Part 2: Persona Moral
In our last blog post, we discussed starting a business in Mexico as an individual. However, some business ventures may require or be best served by forming a legal entity, known as Persona Moral in Mexico. In this article, we will outline some of the important points to consider when creating a legal entity in Mexico.
Setting up the Corporation
The majority of this process must be handled by an experienced corporate attorney. Your corporate attorney will make sure that you choose the appropriate corporate structure and understand what is required of you by law as an investor, partner, or owner of a business. For more details on how to create or become a partner in a Mexican corporation, our business partners at Mexlaw have an excellent article here.
There are also a variety of corporate structures to choose from including LLCs. It is very important to consult with an expert regarding which corporate structure is right for your business needs.
Accounting Considerations – Taxes & Employment Law
Once you have started working with your corporate attorney, an accountant should be hired and will be responsible for ensuring your new corporation is following all Mexican tax laws. They should offer services such as:
- Registering the corporation with SAT, Mexico’s tax authority
- Applying for the corporation’s FIEL (e-signature)
- Opening the corporate bank account
- Accurately completing your monthly accounting records
- Monthly declaration of IVA & ISR (sales & income tax)
- Monthly declaration of hotel taxes (if applicable)
- Annual ISR declaration
- Withholding for taxes (IVA & ISR)
- Balance sheet & financial statements in English
- Issuance and cancellation of invoices (facturas)
- SAT Modifications (fiscal address, password, registering branch offices, paying taxes)
In addition to the tax implications, it is critical that your corporation closely follows Mexican employment laws. Failure to do so could leave your corporation vulnerable to significant fines and penalties from a variety of government agencies. Some things to consider are:
- Employer Registration with SAT
- Employer & Employee Registration with IMSS*
- Payroll calculation according to employer´s requirements (weekly, bi-monthly, monthly)
- Payroll Tax Seal (required by SAT)
- Monthly IMSS calculation
- Bi-Monthly INFONAVIT & SAR calculation
- Employee resignation or termination calculation
- Year-end bonus calculations
- Employee Profit Sharing calculation (PTU)
- Vacation bonus calculations
- Calculations of all additional payroll-related incidents (unpaid time, overtime, Sunday work time, etc.)
- Salary adjustments
- State payroll tax calculations
An accountant is an invaluable resource on your route to business success in Mexico – whether are opening a subsidiary to your existing business or creating a new legal partnership. To find out more on how to start your own business and earn an income in Mexico, please contact our professional and highly experienced team at Mextax today.
