LEGALTICA GUIDE

Doing business in Mexico: how a US company sets up, hires and stays compliant

A US company can do business in Mexico in five ways: sell from the US with no presence, hire through an employer of record, manufacture under a shelter operator’s IMMEX program, set up its own subsidiary (usually an S. de R.L. de C.V. or an S.A. de C.V.), or register a branch. Most companies that will have their own staff, inventory or customers in Mexico end up with a subsidiary, which typically takes four to eight weeks to incorporate and two to four months to be fully operational with a tax ID, bank account, social security registration and, if it imports, a place on the importers’ register. Foreign ownership of 100% is allowed in most sectors, but Mexican labor law is far more protective than US at-will employment, and the working week is falling from 48 to 40 hours between 2027 and 2030.

The rest of Legaltica is in Spanish.

Legaltica editorial team Reviewed 25 October 2026 · 23 min read

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The five ways in, and when each one fits

01 Selling from the US with no presencefine for exports to Mexican customers who import the goods themselves. The risk is a permanent establishment: if a person in Mexico habitually concludes contracts for you, or plays the principal role in concluding them, Mexico can tax the profit as if you had an office there (Income Tax Law, art. 2).

02 Employer of record (EOR) or PEOa local provider employs your people and you pay a monthly fee per employee. It can be running in one to three weeks and suits one to ten hires while you test the market. Since the 2021 outsourcing reform, how the arrangement is structured matters: see the hiring section below.

03 Shelter (albergue) under IMMEXa Mexican shelter company holds the IMMEX program, employs the workforce, imports your machinery and materials temporarily without paying import duties, and handles customs, payroll and compliance; you control production and own the equipment. Typical start-up is three to six months, much of it finding and fitting out a building. It suits manufacturers who want to start fast and defer building their own entity.

04 Your own subsidiaryan S. de R.L. de C.V. or S.A. de C.V. owned by the US parent. It is the only option that gives you full control of hiring, contracts, local sales and, later, your own IMMEX program. Four to eight weeks to incorporate, two to four months until it can invoice, pay staff and import.

05 Branch of the US companypossible, but rarely chosen. It needs prior authorization from the Secretaría de Economía (Foreign Investment Law, art. 17), registration in the Public Registry of Commerce, and an annual balance sheet published in the Secretaría de Economía’s electronic system (General Law of Commercial Companies, art. 251), and the US parent is directly exposed to Mexican liabilities.

S. de R.L. de C.V. or S.A. de C.V.?

Both are limited-liability companies with variable capital (the “de C.V.”), and neither has a legal minimum capital. The practical differences for a US parent are these:

S. de R.L. de C.V. (sociedad de responsabilidad limitada): up to 50 partners (art. 61), with capital divided into partes sociales (membership quotas) rather than shares. It is the usual choice for US subsidiaries because, for US tax purposes, it is an eligible entity that can elect its classification.
S.A. de C.V. (sociedad anónima): at least two shareholders, each holding at least one share (art. 89), with no maximum. Shares transfer more easily, which suits outside investors or a future sale. For US tax purposes the Mexican sociedad anónima is a “per se” corporation and cannot elect to be treated as a partnership or disregarded entity (Treas. Reg. § 301.7701-2(b)(8)).
Both need at least two owners: in practice the US parent holds almost everything and a second group company or a trusted individual holds one quota or one share.
The S.A.S. (simplified one-shareholder company) is not an option for a US parent: its shareholders must be individuals and its 2026 annual revenue is capped at MXN 7,678,849.94 (art. 260).
Which entity suits your US tax position is a question for your US tax adviser before the notary signs, not after.

Business and corporate lawyers in Mexico who speak English

Tell a firm what you plan to do in Mexico, in English, and include the city, the stage you are at (exploring, entity chosen or already operating) and the size of the operation in employees or investment. They receive your message and your phone number, and you see theirs straight away. It’s free and you’re not committing to anything. Languages are taken from each firm’s profile. Firms marked “Registered with Legaltica” manage their own profile.

