Starting a Business in Mexico as a Foreigner: The Practical Guide

Can foreigners legally run a business in Mexico? Yes — with appropriate structures and permits. Many expats in Mérida operate businesses ranging from vacation rentals and online consulting to restaurants and real estate agencies. This guide covers what’s actually required to do it legally.

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The Immigration Foundation: Your Work Status Matters

Before discussing business structures, understand how your immigration status affects your right to work:

Tourist / visitor (FMM): You CANNOT legally work or earn income in Mexico on a tourist permit. Working without authorization is a violation of your immigration status.

Temporary resident without work permit: You can live in Mexico but are not authorized to work for a Mexican employer or provide paid services in Mexico.

Temporary resident with work permit: Authorized to work for the specific employer or in the category specified in your permit.

Temporary resident as owner/investor of a Mexican company: If you own a Mexican company and work in it as a director/administrator, you can obtain residency and work authorization through the company structure.

Permanent resident: Can work for any employer or operate a business in Mexico without additional permits.

The common path for entrepreneur expats: Form a Mexican company (which provides the legal entity to conduct business), then obtain temporary residency as an investor/business owner. The company’s existence and your role in it supports the residency application.

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Mexican Business Structures

S.A. de C.V. (Sociedad Anónima de Capital Variable)

The traditional Mexican corporation — similar to a US corporation (C-Corp or Inc.).

Characteristics:

• Minimum 2 shareholders required
• Shareholders have limited liability
• More formal governance requirements (annual meetings, board, etc.)
• Better suited for larger operations, multiple investors, or businesses with complex needs

Minimum capital: Technically $50,000 MXN minimum (though this is rarely enforced strictly)

Formation cost: $15,000–$40,000 MXN in legal fees (plus notary and government fees)

Annual compliance: Accounting, SAT filings, annual meetings, IMSS registration if you have employees

S.A.S. (Sociedad por Acciones Simplificada)

The simplified alternative — designed for small businesses and startups.

Characteristics:

• Can be formed by a single shareholder (unlike S.A. de C.V.)
• Simpler formation and governance
• Formed entirely online through the SE (Secretaría de Economía) portal
• No minimum capital requirement
• Revenue cap: cannot exceed MXN 5 million/year in gross revenue (if it does, you should convert to another structure)
• No public accounting firm requirement

Formation cost: Free to file online (plus some legal advice costs if you use a lawyer)

Who it’s for: Freelancers, small online businesses, individuals starting a service business, digital nomads who need a Mexican entity

Important limitation: The S.A.S. is relatively new and not all banks and institutions are fully familiar with it. Some banks have been slower to open accounts for S.A.S. entities.

Empresa Individual de Responsabilidad Limitada (Limited Liability Individual Enterprise)

Another option, less common — a single-person entity with limited liability. Check current availability and requirements with a Mexican attorney.

Sole Proprietorship (Persona Física con Actividad Empresarial)

Operating as a self-employed individual (rather than a company) under your own name and RFC. This is the simplest path but:

• You have unlimited personal liability
• Less separation between personal and business assets
• May be less appropriate for customer-facing businesses

When it works: For freelancers and consultants doing remote work for non-Mexican clients (particularly if most income is from outside Mexico), this can be simpler to operate.

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Steps to Register a Business in Mexico

For an S.A.S. (Simplified Path):

1. Get your RFC and CURP if you don’t have them already
2. Check business name availability at the SE portal
3. Form the company online through the SE’s SAS portal — submitting articles of incorporation
4. Register with SAT for your company’s RFC
5. Open a business bank account — with the company’s RFC and incorporation documents
6. Register with IMSS if you’ll have employees
7. Get any sector-specific licenses (restaurant: health permits; rental: tourist registry, etc.)

For an S.A. de C.V.:

Similar but requires a notary for the formation, at least 2 shareholders, and more formal documentation. Typically handled by a corporate attorney.

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Tax Obligations for Mexican Businesses

Once you have a Mexican company and are operating, your tax obligations include:

ISR (Income Tax): Corporate rate of 30% on net profits. Monthly advance payments are made, with annual reconciliation.

IVA (VAT): 16% on most goods and services. If your business sells goods or services subject to IVA, you collect it from customers, remit it to SAT monthly (minus the IVA you paid on your business expenses).

IMSS: If you have employees (including yourself if you take a salary), you must register with the social security institute and make contributions.

Monthly SAT declarations: Even months with no activity require filing a “declaration in zero” with SAT — failure to file monthly creates fines.

Annual declaration: Filed by March 31 of the following year.

Working with a contador: The ongoing compliance burden of a Mexican company requires an accountant. Monthly accounting fees run approximately $2,000–$6,000 MXN/month depending on transaction volume.

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Specific Business Types: What You’ll Actually Encounter

Vacation Rental (Airbnb/Short-Term Rental)

Many expats buy a property and rent it through Airbnb, Vrbo, or similar. This is operating a business in Mexico:

• The rental income is taxable in Mexico (ISR)
• For Airbnb, the platform withholds and remits some taxes automatically — but you may still have a Mexican tax filing obligation
• If your revenue exceeds certain thresholds, IVA may apply
• Operating through a Mexican company is not required for vacation rental but may be advantageous for tax purposes and liability

Consulting / Freelancing for Foreign Clients

Many digital nomads and expats do consulting or freelancing work for clients outside Mexico. The key question: is the income considered Mexican-source or foreign-source?

• If you’re providing services to clients outside Mexico from Mexico, the income may or may not be subject to Mexican tax depending on the structure — this is a nuanced area requiring professional advice
• Operating as a Mexican company and exporting services may qualify for IVA rate of 0% (not exempt but zero-rated, allowing credit for IVA you pay)

Restaurant, Shop, or Service Business

Physical businesses serving local customers in Mexico are straightforward businesses subject to full Mexican taxation. They require:

• Business permits from the municipality
• Health permits (restaurantes: COFEPRIS)
• SAT registration and regular filings
• IMSS for employees
• Potentially specific sector licenses

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Work Permit / Residency as a Business Owner

If you form a Mexican company and work in it, you can apply for temporary residency under the “investor” or “business activities” category:

Requirements vary but typically include:

• Evidence the company is legally formed and in good standing
• Evidence of investment (minimum levels may be set by INM — check current requirements)
• Your role in the company
• Health requirements

This is different from employment-based work authorization — as an owner/director, you’re authorized to manage your own business, not to be an employee of someone else’s company.

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Mexican residency visa guide → RFC and CURP for foreigners → Opening a bank account in Mexico → Short-term rental investment guide → Talk to an advisor →

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Business registration requirements, tax rates, and immigration rules in Mexico change. Always verify current requirements with a licensed Mexican attorney and accountant before establishing a business. This guide is informational as of 2026 — not legal or tax advice.