In Tax ID Mexico, we are an accounting firm with a physical presence in Guadalajara and Zapopan, and we offer Online customer service throughout Mexico and abroadYou can schedule an appointment at our offices or work with us entirely online if you're in another city or country.

Who needs an accountant in Mexico as a foreigner?

Many foreigners don't know that even if they aren't Mexican citizens, they can (and often must) comply with tax obligations in Mexico. Here are some examples of common situations:

• You are going to buying a property in Mexico and you need an RFC to register or declare rental income.
• You sell products or services in platforms such as amazon, Mercado Libre, Shopify, Stripe or Mercado Pago, and you need to invoice in Mexico.
• Lend professional services from Mexico to foreign or national clients (consulting, design, programming, coaching, etc.).
• Are digital nomad and you reside in Mexico with a temporary or permanent visa, generating income from your laptop.
• Are partner or investor in a Mexican company, or you want to open your own business.
• You rent a property through Airbnb or Booking and you need to declare that income.

What can we do for you at Tax ID Mexico?

We have a team specialized in serving foreigners, whether you're already in Mexico or planning to come. These are some of our key services:

1. Obtaining the RFC as a foreigner

We help you get your RFC, an essential requirement for:

• Sign contracts, deed properties or open a company.
• Issue invoices.
• Submit tax returns.

It is important to know that To obtain the RFC it is necessary to have a CURP, which in turn requires a regular immigration status (temporary or permanent residence or naturalization).

2. Registration with the SAT and selection of the appropriate tax regime

We advise you on choosing the tax regime that best suits you, whether it be:

• Natural person with business or professional activity.
• RESICO (Simplified Trust Regime), if you meet the requirements.
• Legal entity (company incorporated in Mexico).

We handle all your tax procedures with the SAT, as well as your accounting, invoicing, and monthly and annual tax returns.

3. Company formation in Mexico

If you're a foreigner who wants to open a business in Mexico, we'll help you throughout the entire process:

• Choice of company type (SA, SAPI, SAS, etc.).
• Drafting of statutes and articles of incorporation.
• Registration with the SAT, Public Registry of Commerce and opening a bank account.
• Register with the IMSS and other institutions if you will have employees.
• Corporate, tax and administrative legal advice.

Yes, it is possible to open a business in Mexico as a foreigner. You just need have a valid e-signature, RFC and a regular immigration status.

Attention in Guadalajara and online

Our office has Physical presence in Guadalajara and Zapopan, JaliscoIf you live in this area, you can visit our offices in person. However, if you're in another city like Mexico City, Monterrey, Playa del Carmen, or even outside of Mexico, we can work with you. 100% online.

We use video calls, email, and secure folders to exchange information and provide you with personalized attention regardless of your location.

Why choose Tax ID Mexico?

• Specialists in Attention to foreigners with economic activities in Mexico.
• Real experience with clients America, Europe and Asia.
• We know the fiscal challenges of the digital nomads, investors and freelancers.
• Comprehensive legal and accounting services: from SAT procedures to ongoing business consulting.

contact us

If you're a foreigner and need a reliable accountant in Mexico, schedule an appointment with us. We can assist you in-office or completely online.

Mail: hgalicia@taxid.mx
Telephone: +52 33 1023 5948
Website: www.taxid.mx
Physical location: Guadalajara and Zapopan, Jalisco
Online support: All of Mexico and abroad

La entrada ¿Eres extranjero y necesitas un contador en México? Atención presencial en Guadalajara y en línea para todo el país y el extranjero se publicó primero en TAX ID.

1. Are Foreigners Required to Register for the RFC?

According to the RMF 2025, foreigners who need to register for an RFC may include:

• Residents in Mexico with legal temporary or permanent immigration status.
• Foreign individuals who will carry out economic activities in Mexico, including:
  • Those with a work permit.
  • Individuals planning to open a business or become partners in a Mexican company.
• Foreign minors with legal representatives (eg, parents or guardians), who may be registered through them.
• Foreign individuals who need an RFC to comply with specific tax obligations, such as investing in real estate or opening bank accounts.

Depending on your immigration status and the activities you plan to carry out, the required documents may vary.

2. General Requirements for RFC Registration (Foreigners)

To register for the RFC, you must schedule an appointment through the SAT portal: https://citas.sat.gob.mx and present the following at a SAT office:

Valid immigration document (as listed in Annex 1-A of RMF 2025):

• Humanitarian visitor card
• Temporary resident card
• Permanent resident card
• Border worker visitor card

Proof of address in Mexico (as listed in Annex 1-A of RMF 2025), such as:

• Utility bills (electricity, water, telephone) or lease agreement
• If you're a Mexican by birth but live abroad, a Third-Generation Consular ID may be accepted
• Other accepted documents listed in Annex 1-A

Note: Some proof of address documents do not need to be in the taxpayer's name, which helps foreigners who do not yet have property or service contracts in Mexico.

