Step-by-Step Guide to Forming an LLC in New Mexico

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New Mexico LLC Quick Facts

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

Initial LLC State Filing Fee – $50

 

Recurring State Fees – $0 (no annual report)

 

How long does it take to get an LLC in New Mexico?

  • Filing by Mail – up to 15 business days
  • Online Filing – 2-3 business days

Don’t want to form an LLC by yourself?

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Quick Reference

The Limited Liability Company (LLC) is a popular entity structure for businesses starting in the state of New Mexico. The LLC provides personal liability protection and has the potential to save money on taxes. With our guide, you can learn how to form an LLC in New Mexico without an attorney.

Unlike a sole proprietorship or partnership where the small business owner can be held personally liable for lawsuits against the business, the LLC is a separate legal structure, protecting the business owner’s personal assets.

Related: How Does an LLC Protect You?

Besides the liability protection, the Limited Liability Company provides several other benefits over the sole proprietorship, partnership, and corporation because of the multiple tax options, ease of administration, and management flexibility.

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

To form a Limited Liability Company in New Mexico, file the Articles of Organization with the New Mexico Secretary of State.  The LLC filing fee is $50.

Approval for the LLC typically takes between 2-3 weeks when filing by mail and 2-3 days when filing online.

Forming an LLC can be both affordable and is something most people can do themselves. Entity formation companies like IncFile or IncAuthority help guide you through the process and make sure there are no mistakes.

Related: Should you use a Formation Service, Hire an Attorney or Do it Yourself?

Steps to Form a New Mexico LLC

Step 1: Create an Account

Begin by creating a user account with the New Mexico Secretary of State’s Corporations and Business Service’s website.

How to form an LLC in New Mexico

Step 2: Begin Creating an LLC

Place your cursor over “Corporations” in the top menu and then select “Domestic (NM) LLC Formation.

New Mexico LLC Registration

Step 3: Name Registration

Entity Type -Make sure “Domestic Limited Liability Company” is still selected in the drop-down box.

Entity Name – Enter the proposed name you want for the LLC.  The LLC’s name also has to differ from other entity names registered with the Secretary of State.  You can check on New Mexico LLC name availability before filing to be sure the one you want is available, or if you are in the process of filing, use the “Entity Name” field to search the database.

Additionally, the name of the LLC must include one of the following designators at the end of the business name:

  • Limited Liability Company
  • Limited Company
  • Limited Liability Co.
  • Limited Co.
  • Ltd. Company
  • L.L.C.
  • LLC
  • L.C.
  • LC
  • Ltd. Co.
  • LC

A comma may be used after the business name and before the designator.  “Cowboy Cleaners LLC” and “Cowboy Cleaners, LLC” are both acceptable.

If there is a name you want to use but aren’t ready to form the LLC, the Application for Registration of Limited Liability Company Name can be filed to hold the name for up to 120 days. The state filing fee for a name reservation is $20, paid to the Secretary of State.

Enter the name you would like to use, along with the designator in the “Proposed Limited Liability Company Name and Name Ending” field. Before settling on a name, you may want to see if a domain name (sometimes called a URL) is also available to match your business name and website address.

Register an LLC Name in New Mexico

Step 4: Purpose & Duration

Effective Date Request – If you want the LLC to start immediately, choose today’s date.  If you want to LLC to start later, enter a date less than 90 days in the future to start.  The main reason for delaying the LLC start date is when the filing is being done close to the end of a calendar year, and the business isn’t going to have any activity until the following year.  By delaying until the following year, they will reduce the number of end of year filings.

Period of Duration – If you intend the business to exist forever, which most businesses do, leave “Perpetual” selected.  If you have a specific end date in mind (typically used for investment-related businesses), choose how long the LLC will operate after selecting “The period of duration is.”

Purpose

NAICS – This section is optional and asks for information regarding the activities of the business.  To do that, there is a number called NAICS (North American Industrial Classification System).  This code is a six-digit number that classifies and categorizes the different business industries.  This information is used in reporting statistical data for each of the industries in the U.S.  Remember this number as you will need it when filing annual tax returns.  Find your NAICS number here.

If the activities of your business aren’t specifically listed, choose one that is close.  The filing allows for up to three codes to be entered.

