If you’re interested in forming a business venture, you’ve probably considered an LLC. New Mexico is one of the several states that does not require a person to be a resident or even a U.S. citizen to form a new limited liability corporation (LLC).
In addition, there are no filing fees involved with forming an LLC in New Mexico. The process for creating your own New Mexico limited liability company (LLC) is as simple as choosing the name, selecting how it will be managed and appointed officers if desired, and then paying the filing fee, which ranges from $30-$50 depending on who prepares the documents.
Once the Secretary of State’s office has processed your paperwork, all you have left to do is open a business bank account for your business.
Start Building Your New Mexico LLC Today
STEP 1: Name your New Mexico LLC
When filing with the state of New Mexico, you are required to create a name for your LLC. The name must include specific keywords depending on how it will be managed. Still, most importantly, you want to ensure that it is easily identifiable as an LLC with the word “LLC” or with the abbreviation “L.L.C.” included in the name.
You can reserve your preferred business name by filing an application for Reservation of Name (Form DBA-1), which lasts ten days and costs $5 per the desired name submitted.
FAQ: Naming a New Mexico LLC
Q. Is the name of my new LLC available?
A. You can search for your desired business name at www.nmcompaniesonline.com/NMOLPSearch/. Please note that this service is not affiliated with the New Mexico government agency, and there are no guarantees that a certain name will be available, especially if someone else has already reserved it.
Q: I want to form an LLC in New Mexico, but I don’t want to use the exact name selected by the Secretary of State’s office (SOS). Is there anything I can do?
A: No. The names you see on the SOS website have been approved and reserved for you to select from when filing your original Articles of Organization paperwork. You cannot add or remove any words from the name you are given.
Q: Can I pick any name even if it’s already being used?
A: Yes, but you should always check to see if a business name is available before filing with the state. You can search www.nmcompaniesonline.com/NMOLPSearch/. Please note that this service is not affiliated with the New Mexico government, and there are no guarantees that a certain business name will be available, especially if someone else has already registered or reserved it.
STEP 2: Choose a New Mexico LLC Registered Agent Service
In order for your LLC to accept important documents and legal services, you will need to have a Registered Agent. A Registered Agent is required by law in all states where a business has been formed and is responsible for receiving important information from the state of New Mexico on behalf of the LLC.
If there are any problems or questions about filing your paperwork, they can contact the Secretary of State’s office directly. The fee for this service begins at $25 per year but varies based on who you select as your agent.
FAQ: Nominating a New Mexico LLC Registered Agent
Q. What is a Registered Agent?
A. A New Mexico LLC’s Registered Agent is an individual or business entity who receives all legal documents on behalf of the business. This is very important because if you are not available to receive any papers, your agent will be responsible for doing so.
You want to make sure the service you choose is reliable and has heavy availability during normal business hours (usually 9-5) in order to process emergency documents quickly.
Q: Can I appoint myself as my own registered agent?
A: Yes, but only if you don’t plan on hiring someone else to fill this role. Otherwise, it may be considered fraudulent behavior, which could result in penalties if found out by the state of New Mexico. If you hire someone else to act as your agent, they can also be your designated representative.
Q: Do I need to meet with my Registered Agent regularly?
A: No. Once you have selected someone or a company to become your registered agent, you do not need to meet them personally. They will simply be responsible for receiving important information on behalf of LLC and for keeping all documentation safe until it is delivered back to the Secretary of State’s office on your behalf.
STEP 3: Filing Articles of Organization with the New Mexico SOS
Now that you have chosen an available name and filed paperwork appointing yourself as your own registered agent, it’s time to file the actual Articles of Organization (Form DBA-7) with the New Mexico Secretary of State.
This form provides the SOS with important information about your LLC and its appointed registered agent, including the name of the business, your contact information (including the physical mailing address), and any positions you may appoint in order to run or manage your company.
FAQ: Filing New Mexico LLC Documents
Q: Is there a particular format for Articles of Organization?
A: Yes. Your papers should be typed in all capital letters on 8½ x 11 paper in black ink only (no pencil). You will need to list your business entity’s exact name that has been reserved or selected by yourself when filing at www.nmcompaniesonline.com/NMOLPSearch/.
Please note that this service is not affiliated with the New Mexico government, and there are no guarantees it will be available if someone else has already claimed it. You will need to include the “Statement of Existence” section on the last page, which certifies that your LLC is in good legal standing and can conduct business in New Mexico.
Q: What if I misspell or make a mistake on my LLC forms?
A: This may result in your papers being rejected by the Secretary of State’s office, so be extra careful when preparing all documents for filing. Make sure you know exactly what information needs to go where and check for spelling and grammar errors before filing anything.
The fee for this service begins at $50 but varies based on how many companies you register with and if any corrections need to be made after filing. If something doesn’t look right, you can always call them for clarification beforehand.
STEP 4: Create a New Mexico LLC Operating Agreement
The only required paperwork for a New Mexico LLC is filing your company’s Articles of Organization. In order to provide information about how you want your new business to function, it is recommended that all LLC owners create an Operating Agreement once the form has been filed and accepted by the state. This type of agreement does not need to be filed officially but will be a huge help if any disputes arise.
