If you want to start a business in New Mexico but are intimidated by the steps needed to establish your own company, you aren’t alone. One-third of Americans have considered starting a small business — without ever realizing their dream. Why not? People are daunted by the steps needed to get started, like figuring out legal registration, tax compliance, and more.
However, starting a limited liability company (LLC) in the Land of Enchantment isn’t complicated. With this guide, we give you detailed insights into the process. Once you have an overview of New Mexico’s LLC formation requirements, you’ll have the confidence needed to get started.
Read on for a step-by-step breakdown of what you need to do to establish your New Mexico small business. You will also discover how an LLC service can simplify the startup process even further — and continue to support your company’s success in the future.
Step 1: Name Your New Mexico LLC
Your business name is important. It’s how people will recognize and remember you. While you want a moniker that’s memorable, avoid getting too complicated. Your LLC’s name should convey the products or services you are providing to avoid confusion.
Additionally, there are some legal guidelines for naming a New Mexico LLC to keep in mind:
- Include the “LLC” identifier: Your business name must end with an acceptable variation of LLC. Options include “Limited Liability Company,” “Limited Company,” “L.L.C.,” “LLC,” “L.C.,” or “LC.” You are allowed to abbreviate “Limited” as “Ltd.” and “Company” as “Co.”
- Avoid prohibited words: You can’t include the words “bank,” “trust,” “insurer,” or “insurance company” in your LLC name. You also can’t use words that would make your business sound like a government agency, such as “government” or “police.”
- Choose an original name: This not only sets you apart from the competition; it’s also required. The law demands that any LLC name be distinguishable from any other LLC, limited partnership, or corporation in the state. To make sure, check the New Mexico Secretary of State database.
If you want to check to see if your business name is available, you can use our New Mexico business name search tool.
When you’re coming up with a business name, it’s wise to consider whether you can secure a matching domain name so that your future website can be easily found online. We have a tool to help you do a preliminary domain name search, and our domain name registration service can help you secure the online name that will best serve your company.
Once you have the perfect name chosen, you will still need to complete a few steps before you can file your Articles of Organization to legally establish your business. Reserving your business name in the meantime ensures that nobody else can take it. Please note that you will only be able to file this online, as New Mexico has no option for filing by mail.
If you’d rather not deal with this process yourself, we have a business name reservation service that can handle it for you. As part of the service, we also check to see if your desired name is available.
To make sure you’re entirely in the clear with your business name, visit the United States Patent and Trademark Office website to see whether your business name or logo is federally trademarked. Trademarks can also happen at the state level. To find out if your desired business name is already trademarked and/or apply for a trademark of your own, go to the Secretary of State website page for trademarks.
Step 2: Appoint a Registered Agent in New Mexico
New Mexico requires every registered business entity, including LLCs, to have a registered agent. This individual or business entity is responsible for accepting legal mail on the business’s behalf. Since some important documentation like legal paperwork needs to be handed to an actual person, a P.O. box won’t do.
What a registered agent service provides is:
- The ability to move your office location without having to update your registered agent address with the state
- The freedom to leave the office, as the registered agent must be present at the office during all normal business hours
- The discreet receipt of legal notices (as opposed to being served a lawsuit in front of a client)
Step 3: File New Mexico Articles of Organization
Once you have your LLC name and the registered agent picked out, you can file your New Mexico Articles of Organization. This is the formal paperwork needed to establish your company as a legal entity in the eyes of the state.
Filing official government documents like this can be intimidating and/or complicated for many people, which is why we’re here. With our business formation plans, our professionals handle the filing for you to make sure it’s done quickly and correctly the first time. But, although we can handle this for you, we’ll show you how the process works below.
You can’t file by mail. New Mexico only allows you to e-file. To do so, visit the Secretary of State’s Corporations and Business Services webpage. Click “Create User Account” and enter your name and the required contact information.