Document proving legal representation (if applicable):

• Notarized legal documents with witnesses and certified signatures

For foreign minors, also required:

• Birth certificate from the civil registry or equivalent from their country of origin
• Valid ID of the parent or guardian representing the minor
• Legal document proving parental rights or guardianship (if not the biological parents)

3. RFC for Foreigners Without a Work Permit

If you have a Temporary Residency without a work permit, the SAT may issue an RFC with limitations:

• You cannot issue invoices or engage in economic activities
• It is primarily used to open bank accounts or report investments in Mexico

If you later wish to operate a business or invoice, you must change your immigration status to a Temporary Residency with a work permit.

4. RFC for Foreigners With a Work Permit

If you have Temporary Residency with a work permit and will carry out economic activities in Mexico, you may register as an individual with business activity. This allows you to:

• Issue invoices (CFDI)
• Open a business
• Hire employees
• Fulfill tax obligations in Mexico

In addition to the general requirements, you must also provide:

• Employer Registration Certificate (CIE) if you're being hired by a company
• Articles of incorporation and RFC of the company if you are a partner or shareholder

5. Final Thoughts on the RFC for Foreigners

Registering for the RFC as a foreigner in Mexico depends on your immigration status and the economic activity you plan to perform. If you're a resident without a work permit, you may obtain an RFC for limited tax purposes. However, if you plan to work or run a business, you'll need to update your immigration status before registering as an active taxpayer.

If you need assistance with this process, Tax ID Mexico can help you manage your RFC registration and guide you in setting up your business in Mexico.

La entrada Registering for the Mexican RFC as a Foreigner (Based on the 2025 Miscellaneous Tax Resolution) se publicó primero en TAX ID.

In this article I explain why Delaware can be considered a Preferential Tax Regime (REFIPRE) by the SAT in accordance with article 176 of the Income Tax Law, and what implications it has for you if you are a tax resident in Mexico.

What is Delaware and why is it so popular for business creation?

Delaware is a U.S. state with a very flexible legal framework. The reasons why thousands of companies choose to incorporate there include:

• Fast, online incorporation
• It is not required to disclose the beneficial owners
• There are no state taxes if you do not physically operate in Delaware.
• Affordable maintenance (approximately USD $300 per year)
• Possibility of being treated as a transparent entity for tax purposes

This has led many Mexican businessmen to use LLCs in Delaware to receive payments from abroad, protect assets, or make investments. However, this may have tax consequences in Mexico.

When are you considered to be in a REFIPRE?

In Mexico, There is no list of countries or jurisdictions considered as REFIPRES. On the other hand, the Income Tax Law establishes a objective criterion:

Income is considered to be obtained through a REFIPRE when said income is subject to an effective ISR rate. lower than the 75% that would be caused in Mexico.

This means that An LLC in Delaware may fall under the REFIPRE assumption if the income it generates They do not pay income tax in the US nor do they accumulate correctly in Mexico.These types of structures often defer or avoid paying taxes, which is precisely what Mexican legislation seeks to prevent.

Tax consequences if you operate with an LLC in REFIPRE

If the SAT determines that you are earning income through a REFIPRE, you must comply with specific obligations, including:

• Accumulating income in Mexico, even if they have not been repatriated or distributed.
• Keep separate accounting records for those incomes.
• Submit informative returns, as established in article 178 of the LISR.
• Demonstrate the business reason that justifies the use of the structure (article 5-A of the Federal Tax Code).

In schemes where the LLC receives payments for services performed in Mexico and then transfers the funds as capital contributions or loans, the SAT may consider that there is a simulation or an undue tax advantage, especially if there is no real economic substance.

So you can't use an LLC in Delaware?

Yes, it can be done, but it must be done with caution. The use of international structures is not illegal, but it requires:

• Specialized tax consultancy in both Mexico and the U.S.
• Evaluate if there is obligation to accumulate income in Mexico.
• Check if there is real economic substance, not just on paper.
• Properly document the business reason, and have consistent contracts and evidence.

Conclusion

Delaware may be a valid option for expanding operations, but it can also become a red flag for the SAT if Mexican tax rules are not followed. The fact that there is no official list of REFIPRES doesn't mean the authority doesn't enforce the rules; it simply will. evaluating each case based on the effective tax rate and the economic substance of the transaction.

In Tax ID Mexico We help entrepreneurs properly structure their international operations and comply with Mexican tax regulations without compromising their business strategy.