FAQ: Creating a New Mexico LLC Operating Agreement
Q. I just filed my LLC papers but have no idea what to do next. Is there any kind of guidance for the first steps?
A: Your best bet is to contact your registered agent and ask if they can recommend a lawyer or another company that specializes in this process. This step will be necessary even if you are planning on running your new business on your own, as it’s never smart to completely avoid legal counsel.
If you go with an outside representative like an attorney, you may need to pay additional fees plus the cost of their services (usually at least $200). Keep in mind that once you hire someone to act on your LLC’s behalf, they are personally liable for all actions taken under their supervision, including filing paperwork or opening bank accounts.
STEP 5: Get an EIN
The next step in this process is to request an Employer Identification Number (EIN) for your business, that is, a business tax identification number. This will be required when you want to open a bank account or make any transactions with other businesses, so it’s important not to forget this step.
FAQ: Getting a New Mexico EIN
Q. How do I officially get an EIN for my LLC?
A: You can acquire this information either by faxing or mailing a completed SS-4 form to the Internal Revenue Service. If you mail, include a check payable to the Social Security Administration in the amount of $0.60 per person on your LLC.
For faxes, it must be sent from the individual who will receive the EIN, and all payment information should be included on page two of your application along with your business details. This number can also be acquired over the phone by calling 267-941-1099 but requires additional fees depending on your location and call provider.
Pros and cons of registering a New Mexico LLC
- LLCs require less paperwork than corporations
- You can hire out accounting and bookkeeping services
- Federal tax laws apply to LLCs as well
- Can still file as a corporation with the IRS if necessary
- If you lose your registered agent, this will also affect any company records they were holding onto for you. This includes things like Articles of Organization, minutes from meetings or board of directors, etc. Therefore it’s important that every owner has access to their own copies at all times.
How much does it cost to form a New Mexico LLC?
The price for filing Articles of Organization with the state government is $50 plus $5.00 if you want an expedited process which only takes one day instead of the usual 5-6 weeks. You can also save some money by using your company’s EIN on filings, but this does not apply to any other fees you might encounter along the way.
Separate Your Personal and Business Assets
It is important that you do not mix assets belonging to yourself and your LLC. If any problems arise, there must be clear lines drawn as to who holds what rights. This includes all types of property like vehicles, homes, or bank accounts, so it’s crucial to consider the wrong steps before creating your LLC.
1. Opening a business checking account:
All your business income and expenses should be kept in a separate account to avoid any problems with the IRS.
2. Getting a business credit card:
If you want to be able to spend your LLC’s money as you please, it is best to request a credit card from the bank where the company’s primary account has been opened. This card should have your business name and address on it and will be used exclusively for transactions related to your business.
3. Hiring a business accountant:
It is a good idea to hire an accountant early on to help you file all the correct paperwork and taxes during your first year of business. If you’re feeling overwhelmed, a professional can take a large part of this work off your hands.
Get Business Insurance for Your New Mexico LLC
Having the right insurance is extremely important if you want to protect your new business from unforeseen problems. You should at least have basic coverage in place while establishing your LLC, but other options are available for companies that need different sets of services for proper management.
1. Insurance requirements:
There are specific guidelines that must be followed when choosing an insurance plan to meet state laws and other legalities. It can be hard to stay on top of all these rules, so it’s best to hire a professional specializing in this area instead.
2. Workers compensation:
This type of insurance is required by law if anyone besides yourself will perform any work or duties for your business, including employees, contractors, or even unpaid interns or volunteers. It covers medical expenses related to injuries and helps protect you from lawsuits if they arise.
3. Directors and officers coverage:
This is an optional type of plan that helps cover the costs for any legal proceedings taken against members or managers in charge of your LLC. It may not be necessary for smaller companies, but it’s always better to have one just in case something goes wrong later on down the line.
4. Business general liability:
If your company is running events, providing services, or creating products, then you need this type of insurance to protect yourself from outside claims that could end up crippling your business financially.
The last thing you want is for a customer dissatisfied with their experience to file a lawsuit against you for all damages related to whatever complaints arose, furthering your expenses and legal problems.
5. Business property:
This coverage helps protect your assets if there is any type of damage caused to your business, equipment, or inventory, whether due to natural disasters, accusations of negligence, or any number of other reasons. It can be expensive, so it’s best to start with a basic plan and add more services once you’ve established yourself as a successful company in New Mexico.
New Mexico Business Licenses & Permits
Now that you have your LLC created, it’s time to start acquiring the necessary permits and licenses. In New Mexico, you need a commercial seller’s permit issued by the state Taxation & Revenue Department unless you will be selling out of your own home or as an occasional sideline to another business.
You must also acquire a local license from the municipality where your business is located and pay any fees associated with this type of documentation.
For specific licensing information related to your line of work, there is no one-stop-shop for all these requirements, so it’s best to check out each agency individually before starting up in any industry, including:
- Notary public: Contact the Secretary of State for more information about how to apply and what types of fees may be involved.