Once your account is created, you can file your Articles of Organization. The process is straightforward. You will need the following information:
- LLC name
- LLC’s physical address
- Registered agent’s name and address
- A six-digit North American Industry Classification System (NAICS) code, indicating the type of trade your business engages in
- Duration of LLC (choose “perpetual,” meaning without limit, or designate a time stamp for how long the business is supposed to last)
- Management model (“member-managed” is ideal if only a few people are involved in the business, and all of them plan to be a part of daily operations, while “manager-managed” is ideal for LLCs with many members who can’t all take part in daily activities)
You must also pay a filing fee when submitting the Articles of Organization.
If you have us handle filing your Articles of Organization, once the state approves your LLC, your paperwork will be available from your ZenBusiness dashboard, where you can keep it and other important paperwork digitally organized.
Once you get your physical paperwork back from the state approving your new LLC, you’ll want to keep it in a safe location along with your other important documents, such as your operating agreement, member certificates, contracts, compliance checklists, transfer ledger, etc. We offer a customized business kit to help you keep these important documents organized and looking professional.
By now you’re realizing how often you’ll need to supply an address for your new business. That can be unsettling for some business owners, especially those running their business from home. In instances where you’re not required to give the registered agent address or official principal address for your business, a virtual business address can come in handy.
With our virtual business address service, we supply you with a physical street address where you can have your mail sent without divulging your real address to more people than necessary.
Step 4: Create an Operating Agreement
An Operating Agreement details how your LLC is structured and managed. It includes details like who the LLC’s members are, their ownership percentages, how profits and losses are distributed, and how management decisions are made. It should also cover forward-looking details, like what happens if a member wants to leave or if the LLC is sold.
While it’s not legally required to submit an LLC Operating Agreement with your New Mexico Articles of Organization, it’s smart to draft one at this time. Setting out details like those described above on paper will decrease the likelihood of conflict — and the document can be referred back to in case disagreements do happen between LLC members.
This document also gives you credibility. Say you want to expand your business, either by bringing in a private investor or through a business loan. The odds are that you will be asked to present an Operating Agreement to show your LLC is run in a serious, reliable manner.
Since an Operating Agreement deals with sensitive financial and legal details, you want to make sure it’s thorough and clearly worded. If you’re unsure as to how to start creating an operating agreement for your New Mexico LLC, we offer a customizable New Mexico operating agreement template to help get you started.
Step 5: Apply for an EIN
An Employer Identification Number, or EIN, is used to identify your LLC in tax paperwork. If you have more than one member in your New Mexico LLC, you will need an EIN. You will also need an EIN if you hire employees.
Your EIN (also referred to as a Tax ID Number or Federal Tax Identification Number) can be beneficial in other ways. Having one will make it easier to open a business bank account for your LLC and obtain a business line of credit or a loan. You may also need it to apply for business licenses.
You can get your New Mexico LLC’s EIN through the IRS website, by mail, or by fax, but if you’re unfond of dealing with that particular government agency, we can get it for you. Our EIN service is quick and eliminates the hassle.
Once you’ve secured an EIN, you’ll be able to open a business bank account. Having separate accounts for your business and your personal banking is critical for sorting out your finances at tax time and helps you avoid commingling funds. Commingling funds can not only make your taxes more difficult, but it could also be used against you if someone takes you to court to challenge whether you and your LLC are truly separate entities.
We offer a discounted bank account for your new business. This allows for unlimited transactions, online banking, a debit card, and more. When you want to authorize others in your business to use the account, we offer a banking resolution template to simplify the process.
For further help managing your new business’s finances, try the ZenBusiness Money App. It can help you create invoices, receive payments, transfer money, and manage clients all in one place. If you want to save yourself the hassle, a reliable partner like us can handle the process of obtaining an EIN for a small fee.
New Mexico LLC FAQs
How much does it cost to start an LLC in New Mexico?
The state fees for forming a New Mexico LLC range from $50 to $150, depending on factors such as your method of filing, whether you choose to reserve your business name, etc. Note that fees change over time, so you should check the Secretary of State website for the most recent fee schedule.
