Do you want to expand an existing LLC into New Mexico with a foreign qualification, but you’re not familiar with the process?
This guide will outline important details when expanding your business and explain how to foreign qualify an LLC in New Mexico.
Your business is growing, and you’re planning an expansion to other states. It’s a good problem to have! But it’s not quite as simple as choosing another location. Because each state has different rules and requirements for business operations, you may need a “foreign qualification” in each state where you plan to do business.
It’s a common misconception that foreign qualification is only for businesses operating outside the U.S. But in this case, “foreign” refers to any business operating in a state that isn’t the state where the LLC was originally formed.
For example, if your LLC is registered in Texas and you are looking to open a second location in New Mexico, you may need to complete a foreign qualification in New Mexico before you can expand there.
Important Note: If you’d like to save time and have the foreign qualification paperwork taken care of for you, look into a reliable online service like Northwest Registered Agent.
Foreign qualifying is essentially asking permission to do business in the state of New Mexico. And the notion that “it’s easier to ask forgiveness than permission” doesn’t apply here. Failing to foreign qualify before expanding a business into New Mexico yields consequences that are far costlier than registering in the first place. If you fail to foreign qualify, your business will:
Let’s consider those penalties. First, you have the immediate monetary hit, the accumulation of fees, and the $200/per year. On top of that, your LLC will lose its revenue stream when it’s cut off from doing business. Finally, you won’t have a way to recover debts or settle other legal matters. It’s best not to risk it and foreign qualify as soon as you start doing business.
Transacting unauthorized business, however, won’t stop your LLC from defending a lawsuit or invalidating any of its current contracts.
For further reading, take a look at the New Mexico LLC Act, Section 53-19-53.
We’ve established why you shouldn’t do business without a foreign qualification. But what exactly does it mean to “do business” in New Mexico? If you’re looking in the state’s LLC Act, you won’t find an explicit description. However, other state and tax laws tell us that you are considered to be “doing business” in most cases and required to foreign qualify if:
Another factor in foreign qualification is taxes. New Mexico requires LLCs to pay a franchise tax each year (if they pay a federal income tax). By foreign qualifying, you’re letting the state know that you’ll need to pay this tax. While it might be tempting to avoid qualifying and, in turn, the tax, don’t do it! This will end in more penalties down the road.
If you’re unsure whether or not you need to file for a foreign qualification in New Mexico, we suggest seeking legal counsel.
The foreign qualification, however, isn’t a hard and fast rule for all LLCs performing any kind of action in New Mexico. Certain actions do not qualify as “doing business” and therefore don’t require a foreign qualification. Some examples are:
If your only business activities in New Mexico appear here, you are most likely exempt from foreign qualifying. You can find a more in-depth list in the >New Mexico LLC Act, Section 53-19-54. If you have questions, it’s wise to seek legal advice.
Foreign qualification in New Mexico is simple if you know where to find and send your forms. If you or your legal counsel has decided to foreign qualify your LLC in New Mexico, you can register by mail or in person.
But first, we have to take care of some forms. Go to the Secretary of State’s Foreign LLC forms page and choose “Application for Registration” at the top of the list.
Pages 1-3 of this form contain detailed instructions for its completion. Follow them carefully, and your registration process will be quick and smooth. For a quick reference, here’s the information you’ll need:
Ready to submit your form? Not so fast. There are three other documents you’ll need to include:
Once you’ve compiled everything you need, mail or hand deliver it to:
Business Services Division
325 Don Gaspar, Suite 300
Santa Fe, New Mexico 87501
And don’t forget your $100 fee. Pay this with a check or money order made out to “New Mexico Secretary of State.”
After your form is in and your fee is paid, sit back, take a deep breath, and pat yourself on the back. Your LLC is on its way to foreign qualification, and you’re embarking on another chapter in the life of your business.
As you’re gathering your information, organizing your forms, and making sure your filing is in order, you’ll want to also confirm the details of your business name’s compliance with state requirements. In New Mexico, your LLC name must:
We think you should foreign qualify your LLC before you begin conducting business in a new state. If you don’t, your business could be subject to a broad range of fines and penalties for operating an LLC in a jurisdiction where you don’t have permission to do so.
While New Mexico accepts online submissions for domestic LLC formations, it only has a mail option for foreign qualifications. Therefore, you’ll typically need to wait roughly two to three weeks for New Mexico to process your foreign LLC filing.
Chances are, you’ll require at least one license or permit to operate your LLC in compliance with New Mexico state law. For more information, we recommend the state’s Regulation and Licensing Department.
While most LLCs do need to file annual reports in each state where they foreign qualify, that is not the case in this state because New Mexico LLC annual reports are not required, whether your LLC is domestic or foreign.
The overall costs of operating a New Mexico LLC can vary considerably based on the specifics of your business. However, we created a helpful guide to help you identify and plan for every expense your LLC will face in this state.
The answer to this question lies in your personal preferences, but we can give some general pointers. An attorney will cost the most by a mile, but also provides expertise you won’t find with the other options. The DIY route is free of charge but can require quite a bit of legwork and provides no peace of mind that the process is being completed correctly.
Using an LLC service means your business will be foreign qualified by professionals who know what they’re doing, while also costing significantly less than a lawyer. This “best of both worlds” attribute is what makes LLC services our preferred option.
Using an online LLC service removes much of the hassle from the foreign qualification process. With these services, all you need to do is provide them with the name, location, and industry your business operates in, along with some info about yourself and your registered agent.
The service then registers your Certificate of Authority (or similarly named document) with the state to qualify your LLC to do business there.
Disclaimer: The content on this page is for informational 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.
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