Business Purpose – Another optional section, the Secretary of State is asking for some basic information about what the business does.  Some will use a statement that keeps the business purpose open-ended that says, “The LLC will and engage in any lawful business activity for which a Limited Liability Company may be organized in New Mexico.”

Related: How to Answer the Business Purpose Statement.

New Mexico LLC Purpose and Duration

Step 5: Registered Agent & Address Information

Initial Registered Agent – A New Mexico Registered Agent must be identified before forming an LLC for service of process.  The Registered Agent can either be a resident of New Mexico (Select “Individual”) or a Resident Agent service (Select “Entity”). The agent must have a physical address in the state (PO Boxes are not allowed), be available during normal business hours, and act as a point of contact to receive legal documents, tax notices, summons, subpoenas, etc. on behalf of the LLC.

You are not required to pay for a registered agent. Any individual meeting the requirements can be the agent; however, the agent’s name and address become public record, and with that comes a loss of privacy. This is more important for some entrepreneurs, especially when doing business from home or still employed.  Hiring a registered agent service like Northwest Registered Agent to be the Registered Agent will reduce unwanted phone calls and mailings.

Entity Address and Contact Information – Enter your preferred email address and phone number (can be personal or business) for the Secretary of State to contact you.

Principal Place of Business – In this section, enter the street address, city, state, and zip code of the initial principal office.  This address can be the LLC’s physical address, or it can be the address where the business records are stored.  You may not use a PO Box for the principal place of business.  This address can be the same as the Registered Agent.

Mailing Address – If the mailing address is different from the primary place of business, enter that address in this section.  If the mailing address is the same as the principal place of business, click on the “Same as” box to copy an earlier used address.

New Mexico LLC Registered Agent

Step 6: Manager / Member Info

This section asks for information regarding the LLC’s managers and members.

Managers, also known as a Manager-Managed LLC, are people hired by the members to run the LLC, similar to a CEO of a corporation.
Members are the owner(s) of an LLC.  An LLC managed by the members is known as a Member-Managed LLC.  In this setup, the members have an active involvement in the management of the LLC.

Most LLCs are member-managed, and at least one member must be entered.  Learn more about the differences between a member-managed and manager-managed LLC.

Member Managed Manager LLC

Step 7: Organizer Information

An LLC Organizer is someone involved with the formation of the Articles of Organization.  The Organizer may or may not become a member, such as a mentor, attorney, or accountant, but any of the initial members could be listed as organizers.  Click the “Add Organizer” button and enter the Organizer’s information.

Additional Articles  – This is an optional section and not used by most LLCs.  Here you would include additional rules for the operation of the LLC.

Certify – One of the Organizers will certify the Articles of Organization.  Select the Organizer who will be certifying the Articles by checking the checkbox “Authorized by” in the earlier “Organizer Information”).

Organizer Information NM LLC

Step 8: Review

Review that all of the information is correct.  If there are no corrections, click “Accept.”

Step 9: Pay and File

Pay and file the Articles of Organization.

In approximately 2-3 business days, the LLC will be approved if filing online, or up to 15 days when filing by mail.

If mailing send paperwork to:
New Mexico Secretary of State, Corporations Bureau
325 Don Gaspar, Suite 300
Santa Fe, NM 87501

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Tasks After Forming Your LLC

Once the LLC has been formed, there are a few additional steps to take care of. Below is a list of the most common tasks.

Prepare a New Mexico LLC Operating Agreement

The operating agreement is a document that governs the framework of an LLC.  This document covers items like ownership rights, member responsibilities, how profits and losses are distributed, and more.

Most states do not require an LLC to have an operating agreement, but it is still worth considering. Without an operating agreement:

  • The LLC could be subject to generic state rules that may be detrimental in the event of a lawsuit.
  • Member’s personal liability protection may be diminished.
  • Members may not fully understand their roles and responsibilities, which could lead to costly disputes in the future.

Related: New Mexico operating agreement template

Obtain an EIN

The EIN or Employer Identification Number (also called a Federal Employer Identification Number or FEIN) is a unique 9-digit tax identification number assigned to a business by the Internal Revenue Service (IRS). Similar to a social security number for an individual, the EIN identifies business entities for tax purposes. The EIN will be needed to hire employees, open a bank account, build business credit, register for business licenses and permits, file state and federal taxes, and more.

