For professionals and business owners seeking clear information on individual business status in Mexico, this article provides an overview of the availability and main conditions of sole proprietorship status in 2025. We focus on Mexico’s established legal structure for solo entrepreneurship and the tax implications under the current regime.
Availability of Sole Proprietorship (Régimen de Personas Físicas)
Mexico allows individuals to operate as sole proprietors under the Régimen de Personas Físicas con Actividades Empresariales y Profesionales. This status is accessible to regular citizens who wish to invoice clients directly, without forming a separate legal entity. It is a widely used structure for freelancers, self-employed professionals, and small business owners throughout the country.
Simplified Tax Regime for 2025: RESICO
In 2022, Mexico introduced the Régimen Simplificado de Confianza (RESICO), a specific tax regime tailored to individuals with business, professional, or rental income and annual revenue beneath a set threshold. This remains the standard entry method for sole proprietors in 2025.
| Eligibility Criteria | Parameter |
|---|---|
| Annual Income Limit | $3,500,000 MXN (approx. $187,000 USD*) |
| Eligible Activities | Business, professional, or property rental activities |
| Registration Authority | Mexican Tax Administration Service (SAT) |
*USD conversion based on an exchange rate of 18.7 MXN = 1 USD (2025).
Taxation Structure for Sole Proprietors (RESICO, 2025)
RESICO provides a simplified and attractive tax calculation for qualifying individuals. The principal tax features are outlined below.
| Income Bracket | Tax Rate (%) | Tax Base | Key Deductions |
|---|---|---|---|
| Up to $3,500,000 MXN (~$187,000 USD) |
1% – 2.5% | Gross income (no major deductions) | Minimal |
Under RESICO, eligible sole proprietors pay a progressive income tax rate ranging from 1% to 2.5% on their gross income. This streamlined structure dispenses with the complex deductions found in other regimes, greatly reducing compliance burdens for small-scale individual operators.
Registration Process and Practical Application
Sole proprietorship (using either RESICO or traditional regime) is activated through a straightforward registration with the Mexican Tax Administration Service (SAT). Professionals and small business owners typically complete the process online by providing identifying information, business details, and selecting the preferred tax regime.
This legal setup enables individuals to invoice for services and manage business activities as a natural person—without forming a separate corporation or limited liability company. It is popular among independent professionals and small-scale entrepreneurs due to its tax simplicity and flexible compliance requirements.
Pro Tips for Navigating Sole Proprietorship Status in Mexico
- Keep annual revenues under $3.5 million MXN to retain access to RESICO’s low tax rates; going above the threshold moves you into less favorable regimes.
- Register promptly with SAT—delays can lead to compliance complications and late penalties. The process is relatively quick if all your documentation is in order.
- Maintain simple, transparent accounting records as required by RESICO. The regime is designed for minimal bureaucracy, but accurate reporting is still mandatory.
- Regularly review SAT announcements as thresholds or criteria may be updated annually, affecting your eligibility or compliance obligations.
References and Official Resources
Overall, in 2025, Mexico maintains accessible and practical sole proprietorship status through the Régimen de Personas Físicas and its RESICO variant. With low tax rates up to $3.5 million MXN in gross income and minimal compliance demands, this structure is suitable for a wide range of small businesses, freelancers, and independent professionals. As always, staying informed of SAT requirements and income limits is essential to maximize the available benefits while remaining fully compliant.