican tax ID (RFC) and e-signature
4. S.A.S. (Simplified Joint Stock Company)
Similar to: Online simplified company
Best for:
Startups or small businesses with one founder
Key points:
Only one shareholder allowed
Fully online registration, no notary
Requires RFC and e-signature
Annual income limit (~6 million MXN)
Which structure is right for you?
Want to scale and look solid? Go with S.A. de C.V.
Starting with partners or family? Consider S. de R.L. de C.V.
Testing the waters or working solo? Start as a Sole Proprietor
Need a company fast, have RFC and e-signature, no partners? S.A.S. is a good choice
Not sure what fits your project? We’ll help you choose the best structure based on your goals and business plan.
By the way, all of these legal forms may, under certain conditions, qualify for the simplified tax regime RESICO and pay only 2.5% Income Tax. But we explain that in another article.