New Mexico LLC

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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 New Mexico isn’t complicated. With this guide, ZenBusiness gives 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.

The 5 steps to form an LLC in New Mexico:

An infographic that explains how to form an LLC in 5 Steps

Step 1:Name Your New Mexico LLC

Your business name is important. It’s how people will recognize and (ideally!) remember you. While you want a moniker that’s memorable, avoid getting too complicated. Your LLC 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.

Choosing an original name also increases the likelihood that you’ll be able to secure a fitting website domain. A website is a low-cost marketing tool that provides potential customers with essential information about your business. Do a domain name search to see if the website addresses suitable for your business name are available.

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. Just file the Application for Reservation of a Domestic Limited Liability Company Name with the Secretary of State and pay the $20 filing fee. If approved, you will have exclusive use of the name for 120 days. 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 like to protect a unique aspect of your business, it might be prudent to register a trademark. It’s typically easier and quicker to register a trademark at the state level. If you’d like to register your trademark with the state of New Mexico, you can file an Application for Registration of Trademark/Service Mark with a $50 fee. If you plan on doing business outside of New Mexico, you may benefit from registering your trademark with the United States Patent and Trademark Office for broader protection. You can also check their search engine to make sure your desired business name isn’t already trademarked by someone.

Step 2: Appoint a Registered Agent in New Mexico

New Mexico requires every LLC 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. 

Registered agent details are a matter of public record, so it’s best to use a third-party registered agent service. If you designate yourself as the registered agent and give your home address, your private details are easily accessible. If you give your LLC address, you may have the embarrassment of having lawsuits served right to your business.

In addition to protecting your privacy, hiring a registered agent service allows you to keep all vital documentation, notably any legal paperwork, in one place.

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.  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 $50 filing fee when submitting the Articles of Organization.

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.

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 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 apply for your New Mexico EIN via the Internal Revenue Service (IRS) website. It’s free of charge, and you’ll receive your EIN in a matter of minutes.

How much does it cost to start an LLC in New Mexico?

The overhead for starting your small business in New Mexico is small. When you file the Articles of Organization online, you will have to pay a $50 filing fee. If you choose to reserve your business name prior to this, you will have to pay. 

Beyond this, the cost of maintaining your New Mexico LLC is minimal. The state doesn’t require an annual report, which spares you the headache and expense of filing this added paperwork (needed in some other states).

However, you may need to pay for additional business permits and licenses, depending on the products and services you offer. The U.S. Small Business Administration (SBA) website has a list of federal licensing requirements. You should also check the New Mexico Business Portal and contact your local chamber of commerce for regional provisions.

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.
  • No annual reporting requirements: Some other states require LLCs to file an annual report, which also comes with a filing fee. This isn’t needed in New Mexico.
  • Strong asset protection: New Mexico has strong asset protection rules for LLCs. Your Operating Agreement will be treated as a legally enforceable document.

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 partners 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 — the minimum fee payable is $50. 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.

New Mexico LLC FAQs

  • 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.

  • 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.

  • 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?

    This depends on the type of business you are operating. Possible areas requiring licenses and permits include health and safety, environmental, building, and construction. New Mexico does not require a general business license, but you will want to check with the New Mexico Regulation and Licensing Department to confirm industry requirements. You will need to research what federal, state, local, and industry-specific licensing your LLC needs.rnrnThe kinds of insurance required for your LLC will depend on many factors. For example, if you have employees, you may need workers’ compensation insurance. If you have a company vehicle, you may need commercial auto insurance. ZenBusiness can help you determine what your business insurance needs are and save you money with a free business owner’s policy insurance quote.

  • 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 $50 filing fee.

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