Registered with Legaltica

CITY
Ciudad de México
LANGUAGES
DE · EN · ES

Jiménez-Ruiz | Abogados

4.9 · 8 Google Speaks English

Jiménez-Ruiz | Abogados is a boutique firm in Colonia Juárez, Ciudad de México. It focuses on administrative litigation, disputes with government authorities, civil and commercial litigation, constitutional relief, and state liability claims, including medical negligence.
If you are setting up or operating a business in Mexico and your matter also involves government actions, permits, contracts, or compliance disputes, they can help with the litigation side.

CALL THEM IF you need help with government disputes, permits, or compliance issues in Mexico City
Registered with Legaltica

CITY
Guadalajara
LANGUAGES
ES · EN

Rosas y Asociados Abogados

5.0 · 50 Google Speaks English

Rosas y Asociados Abogados is a firm in Colomos Providencia, Guadalajara. Its team combines corporate advice and strategic litigation with alternative dispute resolution, and includes lawyers in corporate, real estate, civil, labor, commercial, industrial property, and family law.
If your Mexico business plans also involve contracts, property, corporate structure, or workplace issues, they can support the legal work around those matters and help resolve disputes through alternative channels.

CALL THEM IF you want corporate, property, or labor advice in Guadalajara as your Mexico business grows
Registered with Legaltica

CITY
Guadalajara
LANGUAGES
ES · EN

Preciado & Lara Corporativo de Abogados

5.0 · 269 Google Speaks English

Preciado & Lara Corporativo de Abogados is based in Col. Colinas de La Normal, Guadalajara. The firm works in family, civil, administrative, commercial, labor, tax, and intellectual property law, with office visits by appointment in the Guadalajara metro area.
If your Mexico operations also need help with contracts, taxes, administrative matters, or intellectual property, they can support those legal issues while your business is being set up or expanded.

CALL THEM IF you need civil, tax, or intellectual property support for your Mexico business in Guadalajara

Setting up a subsidiary step by step

Reserve the company name with the Secretaría de Economía online. It decides within two working days, and the notary must file the notice of use within 180 calendar days of the authorization or the name lapses.
Decide the partners, the managers and the powers of attorney (poderes). Who can sign contracts, open bank accounts and appear before the tax and labor authorities is set here; a power granted abroad must be apostilled and translated.
Sign the articles of incorporation before a notario público or, for commercial companies, a corredor público. Foreign partners usually sign through a representative with a power of attorney, so they don’t have to travel.
Registration in the Public Registry of Commerce (Registro Público de Comercio), which the notary handles electronically; typically one to three weeks.
Tax ID (RFC) and e.firma (the company’s advanced electronic signature) before the SAT. The notary can request the RFC. The e.firma is issued at a SAT office by appointment, and the company’s legal representative must already have their own RFC and a valid personal e.firma, which a director living in the US usually does not have; choose a representative who can get one early. Without the e.firma the company cannot issue invoices (CFDI).
Register in the National Registry of Foreign Investment (RNIE) within 40 working days of incorporation (Foreign Investment Law, art. 32). After that, a quarterly notice is due only when certain changes occur, and the annual economic report applies when the company’s assets, liabilities, revenue or costs reach the threshold set by the Foreign Investment Commission (MXN 110 million).
Open a Mexican bank account. This is often the slowest step: banks ask for the registered deed, RFC, proof of address, and the identity and beneficial owners of the whole chain up to the individuals at the top.
Register as an employer with IMSS (social security) and INFONAVIT (housing fund) before the first hire; each employee must be registered within five working days (Social Security Law, art. 15). Register also for the state payroll tax where you operate.
If you will import, apply for the Padrón de Importadores (importers’ register) before the first shipment (Customs Law, art. 59, section IV).

What foreign investors can and cannot own

Foreign investment can hold any percentage of a Mexican company unless the Foreign Investment Law says otherwise (art. 4), so most manufacturing, distribution, software and services businesses can be 100% US-owned. The exceptions are listed in the law:

Reserved to the State (art. 5): among others, oil and gas exploration and extraction, planning and control of the national power grid and transmission and distribution of electricity, nuclear energy, radioactive minerals, and control of ports and airports.
Reserved to Mexicans (art. 6): domestic land transport of passengers, tourism and freight (not courier and parcel services) and development banks. A logistics plan that includes your own Mexican trucking company needs a different structure.
Capped at 49% (art. 7): among others, explosives and firearms, newspapers for national circulation, fishing, integral port administration, domestic air transport and broadcasting (subject to reciprocity).
Above 49% only with approval of the Foreign Investment Commission (art. 8): including private schools, legal services, some port and shipping services and railways. Buying more than 49% of a Mexican company whose assets exceed the annual threshold also needs approval (art. 9).
Real estate: a Mexican company with foreign partners whose bylaws include the foreigners’ clause (convenio de extranjería, the “Calvo clause”) can own land for non-residential use, including in the coastal and border restricted zone, giving notice to the Foreign Ministry within 60 working days of the purchase (art. 10). Residential property in that zone goes through a bank trust: see buying property in Mexico.

Manufacturing: IMMEX, shelter and the permanent establishment risk

IMMEX is the Secretaría de Economía program that lets a manufacturer import raw materials, parts, packaging and machinery temporarily, without paying general import duty, as long as the finished goods are exported. Raw materials, parts and packaging can stay up to 18 months (Customs Law, art. 108). To obtain it, the company must commit to export sales of more than USD 500,000 a year or exports of at least 10% of its total invoicing, and it must file an annual report on its sales and exports by the last working day of May; if the report is late, temporary imports are suspended until it is filed, and if it is still missing at the end of August the program is cancelled from 1 September (IMMEX Decree, arts. 11 and 25). Not everything qualifies: since December 2024 most finished garments and made-up textiles (tariff chapters 61 to 63), and since August 2025 finished footwear (headings 64.01 to 64.05), cannot be imported temporarily under IMMEX (Annex I). With the SAT’s VAT certification, the 16% VAT on temporary imports becomes a credit instead of cash paid up front (VAT Law, art. 28-A).

The tax question behind every maquila structure is whether the US company that owns the machinery and materials ends up with a permanent establishment in Mexico. The law offers two paths:

Your own maquiladora: the US company is not treated as having a permanent establishment if the Mexican subsidiary operates under an IMMEX program, meets the requirements of the US-Mexico tax treaty, and reports a taxable profit of at least the greater of 6.9% of the assets used in the operation or 6.5% of its operating costs and expenses, and files an annual information return on its maquila operations by June showing it (Income Tax Law, arts. 181 and 182). Since 2022 an advance pricing agreement is no longer an alternative way into this safe harbor.
Shelter: the foreign company that supplies materials and machinery to a shelter operator has no permanent establishment if it is not related to the shelter, registers with the SAT, has income tax determined and paid through the shelter on its share of the operation, and files an annual information return on its maquila operations by June (arts. 183 and 183-Bis).
If the shelter fails to meet its obligations and does not fix them within 30 calendar days of the SAT’s request, its importers’ register is suspended and the foreign company is treated as having a permanent establishment, with all the tax obligations that follow (art. 183-Bis).
Selling the finished goods in Mexico rather than exporting them, or selling the machinery to the shelter, takes you outside these rules.

The Plan México decree (DOF 21 January 2025) also allows an optional immediate deduction for new fixed assets acquired until 30 September 2030, within a capped budget and subject to approval by an evaluation committee. Whether it pays off for your project depends on the numbers and is a question for a tax adviser.

Hiring in Mexico: the rules that surprise US employers

01 There is no at-will employment. Unless the contract says otherwise, the relationship is indefinite (Federal Labor Law, art. 35), and a dismissal needs one of the causes in the law, given in writing, or it will be treated as unjustified.

02 Put the terms in writing. Without a written contract or a collective agreement, the employer bears the consequences of the missing document (arts. 24 and 26). A probation period is allowed only up to 30 days, or 180 days for managers and specialized technical or professional roles (art. 39-A).

03 Staff outsourcing is prohibited since 23 April 2021 (art. 12). You can only subcontract specialized services or works that are not part of your corporate purpose or main economic activity, and only from a contractor registered in the REPSE register of the labor ministry (STPS), renewed every three years (arts. 13 and 15). The fine is 2,000 to 50,000 UMA, MXN 234,620 to MXN 5,865,500 at the 2026 value, for whoever subcontracts staff and for providers without the registration (art. 1004-C); those payments are neither deductible nor creditable for VAT (Federal Tax Code, art. 15-D); and even with a registered provider, the client is jointly liable to the workers if the provider fails to pay them (art. 14).