La entrada ¿Delaware es un paraíso fiscal para México? Lo que debes saber antes de usar una LLC estadounidense se publicó primero en TAX ID.

What does REFIPRE mean?

REFIPRE is the abbreviation for Preferential Tax Regime, and refers to those countries or tax systems abroad where it is paid very little or almost no income taxThe Income Tax Law (article 176) establishes that a regime is considered preferential when it is paid less than the 75% of the ISR that would correspond in Mexico for the same income.

It's not just about the typical "tax havens," like the Cayman Islands or Belize. You can also apply to special regimes within well-known countries, such as certain areas in the United Arab Emirates, or even certain legal structures in the United States (such as an LLC in Delaware that doesn't pay taxes because it's a transit tax).

Why does the SAT care about this?

Because if a Mexican (individual or legal entity) earns money through a company, partnership, trust or other entity located in a REFIPRE, the SAT can force him to pay taxes in Mexico on that income, even if you haven't received them yet.

This is because Mexican law seeks to prevent taxpayers from using these countries to defer paying income tax or hide income. That's why there is a rule that These earnings must be accumulated in Mexico as if they had already been collected.

How do you know if you are operating with a REFIPRE?

There is no official list published by the SAT. In reality, you or your accountant should perform an analysis comparing how much income tax you would pay in that country versus what you would pay in Mexico. If the tax is less than 75%, then you are in a REFIPRE (Taxpayer Refund Policy), and tax obligations are triggered.

Also, if you have control or significant participation in a foreign entity, and it operates in a REFIPRE, the rule may also apply even if you have not received profits or dividends.

What happens if you have a company in a REFIPRE?

You have several important tax obligations:

• Keep separate accounting for income from REFIPRES.
• Accumulate that income in your annual tax return in Mexico, even if you haven't received it.
• Submit additional information returns.
• Adequately document the business purpose of the structure (Article 5-A of the Tax Code).
• Apply transfer pricing rules if there are transactions with related parties.

If you fail to comply, the SAT may reject deductions, presume fictitious income, and apply fines.

Which structures usually fall under REFIPRES?

Some common examples:

• Companies incorporated in Belize, Cayman Islands, United Arab Emirates, BVI, Panama or Andorra.
• Foreign trusts or foundations that accumulate income without paying it out.
• LLCs in the United States that do not pay taxes in that country or in Mexico.
• Digital platforms or services where income remains in a foreign entity with a low tax burden.

Care should also be taken with instruments such as SAFE (Simple Agreement for Future Equity), which if signed with entities in REFIPRES, must be analyzed in great detail to avoid tax risks.

Example of a common scheme with REFIPRE: alert for Mexican companies

One of the schemes that the SAT reviews the most occurs when a Mexican company provides services in national territory, but payments for those services They are not received directly in Mexico, but are diverted through a foreign company located in a REFIPRE.

Then, that money is repatriation to Mexico in the form of:

• Capital contributions
• Intercompany loans
• SAFE agreements (simple investment agreements)
• Purchase of shares
• Other financial instruments

This type of structure often lacks real economic substance and generates a high fiscal risk, since it can be interpreted as a simulation to avoid paying taxes in Mexico.

Conclusion

Using entities or structures in low-tax countries may seem attractive, but if not managed properly, they can result in fines, surcharges, and even extensive tax audits. Holding income abroad is not illegal, but must be done with knowledge and compliance.

If you have any doubts about whether you are operating under a REFIPRE or want to regularize your situation, it's best to review the case with an advisor specializing in international taxation. Tax ID Mexico We help individuals and corporations evaluate their structures and comply with all Mexican tax obligations.

La entrada ¿Qué es un REFIPRE y por qué puede causarte problemas fiscales si no lo conoces? se publicó primero en TAX ID.

Budgeting is a key tool in a company's financial planning. It's not just about projecting income and expenses, but also about establishing a structured model that serves as a guide for decision-making, resource allocation, and financial performance evaluation.

1. What is a business budget?

It's a quantitative instrument It reflects, in financial terms, a company's action plan for a specific period (monthly, quarterly, or annual). Its objective is to align resources with the organizational strategy, anticipating financing needs, controlling expenses, and establishing profitability goals.

2. Types of budgets

• Operating budget: Includes income and expenses derived from daily operations. Consider sales, cost of sales, operating expenses, etc.
• Investment budget: Related to fixed asset acquisitions, expansion projects, technology, etc.
• Financial budget: Cash flow projections, projected financial statements, capital needs.
• Master Budget: Integration of all the above. It is the governing document of the financial plan.

