New Mexico has long been a popular choice for establishing limited liability companies (LLCs). Not only is a New Mexico LLC relatively affordable, but it is perhaps the only state where one can create a genuinely anonymous LLC, protecting your privacy as well as your assets. We put together this guide on how to start an LLC in New Mexico to help you save time and learn more about what to expect throughout the process.
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What To Do Before Setting Up a New Mexico LLC
Ahead of moving on with your LLC plans, there are some preliminary actions you should take. Below are a few steps to consider before setting up your new company.
Have an Accurate Budget
At $50, New Mexico has one of the most affordable LLC filing fees in the country. But you’ll pay additional fees if you hire a company to help you form your LLC or act as your registered agent. These fees can vary greatly depending on the company and the services you choose. Be sure to consider costs and accurately budget for the services you need.
Check LLC Name Availability
No one wants to start the LLC process only to learn too late that their desired name is already in use. In New Mexico, a new business’s name can’t be the same as or similar to a business name that’s already on file with the Secretary of State. Before filing your LLC paperwork, check for name availability through the Secretary of State’s business search portal. If you do not find the term after searching, you should be free to move forward.
Reserve Your Business Name
Though not required, you can reserve and hold an LLC name for a period of up to 120 days to ensure you get to use it exclusively. However, you cannot renew your hold once that window has passed. Once you obtain and complete the form, mail it with a $20 fee to the New Mexico Secretary of State Office at 325 Don Gaspar, Suite 300, Santa Fe, New Mexico 87501.
Get a Registered Agent
In New Mexico, LLCs must have a registered agent and registered office to receive any legal or official documents on their behalf. You or an employee can act as your agent, provided you are a New Mexico resident and have a physical address within the state; P.O. boxes do not count. The registered office address must be the same as the agent’s business address.
If appointing someone or stepping into the role does not work for your business, do not worry. You can easily hire a company to act as your registered agent. The typical agent’s fee is between $100 and $300, depending on the company and the services it offers. Make sure you are getting the best deal by reading reviews and testimonials and asking precise questions about the services you intend to buy.
File Your New Mexico LLC Forms
The LLC forms and fees you submit will depend on the type of business in question. Domestic entities should create an account and complete the filing process online. The price for in-state LLCs is $50.
Foreign (out-of-state) entities cannot file online. Instead, they must mail their Certificate of Registration forms to the Secretary of State. In addition, foreign LLCs require a certificate of good standing from their originating state. Send the form and $100 filing fee to the New Mexico Secretary of State, Business Services Division, 325 Don Gaspar, Suite 300, Santa Fe, NM 87501.
Make all checks or money orders out to “New Mexico Secretary of State” or “NMSOS.”
After Establishing Your New Mexico LLC
Once you set up an LLC in New Mexico, there are a few other essential details to handle. Here are some of the first things you should do to get your new LLC up and running.
Get an Employer Identification Number (EIN)
Most businesses are required to have a federal EIN. Single-member LLCs that don’t have employees are notable exceptions. Still, it is an excellent alternative to using your Social Security number, keeping it safe from exposure or potential fraud. EINs are free and available on the IRS website. Be aware that EINs might sometimes get called a Federal Employer Identification Number (FEIN) or Federal Tax Identification Number (FTIN), but they are the same thing.
All New Mexico businesses must also register with the New Mexico Department of Taxation and Revenue. After registering, you will receive one or more New Mexico business tax ID numbers, depending on the types of state taxes that apply to your business.
Apply for Business Licenses
You may need licenses from the state, your locality, or even the federal government to operate your business legally. Some New Mexico cities or counties require businesses to have a general business license. In addition, the state licenses certain industries and professions. A few industries are regulated and licensed by the federal government.
Create an Operating Agreement for Your LLC
Are LLC operating agreements mandatory in New Mexico? No, but they are still a good idea as they lay crucial groundwork for your LLC, from member responsibilities to financial obligations. Having a well-thought-out operating agreement for your New Mexico LLC contributes to its good standing and legitimacy. There is no reason not to create one, and you will probably not regret doing so, as they help avoid confusion or internal disputes.
LLC State Guides
Frequently Asked Questions
What is an LLC?
A limited liability company balances the relative ease and flexibility of a partnership or sole proprietorship structure with the increased risk protection of a corporate structure. Like corporate shareholders, LLC owners (known as “members”) enjoy limited liability, meaning personal liability to the company includes only what members have invested and does not extend beyond it to cover corporate losses or debts.
By default, members of an LLC pay taxes as a share of personal income just as owners of a sole proprietorship or general partnership would—this is often referred to as a “pass-through” tax structure. An LLC can elect to be taxed as a C corporation (C-corp) or S corporation (S-corp) if it meets certain requirements. Many small business owners choose LLCs for their simplicity and flexibility.
How much does it cost to file an LLC in New Mexico?
Domestic LLCs get charged $50 while foreign LLCs must pay $100.
How do I set up an LLC in New Mexico?
Domestic LLCs in New Mexico complete the formation process online. Foreign LLCs, meanwhile, must download and complete a Certificate of Registration and then mail their paperwork and fees to the Secretary of State’s office.
Do New Mexico LLCs file annual reports?
Unlike most states, New Mexico does not require LLCs to file yearly reports.
What kind of tax flexibility does an LLC provide?
LLCs can be taxed as sole proprietorships, partnerships, C-corps or S-corps. This choice allows members of an LLC to minimize their tax burden.
What are the different types of LLCs to set up?
When determining how to start an LLC, there are several types of LLCs to choose from. Knowing the LLC structures available is essential for selecting a business model that most closely aligns with the nature of your company and how you intend for it to operate. These LLC structures include:
- Single-member LLC: This LLC is owned and operated by a single person. While similar to a sole proprietorship, this LLC provides additional tax benefits and liability shielding.
- Multimember LLC: Standard LLCs with more than one member, often divided into manager-managed or member-managed entities.
- L3C: These entities, also known as “low-profit liability companies,” act as a bridge between nonprofit LLCs and for-profit LLCs where the business cause remains the primary focus rather than earnings.
- Series LLC: Series LLCs are tiered business structures where the topmost LLC owns a series of lower-tiered LLCs through limitless segregation. Each LLC in the series operates mostly independently of one another; their assets are also primarily separated.
- PLLC: A specialized LLC, this business formation type is only available to certain licensed professionals.
- Restricted LLC: Restricted LLCs are not taxed during the first 10 years of formation. Likewise, they cannot make distributions to members. It must be stated in the articles of organization that the LLC will be restricted.