04 An EOR is therefore a bridge, not a permanent modelthe provider’s contract, its registration and the work your people actually do should be reviewed against these rules, and most companies move staff to their own entity once the team grows.

05 Christmas bonus (aguinaldo)at least 15 days’ salary, paid before 20 December, pro rata for those who have worked less than a year (art. 87).

06 Paid vacation12 working days after the first year, rising by two days a year to 20 days in the fifth year, then by two days every five years (art. 76, as reformed with effect from 2023), plus a vacation premium of at least 25% of the vacation pay (art. 80).

07 Profit sharing (PTU)10% of the company’s taxable income goes to employees each year, paid within 60 days of the date the annual tax return is due, that is, by the end of May for a calendar year. Directors, administrators and general managers do not take part, and each worker’s share is capped at three months’ salary or the average of the last three years, whichever is more favorable to the worker (arts. 117, 122 and 127). A new company is exempt in its first year of operation (art. 126).

08 Minimum wage in 2026MXN 315.04 a day, or MXN 440.87 in the Northern Border Free Zone (Tijuana, Ciudad Juárez and other border municipalities).

09 Unionssince the 2019 labor reform, collective agreements need the support of the majority of workers in a personal, free and secret vote, and labor disputes start at a conciliation center before they can reach the labor courts. US-bound manufacturers are also exposed to the USMCA Rapid Response Labor Mechanism.

10 Foreign staffa US manager who will live and work in Mexico needs a residence permit with work authorization; visiting for meetings is not the same as working there.

The 40-hour week: published, and phased in from 2027

It is law. The constitutional reform was published in the DOF on 3 March 2026 and the Federal Labor Law reform on 1 May 2026. The maximum ordinary week stays at 48 hours in 2026 and falls on 1 January of each year: 46 hours in 2027, 44 in 2028, 42 in 2029 and 40 in 2030, with no cut in wages or benefits. 2026 is the adjustment period.

Overtime is paid at double rate. The weekly cap is 9 hours in 2026 and 2027, 10 in 2028, 11 in 2029 and 12 from 2030, spread over no more than four hours a day on four days (art. 66 and fourth transitory article).
Beyond that cap, up to four more hours a week can be worked, paid at triple rate, and ordinary plus overtime hours can never exceed 12 in a day (art. 68). Workers under 18 cannot work overtime.
Employers must keep an electronic record of each employee’s start and finish times and hand it over when the authority asks (art. 132, section XXXIV); the STPS rules on it apply from 1 January 2027. The fine for not complying is 250 to 5,000 UMA, MXN 29,327.50 to MXN 586,550 at the 2026 value (art. 994, section IV Bis).
Worked example: in 2027 a plant worker whose ordinary hour is worth MXN 150 works 58 hours in a week. The first 46 are ordinary; the next 9 are paid at double (9 × MXN 300 = MXN 2,700); the last 3 at triple (3 × MXN 450 = MXN 1,350). That week’s overtime costs MXN 4,050. The same 58-hour week in 2026, with a 48-hour limit, costs MXN 3,150 (9 hours at double and 1 at triple), and by 2030 the first 40 hours are the only ordinary ones. Plan shift patterns and headcount for 2027 now.

What a dismissal costs: a worked example

An employee dismissed without a justified cause can ask, first at the conciliation center and then in court, either to be reinstated or to be paid three months’ salary (art. 48). Where the employer is excused from reinstating, as with employees of less than a year, trusted (confianza) employees or temporary staff, the employer pays the indemnity in article 50: for an indefinite contract, 20 days’ salary per year of service plus the three months. On top of that comes the seniority premium of 12 days per year of service, with the salary used capped at twice the minimum wage (arts. 162 and 486). In practice, three months plus 20 days per year plus the seniority premium is where most settlements start.

Example: an engineer in Querétaro with five years of service and a salary of MXN 1,000 a day. Three months is MXN 90,000; 20 days for each of the five years is MXN 100,000; the seniority premium is 60 days at the cap of MXN 630.08, MXN 37,804.80. Total: about MXN 227,800 (about USD 12,100), plus the proportional aguinaldo, vacation and vacation premium owed anyway. Courts calculate on the integrated daily salary (salario diario integrado), which includes benefits, so the real figure is usually higher.

