Advantages of SMEs being formally constituted

Small and Medium Enterprises (SMEs) are fundamental to the Mexican economy, representing a large part of the country's employment and production. However, many of these companies operate informally, which can limit their growth and sustainability. Being formally constituted in accordance with the Commercial Code is not only a legal requirement, but it brings with it multiple advantages that can enhance the success and competitiveness of SMEs. Next, we explore the reasons why it's crucial for SMEs to formalize and the benefits that this entails.

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Access to Financing

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One of the main advantages of formalization is access to finance. Financial institutions and investors prefer to work with formally constituted companies, as this provides them with greater security and trust. Formalized SMEs can access credit, lines of financing and government support programs that are beyond the reach of informal companies.

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Legal Security

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Operating in accordance with the Commercial Code provides a clear and stable legal structure, offering protection to the company's partners or shareholders. This includes the delimitation of responsibilities and obligations, which is essential to avoid internal conflicts and legal problems with third parties. In addition, having legal personality facilitates the conclusion of contracts and commercial agreements.

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Tax Advantages

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Although formalization involves complying with tax obligations, it also allows access to tax benefits and deductions. The federal and state governments offer various incentives and fiscal support programs for SMEs, which can translate into significant savings and better financial planning. In addition, being up to date with tax obligations strengthens the company's credibility with customers and suppliers.

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Improved Image and Reputation

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A formally constituted company projects an image of professionalism and seriousness. Not only does this improve reputation with customers and suppliers, but it can also be a decisive factor when it comes to competing in the market. The trust generated by a well-established company can open doors to new business opportunities and strategic collaborations.

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Access to International Markets

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For SMEs with aspirations to expand beyond national borders, formalization is essential. International markets and trade agreements require companies to comply with legal regulations and quality standards. Being formally constituted facilitates the export of products and services, and makes it possible to take advantage of the free trade agreements that Mexico has with various countries.

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Growth and Sustainability

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Formalization provides a solid foundation for long-term growth and sustainability. It allows SMEs to implement best management practices, improve strategic planning and ensure business continuity. In addition, it facilitates innovation and adaptation to changes in the economic and regulatory environment.

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Direct benefits for partners and/or associates

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One of the biggest concerns of SME partners is the protection of their personal assets. When the company is formally constituted, a clear distinction is established between the personal assets of the partners and those of the company. This means that, in the event of debts or legal problems, the personal assets of the partners are protected and only the company's assets are at risk.

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In the same way, formalization makes it possible to clearly establish the roles, responsibilities and rights of each partner. This is achieved through the drafting of statutes and social contracts that define how decisions are made, how profits are distributed and how the entry and exit of partners is managed. This clarity helps prevent internal conflicts and ensures a more efficient and fair management of the company.

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Conclusion

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The formal constitution of an SME in accordance with the Mexican Commercial Code is a crucial step for any entrepreneur who wishes to ensure the growth and success of their business. Despite the initial challenges that formalization may entail, the benefits far outweigh the difficulties, positioning SMEs on a path of prosperity and continuous development.

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Formalizing is not just complying with a legal obligation, but a strategic investment in the company's future. Formally constituted SMEs are better prepared to face market challenges and take advantage of the opportunities that arise, thus contributing to the strengthening of the Mexican economy.

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The RMG Abogados team is ready to help and accompany you in the process of formalizing your company, so that you can continue to grow as a company.

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Send us an email to contacto@rmgsc.com