3. Technical process for preparing a budget

a) Historical analysis and diagnosis

• Review of financial information from previous years.
• Identification of trends, seasonality and relevant deviations.
• Evaluation of key indicators: gross margins, EBITDA, liquidity ratio, collection and payment days, among others.

b) Definition of assumptions

Every budget starts from financial and operating assumptionsSome examples:

• Expected sales growth.
• Projected inflation.
• Exchange rate.
• Prices of key inputs.
• Hiring or investment policies.

c) Preparation by cost centers

• Budget by areas (sales, production, administration, etc.).
• Assign responsibilities by budget item.
• Avoid duplications and omissions.

d) Consolidation and reconciliation

• Integration of the general budget.
• Reconciliation with financial policies (spending limits, minimum margins).
• Validation with the general management or board.

e) Approval and communication

• Presentation of the budget to the executive committee or board.
• Formal approval and internal dissemination.

f) Implementation and control

• Uploading the budget into accounting or ERP systems.
• Establishment of financial and non-financial KPIs.
• Monthly comparison between budget and actual (variance analysis).

4. Good budgeting practices

• Conservative approach to income, realistic approach to expenses.
• Include alternative scenarios (optimistic, base, pessimistic).
• Use tools such as advanced Excel, Power BI or integrated ERPs (SAP, Odoo, Contpaqi).
• Update the budget quarterly or in response to relevant events.
• Ensure the participation of the financial area from the beginning of the process.

5. Common mistakes

• Projecting without considering historical information or market trends.
• Do not include documented assumptions.
• Underestimating recurring operating expenses.
• Lack of monthly follow-up.
• Isolated development without the participation of those responsible for each area.

6. Conclusion

The budget is a mechanism of control, planning and performance evaluation, and should be treated as a technical and strategic process, not a mere formality. Its proper development and implementation allows for anticipating risks, optimizing resources, and making informed decisions.

In Tax ID Mexico We assist companies in the preparation of comprehensive budgets, from financial diagnosis to the implementation of control tools, also offering the service of CFO as a Service for those seeking financial direction without incorporating a fixed structure.

La entrada Elaboración de Presupuestos Empresariales: Enfoque Técnico y Estratégico se publicó primero en TAX ID.

In today's business world, having a well-structured budget is no longer a luxury: it's a necessity. And within this crucial process, the CFO (Chief Financial Officer) plays a decisive role not only as a guardian of the numbers, but also as a strategic architect of the company's financial future.

What is a CFO?

The CFO is responsible for overseeing an organization's financial health. Their job goes far beyond reviewing balance sheets; it involves analyzing, anticipating, and making strategic decisions based on financial information. In medium-sized and large companies, especially in growing cities like Guadalajara, having a CFO with vision and technical expertise is a differentiating factor.

The Budget: Much More than a Document

A budget isn't just a spreadsheet with projected figures. It's a financial plan that translates business strategy into concrete financial resources, establishing clear goals, limits, and priorities.

And this is where the CFO comes in.

The Role of the CFO in the Budget Process

Financial diagnosis: Before budgeting, the CFO evaluates current financial statements, projected cash flow, profit margins by business line, and historical performance versus future expectations.

Alignment with the strategy: The CFO ensures that the budget reflects the business's realistic goals: expansion, cost reduction, investment in technology, new products, among others.

Budget construction: Works with operational areas to estimate realistic revenues, project controlled expenses, and include margins for maneuver for adverse scenarios.

Monitoring and adjustments: The CFO doesn't deliver the budget and ignores it. He establishes key performance indicators (KPIs), proposes real-time adjustments to address deviations, and presents financial reports to make swift decisions.

CFO as a Service: A Strategic Solution for Growing Companies

At Tax ID Mexico we offer the service of CFO as a Service, a flexible, high-impact solution for companies that do not yet have a full-time CFO, but need professional financial management.

This service includes budget design, control, and analysis, KPI implementation, financial projections, profitability analysis, and strategic consulting to make informed decisions. All this is supported by the experience of a team that has worked with national and international companies in Guadalajara and other regions of the country.

Why is the CFO Key in Companies in Guadalajara?

Guadalajara is today an emerging center for innovation, technology, and corporate services. More and more national and international companies are establishing themselves in the region. This demands clear financial statements, rigorous budget control, and a financial strategy aligned with growth.

Having a CFO or CFO as a Service allows companies to access a strategic profile without the cost of a full-time financial director, ideal for expanding SMEs.

Conclusion

The CFO is no longer just the "chief accountant." He or she is the financial strategist who precisely guides every dollar allocated in the budget. His or her involvement ensures that the company not only survives, but grows intelligently and sustainably. Tax ID Mexico We help you take financial control of your business from Guadalajara, with a national and international vision.