If the case goes to court and the employer cannot prove the cause, it also owes back pay from the dismissal for up to 12 months, MXN 360,000 more in the example, and after that 2% monthly interest on 15 months’ salary until it pays (art. 48). A signed resignation or a settlement approved by the conciliation center is what closes the matter.

Tax basics for a Mexican subsidiary

This is how the system works in general; it is not tax advice for your company.

01 Corporate income tax30% of taxable profit (Income Tax Law, art. 9), with the annual return due within three months of the end of the tax year, plus monthly provisional payments.

02 VAT16% general rate (VAT Law, art. 1). Exports of goods are generally zero-rated.

03 Dividendsan additional 10% tax withheld on dividends paid to individuals and to foreign shareholders (arts. 140 and 164); the US-Mexico tax treaty may reduce it if its requirements are met.

04 Electronic invoices (CFDI)every sale, payment received and payroll payment needs a CFDI issued through the SAT system; without the e.firma and the digital seal certificate, you cannot invoice.

05 Transfer pricingsales, services, royalties, interest and management fees with the US parent must be priced at arm’s length and documented, with an annual information return on related-party transactions.

06 Beneficial ownersthe company must keep and update the identity of the individuals who ultimately own or control it, within 15 calendar days of any change (Federal Tax Code, arts. 32-B Ter and 32-B Quinquies). Not keeping that information carries fines of MXN 1,686,750 to MXN 2,249,000 for each beneficial owner (arts. 84-M and 84-N).

07 Withholding on payments abroadroyalties, interest, technical assistance and some services paid to the US parent are subject to Mexican withholding, at treaty rates if the treaty requirements are met.

Mistakes that cost the most

Hiring people through a “payroll company” for core work: a fine of up to MXN 5,865,500, the payments disallowed for income tax and VAT, and the workers able to claim against you as the real employer.
Dismissing someone the US way, by email and with no written cause: the starting point becomes three months plus 20 days per year, and in court up to 12 months’ back pay on top.
A sales manager in Mexico negotiating and closing contracts for the US company: a permanent establishment, with Mexican income tax on the profit attributed to it, plus penalties and interest.
Missing the RNIE registration or later reports: a fine of 30 to 100 times the UMA (about MXN 3,500 to MXN 11,700 in 2026) for each omission, and the notary who formalizes the company’s next corporate act must report the missing registration to the registry within 10 working days (Foreign Investment Law, arts. 34 and 38).
Not keeping the beneficial owner file: MXN 1,686,750 to MXN 2,249,000 per beneficial owner, for what is essentially a paperwork failure.
Treating IMMEX as an import permit and nothing more: a missed annual report suspends temporary imports and, if still missing at the end of August, cancels the program from 1 September; goods that cannot be shown to have been exported within their time limits owe import duties and VAT.
Waiting for the 2027 deadline: the cut to 46 hours and the STPS rules on the electronic time record both apply from 1 January 2027, and a plant that keeps its 48-hour shifts will pay double rate from hour 47.

When a lawyer is worth it

The notary formalizes the company but does not advise you on the structure, and an EOR or shelter provider is not your lawyer. A corporate and labor lawyer in Mexico is worth it in the situations below. The firms listed say they speak English.

Choosing between EOR, shelter and your own subsidiary: the wrong choice can mean the outsourcing fine, a permanent establishment or years of fees that a subsidiary would have avoided.

Drafting the articles, powers of attorney and intercompany agreements: who can sign and what the parent charges the subsidiary determine both control and tax exposure.

Reviewing a shelter, EOR or specialized-services contract: who is the employer, who is liable to the workers and who bears the tax risk if the provider fails.

Writing employment contracts, internal work rules and the time-record system before the first hire and before 1 January 2027.

Any dismissal, and any approach from a union or a conciliation center: the cost of a badly handled termination is usually several times the cost of advice.

Buying a Mexican company or its assets, or entering a sector with foreign-ownership limits: approvals from the Foreign Investment Commission or the competition authority may be needed before you close.

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Business and corporate lawyers in Mexico who speak English