- Certified public accountant: You must have an annual permit to practice as a CPA in New Mexico, and this can be obtained from the state Board of Public Accountancy.
- Collection agency: Contact the Better Business Bureau for more information about what types of licenses are needed, where to go to apply, and how much these services will cost you.
- Security guard company: The state Private Investigator Licensing Office handles applications needed to work as a security officer, handler, or dispatcher, so contact them if you fall into one of these categories.
- Private investigator: There are specific licensing requirements to becoming a private investigator in New Mexico, including passing an examination, having no felony convictions within the last five years, and having no misdemeanor convictions within the previous year. You can find more information by contacting the Private Investigator Licensing Office directly.
- Adult entertainment business: If you are interested in starting an adult entertainment company in New Mexico, make sure to contact the Secretary of State for specific licensing requirements, including background checks, fees, and application information, along with reading up on all rules regarding this type of industry before getting started.
- Massage therapist: This license must be requested from the Department of Health if you plan to work as a massage therapist in New Mexico. Look into qualification requirements and how to apply through their office before doing anything else.
- Security guard: The state Private Investigator Licensing Office is responsible for handling applications needed to work as a security guard, handler, or dispatcher, so make sure to contact them for information about fees and requirements.
- Collection agency: The Better Business Bureau is responsible for issuing all types of business permits related to collections, including licenses for agents and adjusters, which you must pay an annual fee to use in New Mexico.
- Wedding professional: There are specific rules regarding who can conduct weddings within the state, such as officiants and ministers that should be contacted prior to beginning any wedding services in New Mexico.
New Mexico LLC Taxes
New Mexico is a great state for incorporating a company because of the low costs involved and very limited annual filing requirements compared to other states.
If your business has limited liability, you’ll have what’s called a “pass-through” tax status which means that your LLC does not pay income taxes at the LLC level, but rather passes through all profits or losses on to its members instead. In New Mexico, limited liability companies are taxed as follows:
- If taxable income is less than $50,000 per year there is no corporate income tax.
- If taxable income exceeds $50,000 per year an annual franchise tax fee of 3% on net worth must be paid in addition to regular withholding tax.
You must contact the New Mexico Taxation and Revenue Department for an exact calculation of your total liabilities.
Gross Receipts Tax
In addition to regular taxes as an LLC, you will also have to pay a gross receipts tax each year. This fee varies depending on the type of business you have and is determined by both your net worth and annual income. More information can be found at the New Mexico Taxation and Revenue Department website.
One of the benefits of incorporating a business in New Mexico is that you will not have to pay any taxes on behalf of your employees. All taxes, withholding, and unemployment insurance must be paid by the employee or contractor so there’s no need for employers to worry about paying these costs themselves.
Federal LLC Tax Filing Requirements
All limited liability companies that run a business in the United States are obligated to file annual reports and pay any taxes owed directly to the Internal Revenue Service every year.
LLCs that have elected for pass-through taxation will have their tax status indicated by an “S” on their federal tax return while all other tax statuses are designated by an “M”. You can download IRS Form 8832 here to determine your exact filing requirements which you must complete along with Form 1065 regarding your business income. These forms are due by March 15th each year.
New Mexico LLC Annual Filing Requirements
Limited liability companies based in New Mexico must submit an Application of Authority along with one or more $30 certificates of existence depending on the number of members in your business. These forms must be completed and submitted to the Secretary of State every year before January 1st.
Hiring Employees in New Mexico
If you’re planning on hiring employees in New Mexico, there are specific requirements your business must meet regarding withholding taxes and workman’s comp. Visit the state’s Department of Workforce Solution website for more information about these issues.
New Mexico LLC Laws
Although it seems that the registration process in New Mexico is quite easy, there are certain laws that you must follow once your business has been established.
For example, businesses that plan to hire employees should be aware that they cannot discriminate against people based on race, color, or national origin within their own company which means the same rules apply if a contractor is hired by an LLC to complete work at your premises.
How to Build Business Credit?
If your LLC plans on getting a loan, purchasing property, or signing any type of contract in the future, you will need to report your business credit score to creditors. You can check your rating and receive a free copy of your New Mexico Business Report at Equifax’s website.
As with all states that require annual reports and filing fees, you should keep copies of these documents for several years for your own records just in case the Secretary of State needs to verify them for some reason.
New Mexico Foreign LLCs
If you own a foreign LLC, you must file Form 542-S with the New Mexico Taxation and Revenue Department every year to keep your business legally registered.
If your company is based outside of the United States, you will have to pay a $50 fee which should be accompanied by a completed Franchise Tax Application for Foreign Corporations.
How to Obtain a Certificate of Good Standing in New Mexico?
Should you ever need to prove that your limited liability company is in good standing with the state, you can order a Certificate of Good Standing directly from the Secretary of State’s website.
You will be charged $10 for this document and it should arrive within 15 days after it has been generated.
Starting a limited liability company in New Mexico is quick and easy if you follow the registration process step by step.
Once your articles of organization have been filed along with all necessary documents, you will receive your company’s EIN number which can be used for business banking.