Types of Companies in Mexico: A Complete Guide to Choosing the Best Option for Your Business

Establishing a company in Mexico is not only a key step to operate legally but also a strategic decision that can protect your assets, improve your access to clients and suppliers, facilitate obtaining financing, and give you greater credibility in the market.

But which type of company is best for you? What are the differences between a Corporation (Sociedad Anónima) and a Limited Liability Company (Sociedad de Responsabilidad Limitada)? How easy is it to set up a Simplified Joint-Stock Company (Sociedad por Acciones Simplificada) or a Civil Society (Sociedad Civil)? And most importantly, what are the tax implications for each?

In this guide, we clearly and practically explain everything you need to know to make an informed decision and correctly structure your company from the outset.

Why Establish a Company?

If you're starting a business with one or more partners, or simply wish to separate your personal assets from those of your business, establishing a commercial or civil company is an excellent decision.

In addition to providing legal security, a company allows you to access more efficient tax schemes, participate in tenders, sign more robust contracts, and, in many cases, operate with greater formality and scalability.

Types of Companies in Mexico

Commercial Companies

Governed by the General Law of Commercial Companies, these companies are designed for commercial activities with profit motives. The main types are:

General Partnership (Sociedad en Nombre Colectivo)
Limited Partnership (Sociedad en Comandita Simple)
Limited Liability Company (Sociedad de Responsabilidad Limitada)
Corporation (Sociedad Anónima)
Limited Partnership by Shares (Sociedad en Comandita por Acciones)
Cooperative (Sociedad Cooperativa)
Simplified Joint-Stock Company (Sociedad por Acciones Simplificada)

Civil Companies

Governed by the Federal Civil Code, these are aimed at non-speculative economic activities, such as those carried out by lawyers, accountants, doctors, or engineers. The most common types are:

Civil Society (Sociedad Civil)
Civil Association (non-profit organization)

Key Factors for Choosing the Right Company

1. Business Activity (Objeto Social)

The business activity is the main purpose of your company. If you're looking to engage in commercial activities, a commercial company is the right choice. If your activity is professional or non-profit, a civil society or civil association may be more suitable.

Practical Tip: Write a broad but clear business activity statement, allowing you to operate without unnecessary limitations.

2. Number of Partners

Except for the Simplified Joint-Stock Company, which can be established by a single person, all other companies require at least two partners. There is no maximum number of partners unless stated, such as in the case of a Limited Liability Company, which has a 50-partner limit.

Note: Partners can be individuals or legal entities, both domestic or foreign, with certain restrictions in regulated sectors.

3. Share Capital

In Mexico, no company requires a specific minimum share capital by law. Capital can be contributed in cash or assets and can be paid in one lump sum or in installments, according to the company’s bylaws.

Key Point: The amount is not as important as reflecting the seriousness of the project and having enough capital for the company’s initial operations.

4. Partner Liability

Depending on the type of company, liability can be limited or unlimited:

In a Corporation, Simplified Joint-Stock Company, Limited Liability Company, Promoter Investment Corporation, and Civil Society, partners are only liable up to the amount of their contributions.
In a General Partnership and Limited Partnership, partners have subsidiary, joint, and unlimited liability, meaning they can risk their personal assets.

Important: Establishing a company should not be used to evade responsibilities, especially in cases of fraud or breach of contract.

5. Management and Supervision

Every company must have a management body, which may be a sole director or a board of directors. In certain companies like the Corporation, a Commissary is required to oversee the directors’ actions.

Recommendation: Choose the management structure that best suits the size and complexity of your business. The more partners you have, the more beneficial it will be to have a board of directors.

6. Tax Regime and Income

The choice of company also affects the tax regime:

The Simplified Joint-Stock Company can operate as long as its annual income does not exceed $7,076,469.38 MXN (2024 limit).
Other companies can opt for the Simplified Trust Regime if their annual income is below 35 million pesos.
Civil Companies are taxed on received income, even outside the Simplified Trust Regime.

Consideration: Always evaluate projected income, the type of clients, and deductible expenses to select the best tax regime.

7. Constitution and Dissolution

Except for the Simplified Joint-Stock Company, all companies must be established before a Public Notary. The Simplified Joint-Stock Company can be established online through the Ministry of Economy’s portal, making it quick and accessible, although with some limitations.

All companies can be dissolved through a simplified process, provided they meet the legal requirements outlined in Articles 249 BIS and 249 BIS 1 of the General Law of Commercial Companies.

Legal Tip: Although it may seem straightforward, drafting bylaws and complying with legal requirements require professional guidance. A mistake can be costly later on.

General Comparison

Type of Company	Minimum Partners	Liability	Constitution	Income Limit	Tax Regime
Corporation	2	Limited	Public Notary	No	Simplified or General
Limited Liability Company	2 (max 50)	Limited	Public Notary	No	Simplified or General
Simplified Joint-Stock Company	1	Limited	Online Platform	$7.07 million	Simplified Regime
Civil Society	2	Limited	Public Notary	No	Cash Flow
General Partnership	2	Unlimited	Public Notary	No	General Regime
Limited Partnership	2	Mixed	Public Notary	No	General Regime
Civil Association	2	Limited	Public Notary	No	Non-profit Regime

Conclusion

There are several types of companies in Mexico. Choosing the right type of company is not just about fulfilling a legal requirement; it's a strategic decision that will impact your company’s structure, growth, and protection. At UPLAW Abogados | Attorneys-at-Law, we have helped numerous domestic and international businesses in their establishment, expansion, and legal compliance. If you're ready to start your business or need to regularize your current one, we can help guide you through the process from diagnosis to final registration with the SAT.

Have questions or need personalized advice?

Request a free legal audit to identify risks, optimize your corporate structure, and get started on the right foot.

📩 contacto@uplaw.com.mx🌐 www.uplaw.com .mx📱 WhatsApp: 5655450359 📌 You can also download the Legal Kit PyME 360° at the following link:

🔗 https://www.uplaw.com.mx/kit-legal-pyme-360

A free tool designed to help you identify legal risks, comply with your obligations, and protect your company's growth. 💼✅