Steps to Dissolve Your New Mexico Business
- Establish a valuation of your New Mexico business
- Compile a full account of your New Mexico business’s debts
- Identify New Mexico’s official dissolution document
- Follow instructions in your New Mexico business’s operating document
- Cancel your New Mexico business’s permits, licenses, and registrations
- Wrap up your New Mexico business’s legal and financial obligations
- File dissolution documents for your New Mexico business
The decision to dissolve a New Mexico business isn’t easy, but it’s essential that when you decide to do so, you do it the right way. Businesses dissolve for good and bad reasons. To illustrate, a business may close after it has sold all its assets to an investor for a large gain to its owners. On the other hand, due to an economic downturn a business may have accumulated large vendor debt that it can’t pay. Regardless of the reason, good or bad, when owners decide to dissolve a business, it must do so in a specific manner. Otherwise, a dormant business may continue to amass fees and fines from licenses and permits, taxes and penalties, and default judgment awards from unanswered lawsuits. All these responsibilities could be passed on as personal liability to the owners if they neglect to properly dissolve the business.
Before dissolving your New Mexico business
Corporations and limited liability companies (LLCs) are their own legal entities. The business then provides limited legal liability to its owners on a personal level. To best ensure these liability benefits, owners must respect the separate nature of the business, and the easiest way to do this is through keeping good records. It’s important that all transactions and decisions are in the business’s name, in writing, and kept in a centralized place. Therefore, before you dissolve your business, make sure that you have gathered all the business’s witten records. It’s easier to have these records on hand prior to the dissolution process, rather than try to find them or establish them later.
Step 1: Establish a valuation of your New Mexico business
Generally, your business’s value is the total sum of all its tangible property such as real estate, inventory, vehicles, and office equipment. Occasionally, intangible assets like contracts, patents, and copyrights are also added, but only if they can be easily sold. That said, it’s often very difficult to value your business, especially if you have been operating for a long time. If the task seems overwhelming, we encourage you to hire a professional to help you. Once you have established what your business is worth, gather all of the documents that support the value and also prove ownership (titles, deeds, bills of sale, etc.), as well as any tax information that may relate to the assets. These documents and the total value of your business are essential to addressing any creditors in Step 6.
We can make this step much easier for you with our Business License Report and Worry-Free Compliance Service. With these services, much of the information we just discussed is readily available for you to dissolve a New Mexico corporation or dissolve a New Mexico LLC.
Step 2: Compile a full account of your New Mexico business’s debts
Understanding how much your business owes, and to whom, is central to properly dissolving your business. Remember, one of the most important outcomes to a properly dissolved business is that the owners have no personal liability for business debts. To maximize this result, an accurate accounting of business creditors, and amounts owed to each, is critical. The reasoning behind this is the law doesn’t allow a business to simply close and ignore its debts. It must make an effort to take responsibility for its commercial activities. If it doesn’t, the owners may be personally liable. Therefore, good and responsible business practice mandates an accounting of the business’s debts as part of the dissolution process.
Step 3: Identify New Mexico’s official dissolution document
Articles of Dissolution in New Mexico are significantly different depending on whether you’re dissolving a corporation and an LLC. For that reason, make sure that you identify which of the below methods applies to your business:
- Statement of Intent to Dissolve
- Articles of Dissolution
- Articles of Dissolution
You will file these documents with the Corporations and Business Services Department of the New Mexico Secretary of State’s office, either in person or through the mail.
Step 4: Follow instructions in your New Mexico business’s operating document
If your business is a corporation or an LLC, it will typically have a governing document. For corporations it’s the bylaws, and for LLCs it’s the operating agreement. Governing documents outline the internal procedures for dissolving a business. Usually, this consists of votes by the shareholders (corporation) or members (LLC) and perhaps another authorization by a board of directors (corporation) or manager (LLC). Check your business’s governing document for the proper procedure, and be sure to follow it and document it in writing. It’s also important to remember that whether your business has governing documents or not, you still must follow New Mexico law for dissolving a corporation or LLC.
If you’re just starting an LLC, we have an Operating Agreement Template to help you make this part of the process easier.
Step 5: Cancel your New Mexico business’s permits, licenses, and registrations
In the course of business, it’s likely that you obtained permits, licenses, or registrations. Some of these may automatically renew for a fee or impose fines for lapsing. Therefore, go through any permits, licenses, or registrations your business may have and file the appropriate cancellation paperwork. You want to avoid accumulating fees and fines that could be passed on to the owners.
Step 6: Wrap up your New Mexico business’s legal and financial obligations
At this point, you can give notice to all business creditors that you’re ceasing operations and dissolving. Make sure you research New Mexico law regarding the minimum notice period that creditors have to make a claim with your business. If you receive a claim, you need to decide whether to honor it or not. That decision is very important, and we urge you to seek professional advice on how to proceed.
At the state level, the New Mexico corporate dissolution process also requires that you obtain clearance letters from the New Mexico Department of Taxation and Revenue (DTR) and Department of Workforce Solutions. Similar filings may also be necessary with a New Mexico LLC if you elected certain tax treatment or had employees. You will also need to file any final tax returns with the DTR and the federal Internal Revenue Service (IRS). Along with filing your final tax returns with New Mexico and the IRS, make sure to cancel any tax identification numbers.
Step 7: File dissolution documents for your New Mexico business
Now it’s time to file your dissolution documents. As mentioned before, make sure you identify the proper documents for your business entity, because the filing requirements are different for corporations and LLCs.
We can help with your New Mexico business needs
We’re experts at making your business operation run more smoothly. Check out our wide range of business formation and legal compliance services to review the many different options available to make your business more efficient and compliant.
Disclaimer: The content on this page is for information purposes only, and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional.
- How do I dissolve a business in New Mexico?
To dissolve a business in New Mexico, file Articles of Dissolution with the New Mexico Secretary of State. However, since there are differences between a corporate dissolution and an LLC dissolution, make sure to check which one applies to your business.
- How much does it cost to dissolve an LLC in New Mexico?
Filing fees are subject to change, but the New Mexico Secretary of State lists the fee directly on the Articles of Dissolution.
- How long does it take to dissolve an LLC in New Mexico?
Since you must file your dissolution documents in person or by mail, expect that it will take up to 15 days to dissolve your LLC. However, bear in mind that giving your creditors legal notice to make a claim with your business is the more proper timetable for dissolving your LLC.
- How do I dissolve a nonprofit organization in New Mexico?
You dissolve a nonprofit organization in New Mexico in the same manner as a for-profit corporation. However, the nonprofit has its own dissolution documents.