What are the benefits of an LLC in New Mexico?
In general, an LLC offers a streamlined means of establishing a business. It doesn’t require a capital investment to get off the ground, for example. When you form your LLC in New Mexico, you enjoy additional advantages:
- Online filing: New Mexico only allows the Articles of Organization to be e-filed. This expedites the process, avoiding the wait times that come with mail.
- Easy set up: LLCs are relatively quick to set up and there aren’t nearly as many formal requirements as a New Mexico corporation must follow.
- Asset and liability protection: New Mexico has strong asset protection rules for LLCs. Your Operating Agreement will be treated as a legally enforceable document.
Learn more about the benefits of starting an LLC.
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We can help you to figure out such requirements. Our more advanced business formation services cover tasks like getting an EIN and ensuring your LLC complies with state licensing regulations.
What is the processing time to form my New Mexico LLC?
There’s no option to mail your document, so online processing is relatively fast. It typically takes two business days to hear back after you’ve filed your Articles of Organization.
New Mexico has options for expediting your filing for an additional fee. If you’re in a hurry to form your LLC and don’t want to jump through the hoops of the state’s expedited filing processes, we can handle it for you with our faster filing speeds service.
Do I need to file my Operating Agreement with the state of New Mexico?
No, this is not required in New Mexico — but it is recommended to create one to help further separate your personal liabilities from your business debts and liabilities in the event of legal issues. Just make sure to keep it with your other business paperwork to refer to it easily.
How is a New Mexico LLC taxed?
You can opt to have your New Mexico LLC treated as a sole proprietorship (referred to as a “disregarded entity” by the IRS), a partnership, or a corporation for federal tax purposes. Most LLC owners decide to have their business taxed the default way, which is as a sole proprietorship (for single-member LLCs) or a partnership (for multi-member LLCs). This method only requires your LLC members to pay taxes on their percentage of the profits on their personal tax returns. The LLC itself is not taxed.
You must also register your business with the New Mexico Taxation and Revenue Department, where you’ll get a Combined Reporting System (CRS) identification number through the New Mexico’s Taxpayer Access Point (TAP).
If you have your LLC taxed as a C corporation or S Corporation, you have to pay the state a corporate franchise tax — there is a minimum fee that would need to be paid. If you choose to have your LLC treated as a sole proprietorship or partnership, you will pay state income taxes on whatever profits you take out of the company.
If you want to determine your bookkeeping, accounting, and tax needs, check out our Free Accounting Assessment.
What tax structure should I choose for my New Mexico LLC?
This depends on many factors, like how many members your LLC has and how much it’s worth. A tax professional can advise you on what structure best suits your needs.
Does New Mexico allow a Series LLC?
A Series LLC, which refers to one or more LLCs under the umbrella of a parent LLC, is a concept that appeals to many business entrepreneurs. However, Series LLCs are not legal in all states. New Mexico does not permit Series LLCs as of June 2020.
Which licenses and insurance are required for an LLC in New Mexico?
You’ll need to make sure your LLC has all the licenses and permits it’s required to have by law. Unfortunately, because licensing varies by industry and location and can occur on the federal, state, and local levels, there’s no central place to check to see if you have all the licenses and permits you need. You’ll have to do some research.
If you don’t have the time or inclination to do all this research, or if you just want the peace of mind to know that your business has all the licenses and permits it’s legally required to have, our business license report service can do the work for you.
When do I file my New Mexico annual report?
New Mexico has different annual reporting requirements (and form names) for different business types. For-profit corporations file a biennial report (every two years), and nonprofits file their report annually. LLCs must file an annual “Income and Information Return for all Pass-Through Entities.” The due date for this filing is on or before the due date of your federal return for the tax year.
How do I dissolve my New Mexico LLC?
A New Mexico LLC can be dissolved by filing the Articles of Dissolution with the Secretary of State. The business must be in good standing upon dissolution — for example, all of your taxes must be paid. You will have to pay a filing fee as well.