Mexican-owned businesses operating in San Antonio must comply with several federal, state, and potentially international reporting requirements on an ongoing basis.

Federal Tax Returns: Annual tax returns are required based on your entity type. LLCs typically file Form 1065 (partnership return) or Form 1120 (if taxed as a corporation). C-Corporations file Form 1120 annually.

Quarterly Estimated Taxes: If your business expects to owe $1,000 or more in taxes, quarterly estimated payments are required to avoid penalties.

Texas Franchise Tax: Businesses with revenues exceeding $2.47 million (as of 2024) must file and pay the Texas Franchise Tax annually by May 15. Even businesses below this threshold must file a Report of No Tax Due.

Payroll Compliance: If you have employees, you must withhold federal income tax, Social Security and Medicare taxes, file quarterly payroll tax returns (Form 941) and comply with the requirements of the Texas Workforce Commission.

FBAR and FATCA Reporting: Mexican citizens with signing authority over U.S. financial accounts may have additional reporting obligations to Mexican tax authorities, and U.S. entities with foreign ownership may need to file Form 5472.

Annual Reporting: Texas requires most entities to file an annual public information report with the Secretary of State.

Our firm provides comprehensive monthly accounting, payroll processing, and annual tax preparation to keep your business compliant on both sides of the border.

Transferring funds between related entities in Mexico and the United States requires careful planning to comply with tax laws, banking regulations, and transfer pricing rules.

Legitimate Transfer Methods:

Capital Contributions: Investing additional capital in your U.S. entity is not a taxable event and is a straightforward way to finance operations. Proper documentation is essential.

Intercompany Loans: Your Mexican company can lend money to your U.S. business, but the loan must have market terms (market interest rate, repayment schedule, written agreement) to satisfy IRS scrutiny.

Service Fees and Royalties: If your Mexican company provides legitimate services (management, intellectual property licensing) to your U.S. operation, payments for these services are permissible but must reflect fair market value.

Dividend Distributions: Profits may be distributed from your U.S. entity to Mexican shareholders, subject to U.S. tax withholding (typically 10% under the U.S.-Mexico tax treaty) and potential Mexican taxation.

Transfer Pricing Compliance: The IRS closely monitors transactions between related parties in different countries. Documentation must support the fact that all intercompany transactions are conducted at market prices.

We help structure intercompany transactions to optimize cash flow while maintaining full compliance with U.S., Mexican, and international tax regulations.

Taxation for Mexican citizens operating businesses in San Antonio depends on their residency status and the type of business entity they establish.

Nonresident Aliens: If you maintain your primary residence in Mexico and are classified as a nonresident alien for U.S. tax purposes, you are generally taxed only on income that is effectively connected with a U.S. business. This includes profits from your San Antonio operations.

Effectively Connected Income (ECI): Business income earned through a U.S. operation is subject to graduated federal tax rates similar to those applied to U.S. citizens, ranging from 10% to 37% depending on the income level.

U.S.-Mexico Tax Treaty: The U.S.-Mexico tax treaty provides significant benefits, including provisions to prevent double taxation. You can claim foreign tax credits in Mexico for taxes paid to the U.S., and vice versa.

State Taxes: Texas has no state income tax, making San Antonio an attractive location for business operations. However, businesses may be subject to the Texas Franchise Tax (Margin Tax) if revenues exceed certain thresholds.

Proper tax planning with a qualified accountant specializing in cross-border matters is essential to minimize your total tax burden while maintaining compliance in both countries.

San Antonio offers unique advantages for Mexican entrepreneurs seeking to establish operations in the U.S., combining business-friendly policies with cultural and geographic benefits.

Strategic Geographic Location: San Antonio is located just 150 miles (240 kilometers) from the Mexican border, making it easily accessible from Monterrey, Mexico City, and other major Mexican commercial centers. This proximity facilitates travel, logistics, and maintaining connections with Mexican operations.

No State Income Tax: Texas is one of only seven U.S. states with no personal income tax and no corporate income tax, significantly reducing the overall tax burden compared to states like California or New York.

Lower Cost of Living and Business Operations: Compared to other major U.S. metropolitan areas, San Antonio offers more affordable commercial real estate, lower labor costs, and lower overall operating expenses while providing access to a major metropolitan market.

Strong Hispanic Business Community: San Antonio boasts a thriving Hispanic business ecosystem with numerous organizations, networking opportunities, and resources specifically designed to support Latino entrepreneurs. The city's bilingual workforce and cultural familiarity facilitate a smooth transition for Mexican business owners.

Pro-Business Regulatory Environment: Texas consistently ranks among the most business-friendly states in the nation, with streamlined regulations, business incentive programs, and a business-friendly legal environment.

Growing Economy: San Antonio's diversified economy includes healthcare, military, technology, tourism, and manufacturing sectors, providing numerous opportunities for both B2B and B2C businesses.

Our firm is deeply embedded in San Antonio's business community and can connect you with the resources, networks, and partners to help your expansion succeed.

Selecting an accounting firm for cross-border operations requires evaluating specific capabilities that most domestic-only firms lack.

Key Qualities to Look For:

Bilingual Staff: Communication is critical when dealing with complex financial matters. An accounting firm with Spanish-speaking professionals ensures that nothing is lost in translation and fosters a more comfortable working relationship.

Cross-Border Tax Expertise: Your accountant must understand both U.S. federal and Texas state tax requirements, as well as how they interact with Mexican tax obligations. Knowledge of the U.S.-Mexico tax treaty is essential for optimizing your tax position.

Experience with Foreign-Owned Entities: Forms such as Form 5472, FBAR requirements, and the nuances of nonresident alien taxation require specialized knowledge that general practitioners may not possess.

Guidance on Structuring Entities: A qualified firm should help you assess whether an LLC, C-Corp, or other structure best serves your objectives, considering factors such as liability protection, tax efficiency, and future investment plans.

Banking and Business Relationships: Established relationships with banks, lawyers, and other professionals who work with international clients can significantly simplify your business setup process.

Technology and Accessibility: Cloud-based accounting systems allow you to access financial information and collaborate with your accountant from anywhere—essential when managing cross-border operations.

Proactive Advisory Services: Beyond compliance, your accounting firm should serve as a strategic advisor, identifying opportunities to reduce taxes, improve cash flow, and support your growth objectives.

At Chapa Services, we specialize in serving Mexican entrepreneurs expanding into San Antonio. We combine deep cross-border expertise with personalized service to support every stage of your business journey in the U.S.