Your route into Mexico is decided before you operate.
Subsidiary, branch, third parties or digital services from abroad. Each route changes your taxes in both countries, your payroll and even which bank will open your account. This guide compares all four and explains how we decide with you.
Guide · Current as of August 2026
The route is chosen before you operate.
When a US company starts selling, hiring or providing services in Mexico without deciding on its structure, the structure gets decided on its own. And almost never in its favor: the Mexican tax authorities may take the position that a permanent establishment already exists, meaning you already operate here and already owe taxes here, even if you never signed a deed of incorporation.
The route also defines very concrete things. Whether you can invoice in pesos and your clients can deduct what they pay you. Whether you can run your own payroll with social security in order. Whether a Mexican bank will open an account for you. Without an RFC (Mexico's tax ID) there are no invoices, and without invoices many corporate clients will not buy from you.
None of this means you always have to incorporate a company. Some operations fit well in an arrangement without an entity, at least for a while. What matters is choosing that arrangement with the risk measured and in writing, instead of drifting into it by inertia.
Four ways in, four risk profiles.
Mexican subsidiary
An S. de R.L. de C.V. or an S.A. de C.V. with your parent company as partner. Full control, local invoicing, your own payroll and liability separation between the parent and the Mexican operation. For US tax purposes, the S. de R.L. can elect to be treated as a pass-through entity (the arrangement known as check-the-box); the S.A. is always treated as a corporation. It is the natural route once you have decided to stay.
Branch of a foreign company
The parent operates directly in Mexico, without creating a new company. It requires authorization and registration with the Mexican authorities, and the parent is liable with all of its assets for what happens here. For tax purposes it is usually treated as a permanent establishment. It is rarely used, and almost always for very specific regulatory reasons.
Operating without an entity
Distributors, sales agents or engaging your team through third parties. It works to validate the market without opening a company, with two risks that must be measured: that the actual operation creates a permanent establishment and, if there are people working in Mexico, the staffing rules: outsourcing personnel has been prohibited in Mexico since 2021, only specialized services unrelated to your core business are allowed, and even those require registration with REPSE (Mexico's mandatory registry for specialized services providers).
Digital services from abroad
If you sell digital services to users in Mexico, there are specific tax obligations before the SAT (Mexico's tax authority) that can be met without incorporating a company: registration and tax payments depending on the case. It is a regime of its own, with its own rules, and it is worth reviewing before the first sale, because the obligations arise with the operation, whether an entity exists or not.
What your US CPA will ask first.
The structure you choose in Mexico has direct consequences for your company's tax filings in the US. The most visible one: how the US tax authorities classify your Mexican entity.
An S. de R.L. can elect to be treated as pass-through for US purposes, so its results flow directly to the parent or the partners. An S.A. does not have that option: for the US tax authorities it is always a separate corporation. That difference, barely noticeable in Mexico, changes tax credits, timing of taxation and paperwork on the US side.
The tax treaty between Mexico and the US also matters, since it defines when a foreign operation is considered established in the other country. That is why we run the diagnosis in coordination with your tax advisor in the US: we handle the Mexican side and give your CPA what they need to handle theirs.
How we decide the route with you.
Operations diagnosis
What you sell, to whom, with what team and from where. We review contracts, money flows and where your people are, because the right route comes out of the actual operation and your plans for the next 2 or 3 years.
Smart risk matrix
We put the viable routes on the table with the risk of each one: tax, labor and regulatory. You see the full map and decide with your team; we stand behind the decision.
Proposal with a fixed fee
You receive the scope, the timeline and a fixed fee in pesos in writing, with VAT and third-party expenses stated transparently. No surprises halfway through.
Execution
Incorporation or registration, RFC, powers of attorney, bank account, contracts and payroll, in the order that avoids bottlenecks. We report every milestone until the operation is up and running.
Typical mistakes when landing in Mexico.
Copying another company's structure
The S. de R.L. that worked for your competitor can be a bad fit for you: their cap table, their US tax strategy and their operation are different from yours. The structure is designed around your case, with your CPA at the table.
Hiring employees as freelancers
If a person works on your schedule, with your tools and under your instructions, Mexican law will very likely consider them your employee, no matter what the contract says. The labor liability grows quietly and is claimed in full when the relationship ends badly.
Ignoring REPSE
Since 2021, outsourcing personnel through third parties has been prohibited in Mexico: only specialized services unrelated to your core business are allowed, and even those require the provider to hold current REPSE registration. A badly built arrangement makes those payments non-deductible and creates liability before the labor authorities, even if the provider is registered.
Leaving the RFC and the bank for last
Incorporating the company is the fast part. The RFC, the electronic signature and the bank account are the procedures that set the real pace, and without them there are no invoices and no collections. They get scheduled from day one.
The right route is the one that withstands scrutiny.
No route is good or bad in the abstract. A subsidiary can be overkill for someone testing the market for six months, and a third-party arrangement can be quietly stacking up liabilities for someone who already has ten people working out of Guadalajara. Our job is not to sell you an incorporation, it is to show you the real cost and risk of each path so you can decide with data.
Clear options, measured risk, the decision is yours.
What companies ask before coming in.
How much does it cost to incorporate a company in Mexico?+
Incorporation with us starts from $14,000 MXN plus VAT. The initial payment is $14,000 MXN when the partners are individuals residing in Mexico, and $25,000 MXN when a foreign entity holds equity, to cover the power of attorney granted abroad. Notarial costs are third-party expenses we take no part in; as an estimate, the deed of incorporation starts around $18,000 MXN and the power of attorney runs from $7,000 to $8,000 MXN. Before you incorporate we tell you the expected total, no fine print.
Can a US company own 100% of the Mexican entity?+
Yes. The general rule allows 100% foreign capital, with exceptions for certain activities that Mexico's Foreign Investment Law reserves or restricts. In the diagnosis we check whether your line of business falls under any of them; for most technology, services and trading companies there is no restriction.
S. de R.L. or S.A. when the partners are in the US?+
It depends mostly on the tax strategy on the US side. The S. de R.L. can elect to be treated as pass-through before the US tax authorities; the S.A. is always treated as a corporation. In Mexico they operate very similarly, so the decision is made together with your CPA.
How long does the whole process take?+
Incorporating the company is the fast part. The real pace is set by the RFC, the electronic signature and the opening of the bank account, which depend on appointments and on each institution's timing. That is why we start those procedures in parallel from day one and give you a realistic timeline in the proposal.
Can we operate while the company is being incorporated?+
In many cases yes, with bridge arrangements: invoicing from the parent, operating through a distributor or providing services under a temporary contract. Each bridge carries its own tax and labor risk, so we choose it by measuring how long it will last and how much it exposes the parent.
What about the team I already have working in Mexico?+
It is one of the first things we review. If they are engaged as freelancers or through a third party, we assess the accumulated labor exposure and design the transition to your own payroll or to a compliant arrangement with REPSE registration. Regularizing in time almost always costs less than waiting for a dispute.
What if we have no one on the ground in Mexico?+
You need someone who can act for the company in Mexico. When the client does not have that person, we offer a resident agent service, available only to select clients and subject to identity verification (KYC). Scope and fee are set in writing.
Tell us how your company operates today.
The first step is a diagnosis of your operation: what you sell, who works for you in Mexico and what your plans are for the next 2 or 3 years. With that, we deliver scope and a fixed fee in writing, in English or Spanish, before you sign anything.