La entrada El CFO y su Rol Estratégico en los Presupuestos Empresariales se publicó primero en TAX ID.

What Is an Apostille?

An apostille is an official certification attached to public documents—such as birth certificates, powers of attorney, court rulings, or articles of incorporation—so they are legally valid in other countries that are parties to the Hague Apostille Convention of 1961.

In simple terms, it's a streamlined method to legalize documents for international use among countries that are part of the convention.

When Is an Apostille Required?

An apostille is required when a Mexican document will have legal effect in another country. For example:

• Registering a Mexican company abroad
• Submitting civil registry documents (birth, marriage) for immigration purposes
• Validating academic degrees and certificates
• Granting legal powers from Mexico to another country
• Proving legal representation before foreign banks or government agencies

Where Is the Apostille Issued in Mexico?

In Mexico, apostilles are issued by the Ministry of the Interior (SEGOB) through the General Government Offices in each state. For federal-level documents, the Secretariat of Foreign Affairs (SRE) handles the process.

What Types of Documents Can Be Apostille?

Common documents that may be apostilled include:

• Civil registry certificates (birth, marriage, death)
• Notarized documents (powers of attorney, contracts, incorporation papers)
• Court decisions and legal resolutions
• Academic certificates and professional degrees
• Official documents issued by state or federal authorities

General Requirements for Apostilling

Requirements may vary depending on the type of document and issuing authority, but generally include:

1. The original document in good condition
2. A valid ID or copy of the document requester
3. Payment of government fees (some states provide the service for free)
4. Prior validation in certain cases (eg, SEP validation for academic degrees)

Foreign Documents for Use in Mexico

Just as Mexican documents require an apostille for use abroad, foreign documents must be apostilled to be valid in Mexico, as long as the country of origin is a member of the Hague Convention.

For example, if a US citizen or business wants to use a:

• Birth certificate
• Power of attorney
• Divorce decree
• Marriage certificate
• Company incorporation document

…they must obtain an apostille from the appropriate authority in the US before presenting it in Mexico.

Who Issues Apostilles in the US?

In the United States, apostilles are issued at the state level, usually by the Secretary of State in the state where the document was issued. For example:

• For California documents: California Secretary of State
• For Texas documents: Texas Secretary of State
• For New York documents: New York Department of State

Each state has its own procedure, fees, and processing times. Most allow submissions by mail or online.

Once apostilled, the document can be used in Mexico for a variety of legal processes, such as immigration, property transactions, business incorporation, or banking.

Apostille and Powers of Attorney for Incorporating Companies in Mexico

If a foreign individual wishes to form a company in Mexico without being physically present, the most common practice is to grant a power of attorney to a legal representative in Mexico. This power must meet the following conditions:

1. It must be signed before a notary public in the country of origin
2. It must be apostilled if the country is part of the Hague Convention
3. Once apostilled, it can be translated into Spanish (if needed) and protocolized before a Mexican notary

For instance, a US-based partner can sign a power of attorney before a local notary, apostille it through their state's Secretary of State, and send it to Mexico for use in signing the company's articles of incorporation.

This process is also required for:

• Buying real estate
• Opening bank accounts
• Registering with Mexican tax and labor authorities

What If the Country Is Not Part of the Hague Convention?

If the document comes from a country not party to the Hague Convention, an apostille is not possible. Instead, the document must be legalized through a more traditional consular process, which typically includes:

1. Signing the document before a notary or public authority in the country of origin
2. Legalization by the Ministry of Foreign Affairs of that country
3. Final legalization at the Mexican Consulate in the same country

Although this process takes longer and may involve more costs, it is still a valid way to ensure documents are legally recognized in Mexico.

Which Countries Accept Apostilles?

All countries that are parties to the 1961 Hague Apostille Convention accept this simplified legalization. These include the United States, Spain, Canada, Germany, Colombia, Argentina, Brazil, France, and Italy, among many others.

You can find the full list here:
https://www.hcch.net/en/instruments/conventions/status-table/?cid=41

Conclusion

An apostille is a vital tool for anyone needing their Mexican or foreign documents to have legal effect across borders. Whether you are investing, studying, working, or representing a business, getting your documents apostilled (or legalized if necessary) is an essential and simple step.

If you're unsure how to apostille or legalize documents for use in Mexico, at Tax ID Mexico we can guide you through the process and help make it faster and easier.

La entrada What Is an Apostille and Why Is It Important? se publicó primero en TAX ID.

What is an apostille?

An apostille is an official certification affixed to public documents—such as birth certificates, powers of attorney, court rulings, or articles of incorporation—to give them legal validity in other countries that are party to the 1961 Hague Convention.

