If you’re passionate about a cause, starting a nonprofit corporation can help you take advantage of certain tax benefits. Setting up a nonprofit also gives you more credibility, making it easier to attract donors and find volunteers to support your work.
Steps to Form a New Mexico Nonprofit Corporation
- Select initial directors
- Choose a name
- Choose a New Mexico registered agent
- File Articles of Incorporation with New Mexico
- File a New Mexico initial report
- Create corporate bylaws
- Hold an organizational meeting for the board of directors
- Set up corporate records
- Get tax ID numbers
- Apply for New Mexico licenses and permits
- Apply for tax-exempt status
- Register as a charity with the state
- Acquire insurance for your nonprofit
- Open a bank account
Step 1: Select initial directors
Under New Mexico law, your nonprofit corporation must have at least three directors. After selecting your directors, you’ll need to add their names to your New Mexico Articles of Incorporation.
Step 2: Choose a name
Naming restrictions: You must choose a name that isn’t “the same as, or confusingly similar to” the name of another business. See our New Mexico business name search page to find out if your desired name is already in use.
If the status is revoked, final, withdrawn, or dissolved, then the name is available. If the status is active, tax clearance, suspended, new corporations, or intent to dissolve, you’ll have to choose another name.
Domain registration: To start a website, you’ll need to register a domain name. Before choosing the name of your nonprofit corporation, look into whether any domain names are available to match. ZenBusiness can help you with domain registration when you’re ready.
Name reservation: If you can’t file your New Mexico Articles of Incorporation right away, consider reserving your desired name. Name reservation prevents someone else from registering the name before you do. ZenBusiness can help you reserve your business name until you’re ready to file.
Step 3: Choose a New Mexico registered agent
A registered agent is a person or business that receives documents on your behalf. These documents are typically related to taxes and legal compliance. In New Mexico, a registered agent must be one of the following:
- An individual
- A domestic corporation
- A foreign corporation that’s authorized to do business in New Mexico
You can serve as your own registered agent, but there are some drawbacks. One major disadvantage is that you need to be available during business hours to accept document deliveries. Another disadvantage is that your address would become part of the public record.
Step 4: File Articles of Incorporation with New Mexico
Domestic nonprofit corporation
If your nonprofit is in New Mexico, it’s considered a domestic nonprofit corporation. To file Articles of Incorporation for a domestic nonprofit, follow these steps:
Download the form here from the New Mexico Secretary of State website.
- Fill in every field on the application. You’ll need to provide the name of your nonprofit corporation, the names of at least three initial directors, and other information about the nonprofit.
- Sign the application.
- Designate a registered agent. If your registered agent is an individual, fill in Box One. If your registered agent is a corporation, fill in Box Two.
- Fill out the Document Delivery Instructions Form included in the application packet.
- Write a check or money order payable to the New Mexico Secretary of State. As of 2021, the filing fee is $25.
Foreign nonprofit corporations
If your nonprofit is in a state other than New Mexico, it’s considered a foreign nonprofit corporation. The filing requirements are similar, but you need to complete a few extra steps.
First, search the Secretary of State database to find out if a New Mexico LLC, corporation, or partnership is already using your nonprofit’s name. If your current name isn’t available, you’ll need to choose an unused name to use in New Mexico. When you have a name in mind, fill out the required form and submit it.
Next, download the foreign nonprofit application checklist from the New Mexico Secretary of State website. Don’t leave any fields blank, or your application will be rejected. When you’re ready to file, enclose a check or money order for $25 payable to the New Mexico Secretary of State.
Within 30 days of filing, you’ll need to submit a Certificate of Good Standing to the New Mexico Secretary of State’s office. Your state may call it a Certificate of Fact, a Certificate of Existence, or something else. These documents verify that your nonprofit exists and that it’s authorized to operate in your home state.
Step 5: File a New Mexico initial report
Step 6: Create corporate bylaws
Bylaws are the rules that must be followed when managing a nonprofit corporation. Your bylaws must contain any rules that don’t conflict with New Mexico law or contradict the Articles of Incorporation. Initial bylaws must be adopted by the board of directors.