In other words, it is a simplified way of legalizing documents for international use between member countries of the convention.

When is it necessary to apostille a document?

A Mexican document must be apostilled when it is to have legal effect in another country. For example:

• Registering a Mexican company abroad
• Submit birth or marriage certificates for immigration procedures
• Validate university degrees outside of Mexico
• Granting legal powers from Mexico to another country
• Prove legal representation before foreign banks or authorities

Where is the apostille issued in Mexico?

In Mexico, apostilles are issued by the Ministry of the Interior (SEGOB) through the General Directorates of Government in each state, or directly by the General Directorate of Political Coordination of the Ministry of Foreign Affairs, for documents issued by federal authorities.

What types of documents can be apostilled?

Among the most common documents that are apostilled are:

• Civil Registry Certificates (birth, marriage, death)
• Notarial documents (powers of attorney, contracts, articles of incorporation)
• Judgments and court rulings
• School certificates and professional qualifications
• Federal or state administrative documents

General requirements for apostille

Requirements may vary depending on the type of document and the issuing entity, but generally the following are required:

1. The original document in good condition
2. Simple copy or official identification
3. Payment of fees (in some entities it is free)
4. Sometimes, prior validation is required (for example, if it is a university degree, it must first be validated by the SEP)

What about foreign documents for use in Mexico?

Just as Mexican documents require an apostille to be valid abroad, foreign documents must also be apostilled to be legally valid in Mexico, provided the country of origin is a party to the Hague Convention.

For example, if a US citizen or company wants to use a:

• Birth certificate
• Power of Attorney
• Divorce decree
• Marriage certificate
• Company incorporation deed

…these documents must be apostilled by the competent authority in the U.S. before being submitted to Mexico.

Who apostilles documents in the United States?

In the United States, apostille is processed at the state level. The authority in charge is usually the Secretary of State of each state. For example:

• If a document was issued in California, you must go to the California Secretary of State
• If it was issued in Texas, it is processed before the Texas Secretary of State
• In New York, it is managed with the New York Department of State

Each state has its own procedures, costs, and turnaround times. Most allow filing by mail or online.

Once apostilled, the document can be used in Mexico for procedures such as birth registration at consulates, accreditation of legal representation, real estate purchases, immigration procedures, or company formation.

Apostille and powers to establish companies in Mexico

If a foreigner wishes to establish a company in Mexico without being physically present, they typically grant a power of attorney to a representative in Mexico. This power of attorney must meet certain requirements to be valid:

1. It must be signed before a notary in the country of origin
2. It must be apostilled if the country signed the Hague Convention.
3. Once apostilled, it can be translated into Spanish (if it is in another language) and presented to a Mexican notary for notarization.

For example, if a partner is in the United States and wishes to grant power of attorney to form a limited liability company in Mexico, they must sign the power of attorney before a notary in their state and then have it apostilled by the Secretary of State. With this power of attorney, their attorney-in-fact can appear before a notary in Mexico to sign the articles of incorporation.

This process is repeated in procedures such as:

• Purchase of real estate
• Opening bank accounts
• Registration with the SAT or the IMSS

What happens if the country is not a party to the Hague Convention?

If the document originates from a country that is not a party to the Hague Convention, it cannot be apostilled. Instead, a consular legalization process must be followed, which involves several steps:

1. The document is signed before a notary or competent authority in the country of origin
2. Then, it is legalized in the Ministry of Foreign Affairs of that country.
3. Subsequently, it is presented at the Mexican Consulate in that country, where the final legalization is carried out.

This procedure may be longer and more expensive than apostilling, but it is equally valid for the document to be legally valid in Mexico.

Which countries accept apostilled documents?

All countries that are party to the 1961 Hague Apostille Convention accept this form of validation. These include the United States, Spain, Canada, Germany, Colombia, Argentina, Brazil, France, Italy, and many others.

You can see the full list here:
https://www.hcch.net/es/instruments/conventions/status-table/?cid=41

Conclusion

Apostille is a key tool for those who need their Mexican or foreign documents to have legal effect outside their country of origin. Whether you plan to invest, study, work, or represent a Mexican or foreign company, apostilling your documents is a necessary and relatively simple step.

If you have questions about how to apostille or legalize documents for procedures in Mexico, in Tax ID Mexico We can guide you and help you speed up the process.

La entrada ¿Qué es el apostillado y para qué sirve? se publicó primero en TAX ID.

Below are the financial statements as of December 31, 2024, and 2023, of a company engaged in the importation and national distribution of products for sale to the general public:

1) Statement of financial position:

2) Income statement

3) Cash flow statement

4)Statement of changes in shareholders' equity

Analysis of basic financial statements

Analyzing a company's financial statements allows us to evaluate its profitability, liquidity, capital structure, and cash generation capacity.