Step 7: Hold an organizational meeting for the board of directors
After filing your Articles of Incorporation, it’s important to hold an organizational meeting for the board of directors. During this meeting, the board selects officers, adopts bylaws, and performs other important tasks.
Step 8: Set up corporate records
You’ll need to keep detailed records for your nonprofit corporation. To do this, you can use a binder or cloud-based software to store important documents.
Step 9: Get tax ID numbers
All New Mexico corporations must register for a Combined Reporting System (CRS) number with Taxation & Revenue New Mexico. Before registering for a CRS number, you must have a federal employer identification number (EIN). You can apply for an EIN on the Internal Revenue Service website, or you can let ZenBusiness do it for you with our EIN service.
Step 10: Apply for New Mexico licenses and permits
Your New Mexico nonprofit corporation may need special licenses or permits. Because licensing requirements vary by location and industry, there’s no central licensing authority. You’ll need to check with city, county, state, and federal agencies to determine what licenses and permits you need. Some nonprofits raise money by running games of chance. If you plan to do this, you’ll need to seek approval from the New Mexico Gaming Control Board.
It’s your responsibility to make sure you have all the required licenses and permits. ZenBusiness’s partners can help you determine what business licenses and permits your business needs to operate.
Step 11: Apply for tax-exempt status
To get tax-exempt status you need to apply for 501(c)(3) status with the IRS. Once you’ve done that the state of New Mexico will grant you tax-exempt status.
Step 12: Register as a charity with the state
Register as a charity with the New Mexico Office of the Attorney General.
Step 13: Acquire insurance for your nonprofit
Protect your nonprofit by signing up for relevant insurance policies. If you have employees, you must have workers’ compensation insurance. You must also pay a quarterly assessment fee to the State of New Mexico Workers’ Compensation Administration.
You may also need liability insurance or some other type of insurance to protect your nonprofit’s assets. Consult a qualified insurance agent to determine what kind of coverage you need.
Step 14: Open a bank account
Open a bank account to keep the nonprofit’s finances separate from your personal finances.
Ready to Kickstart Your Business?
At ZenBusiness, we are proud to support small businesses through a variety of different tools and services. Whether you need a registered agent service, want to reserve a business name, or looking to register a domain, our goal is to help you stay on the road to success. Check out our services, and contact us today to see how we can help you grow your company.
New Mexico Nonprofit Corporation FAQ
- Can the founder of a nonprofit receive a salary?
The founder of a nonprofit can receive a salary, as long as that salary is reasonable based on the services provided. For example, the founder of a nonprofit couldn’t take a $200,000 salary for cleaning the office or doing basic clerical work. It might be reasonable to take a $50,000 salary for managing staff or providing marketing services, however.
- How much does it cost to start a nonprofit corporation in New Mexico?
As of this writing, it costs $25 to file Articles of Incorporation in New Mexico. There is also a fee for each initial report and annual report filed with the state. You may incur additional costs if you hire an attorney or an accountant to help you set up the nonprofit corporation. Check with the New Mexico Secretary of State for a current fee schedule.
- What happens if a nonprofit makes money?
It’s okay for a nonprofit to make money as long as that money is spent on activities related to the nonprofit’s mission. For example, if your nonprofit provides tutoring to children from low-income families, you could use the money to buy tutoring materials. If the money isn’t spent on relevant activities, you may have to pay corporate taxes on it. Your tax-exempt status may also be jeopardized.
- What kinds of businesses can be a nonprofit?
A business can only be a nonprofit if it’s organized for a tax-exempt purpose. The following are some examples of exempt purposes under the IRS Code: Preventing animal cruelty Promoting literacy Advancing science or education Testing for public safety If your business isn’t organized for a tax-exempt purpose, then it can’t be set up as a nonprofit.
- Can nonprofits sell products?
Nonprofits can sell products as long as the activity directly relates to their purpose. Selling mugs and using the proceeds to fund an educational program would be acceptable, for example. To determine if the activity is relevant to your tax-exempt purpose, consult with an experienced attorney.
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