An integrated evaluation of the statement of income, statement of financial position, statement of cash flows, and statement of changes in shareholders' equity for the 2024 financial year is presented below.

Statement of income

During 2024, the company doubled its net income, going from 4Q16.5 million in 2023 to 4Q11.8 million. This growth was accompanied by a considerable increase in sales costs, which rose from 4Q13.9 million to 4Q16.8 million. However, the gross margin remained positive. General expenses tripled, especially in areas such as salaries, services, and operations, which is consistent with accelerated business growth.

The record of PTU (profit-taking) for 1Q4T109,000 is noteworthy, as is an increase in the income tax (ITR). Both reflect a company with higher taxable profits. The financial result was negative, with expenses of 1Q4T11.5 million compared to products of only 1Q4T238,000, indicating a high financial cost.

Despite these costs, the company closed the fiscal year with a net profit of Q4Q1357,734. Although lower than the Q4Q144,684 result for 2023, this result should be analyzed in conjunction with the evolution of the balance sheet and capital structure.

Statement of financial position

Total assets doubled, reaching 12.1 million pesos in 4Q1, driven primarily by increased inventories, cash, and advances to suppliers. Liabilities, in contrast, decreased from 5.7 million pesos in 4Q1 to 5.0 million pesos in 4Q1, highlighting a dramatic drop in various creditors, which can be interpreted as a repayment of liabilities or a restructuring.

The most significant growth was in shareholders' equity, which increased from 4Q1472,000 to over 4Q17,000,000, thanks to two key events: the capitalization of 4Q15.4 million and additional contributions of 4Q1829,000. This demonstrates that the growth observed in revenue and assets was financed not by debt but by equity, substantially improving the company's solvency.

Cash flow statement

Operating cash flow was positive but declining, going from 1TP4Q1.17 million in 2023 to just 1TP4Q632 thousand in 2024. This decline was primarily due to an increase in payments to suppliers and inventory, and a significant reduction in collections from customers.

Investment was minimal (4Q13,000 in fixed assets), consistent with a company that prioritizes operations over physical expansion. Financing was key: 4Q1.3 million in net cash flow from capital contributions and loans. This inflow allowed the company to close the year with a cash balance of 4Q1.47 million, practically double the previous year's closing balance.

Statement of changes in stockholders' equity

This statement confirms that the growth in share capital was due to two extraordinary movements: cash contributions and debt capitalization. In addition, retained earnings from prior years were incorporated. This reflects a strengthened financial structure and greater independence from external financing.

Possible improvement actions

1.Income Statement: Improved profitability and cost control

• Review and optimize overhead costsA significant increase in overhead costs was observed (from 1Q4Q1.1 million to 1Q4Q2.8 million). It is essential to analyze the expense by type (payroll, utilities, rent, travel expenses) to identify areas where these can be reduced without impacting operations.

• Evaluate the return policyReturns increased from 1TP4Q4,000 to 1TP4Q4,000. This may reflect quality issues, non-delivery, or administrative errors. It is recommended to establish more rigorous quality controls and sales documentation.

• Negotiate better financing conditionsFinancial expenses have doubled. It is suggested that interest rates be renegotiated, debt consolidation, or less expensive alternatives be sought (e.g., revolving lines of credit or government financing).

• Evaluate gross margin and pricing policyAlthough revenues grew, so did costs. It would be useful to calculate gross margins by product/service line and consider price adjustments or portfolio restructuring.

2. Statement of Financial Position: Sanitation of financial structure and liquidity

• Reduce inventory concentrationInventory nearly doubled (from 1Q4Q3.3 million to 1Q4Q6.9 million). It is recommended to implement inventory turnover indicators and adjust purchasing policies to avoid obsolescence or overstocking.

• Review customer balances and advancesAlthough customer balances decreased slightly, their aging should be monitored. The low operating cash flow may be related to overdue accounts receivable. It is suggested that automated reminders, late payment interest, and stricter contracts be implemented.

• Use advances to suppliers strategically: They increased from 10,000 to 10,000 million. Conditions must be renegotiated to convert them into effective inventory more quickly or defer them if the supplier fails to comply.

3. Cash Flow Statement: Focus on Genuine Operating Cash Flow

• Improve the cash conversion cycleOperating cash flow decreased from 1Q4Q1.1 to 1Q4Q632,000. The company must monitor the relationship between days of inventory, accounts receivable, and accounts payable. Tools such as a cash flow dashboard or implementing weekly KPIs will help identify bottlenecks.

• Avoid excessive dependence on financingAlthough the cash close was positive, it was achieved through debt and capitalization. In the medium term, this is not sustainable. We must seek healthier operating margins and self-financing.

• Plan asset purchases based on cash flows, not surplus capital.The fixed assets acquired are minimal, but they must be done with a strategic vision: Does it increase productivity, reduce costs, or generate revenue? If not, it should be avoided.

4. Statement of Changes in Stockholders' Equity: Consolidate structure and communicate confidence

• Leveraging the strength of social capitalCapitalization strengthens the financial structure, but it must be communicated to partners, clients, and financial institutions as a reputational asset. This can improve credit conditions and confidence in the operation.
• Establish a formal profit reinvestment policy: Since results from previous years have accumulated, it is recommended to define what percentage is reinvested, distributed, or reserved for contingencies.

• Properly document contributions and debt capitalizationFor tax and corporate purposes, it is essential to have minutes, contracts, and transactions formally registered with the SAT and the Public Registry of Commerce.

General conclusion

The company is experiencing accelerated growth, with revenues doubling and a significant increase in assets. However, net income is declining due to rising operating costs and financial expenses. The balance sheet reflects a clear improvement in the financial structure: liabilities are down, shareholders' equity is up, and cash is accumulating, all financed internally by partners rather than by third parties.

Although the operation generates positive cash flow, it still relies heavily on financing to maintain its liquidity. Improving operational efficiency, reducing financial costs, and focusing efforts on inventory turnover and accounts receivable will be key next fiscal year.

If you'd like a personalized analysis of your financial statements, to optimize your cash flow, or to evaluate your capital structure, please contact me at hgalicia@taxid.mx. At Tax ID Mexico, we help you make accounting and tax decisions based on real, actionable information.

La entrada Análisis de estados financieros en este 2025 se publicó primero en TAX ID.

• Games that do not involve actual cash flow (such as depreciation and accrued interest),
• AND net changes in working capital (customers, suppliers, inventories and taxes).

This means that many figures in the flow should not be read literally as a payment or income, but as accounting movements accumulated during the period.

Case study: Example, SA

Cash flow analysis

Below we present an analysis prepared with the previous financial statement:

During fiscal year 2024, the entity reported profit before tax of 1TP4Q792,573, slightly lower than the previous fiscal year (1TP4Q824,711). Applying the indirect method, adjustments were made to items that do not involve cash movements, notably depreciation and amortization (1TP4Q3,831) and interest expense and exchange loss (1TP4Q889,724), resulting in a total of 1TP4Q1,686,128.

In operating activities, net cash outflows were observed mainly from payments to suppliers (1Q4Q3,200,879), payments to inventory suppliers (1Q4Q4,668,611), and income tax payments (1Q4Q615,374). Collections from customers were low compared to the prior year (1Q4Q235,982 in 2024 vs. 1Q4Q1,162,904 in 2023). As a result, net cash flow from operating activities decreased significantly to 1Q4Q632,960, compared to 1Q4Q1,173,291 in the prior year, reflecting pressure on operating working capital.

Regarding investment activities, the only outflow was the acquisition of property, plant and equipment for $13,354, which is marginal but represents a reinvestment in productive assets.

Regarding financing activities, the company offset the decline in operating cash flow with robust financing. It obtained loans from related parties and third parties, carried out capital increases of 1Q4Q829,847, and made corresponding payments and interest. Net cash flow from financing activities amounted to 1Q4Q1,335,220, higher than the previous year.

The net increase in cash for the period was 1Q4Q688,906, and the closing balance of cash and equivalents closed at 1Q4Q1,472,123, representing a growth of 881Q3Q compared to the end of 2023. Although liquidity at the close is positive, it is important to note that this was achieved primarily through financing received and not through internal cash generation.

From an accounting perspective, in accordance with the provisions of NIF B-2 "Statement of Cash Flows," the operating result shows a significant decline in cash generation, which could compromise sustainability in the medium term if the trend is not reversed. It is recommended to review the cash conversion cycle, improve collection policies, and evaluate the dependence on financing to cover recurring operations.

Cash Flow Conclusions

The cash flow statement is essential for assessing a company's actual ability to generate liquidity. In this case, it was identified that the majority of the cash generated during the fiscal year came from financing activities rather than from business operations. This is a red flag, as a healthy company must be sustained primarily by its operations.

To correct this situation, it is recommended to optimize the collection cycle, control supplier payments, and reduce dependence on external financing. It is also key to implement a monthly flow analysis and strengthen financial planning to anticipate capital needs and make informed decisions.

La entrada Flujo de efectivo método indirecto: más que cobros y pagos se publicó primero en TAX ID.