There is no cost for the EIN when registering through the IRS. The number is available immediately when applying through the IRS website; however, you can also register by phone, fax, or mailing IRS Form SS-4.

Related: How to Apply for an EIN

Elect the LLC’s Form of Federal Income Taxation

One of the significant benefits of the Limited Liability Company is the tax flexibility it provides.  When applying for the Employer Identification Number, you will choose how the entity will be taxed for federal income tax purposes. While there are some limitations, an LLC may be classified for federal income tax purposes as a:

  • Sole proprietorship
  • Partnership
  • C-corporation
  • S-corporation

While this may sound confusing, this refers to how the LLC is taxed, not the legal structure.

Related: How can an LLC be taxed?

By default, the taxation of an LLC is called pass-through taxation, which means the profits or losses of the LLC flow through to the members.

Single-member LLCs will, by default, be taxed as a sole proprietorship. The members can also elect to change the taxation to a C-corporation or an S-corporation.

Multi-member LLCs will, by default, be taxed as a partnership. The members can also elect to change the taxation to a C-corporation or an S-corporation.

In general, the difference between being taxed as a corporation and being taxed as a sole proprietorship or partnership the profits and losses are passed to the member’s federal income tax returns based on their percentage of ownership.  As a result, the owner will pay self-employment taxes on all business profits.  As an alternative, electing to be taxed as a corporation allows the members to take a reasonable salary and then pay payroll taxes.  Any remaining profits are distributed and aren’t subject to payroll taxes, resulting in potential tax savings.

Before electing how your LLC will be taxed, consider talking with an accountant to assess which one will be best for you. Some tax elections, such as the C corporation, may be detrimental for some people due to double taxation.

LLCs in New Mexico that are taxed as a corporation (both C and S) will be assessed a corporate franchise tax, which is a tax for the privilege of doing business in the state. LLCs that are taxed as a sole proprietorship or partnership, do not pay this tax but will pay state income taxes on profits.

Open an LLC Bank Account

Opening a bank account for your LLC is important for liability protection as the account separates the business’s funds from the member’s personal funds.

Several documents will be needed to open a business bank account, such as:

  • A banking resolution is a document that authorizes the members to open a business bank account on behalf of the LLC.
  • Copies of the original formation paperwork from the state showing the creation of the LLC.
  • Driver’s licenses of the members.
  • Occasionally the bank will request a New Mexico Certificate of Good Standing to prove the LLC is active and in good standing with the state.

Related: How to Open a Business Bank Account for your LLC 

Get Business Insurance

Even with the liability protection of the LLC, business insurance is important to protect the business. The most common types of insurance include:

General Liability Insurance – covers damages owed and medical expenses for accidents that happen at your place of business.
Business Property Insurance – replaces damaged, stolen, or lost business property. This includes your physical business location, equipment, supplies, and anything else you used to run your business.
Business Vehicle Insurance – covers company vehicles and may also include coverage for personal vehicles used for business-related activities. Many personal policies won’t cover your vehicle if there is an accident while being used for business purposes.
Workers Compensation Insurance – mandatory in most states if you have employees, this insurance covers medical expenses that occur because of an accident or injury that happens to one of your employees while they’re at work.

Related: 7 Types of Insurance Your Business May Need

Apply for Business Licenses and Permits

Depending on what your business does and where it is located, there will likely be various business licenses and permits needed before starting your business. Some common registrations include:

  • Business License – Some cities require businesses to obtain licensing before they can start.
  • Professional License – Certain services such as barbershops, accountants, salons, and others must be licensed.
  • Combined Reporting System Number (CRS) – All businesses in New Mexico must register with the Taxation and Revenue Department.

Related: What Business Licenses are Needed in New Mexico?

 

Common Questions When Starting An LLC

You can act as your own registered agent, provide you are a resident of the state and are generally available during normal business hours. 

It’s sometimes thought that the LLC and business license are the same, which they aren’t.  Business license requirements vary by location and the type of business being operated. 

An out-of-state LLC wanting to do business in another state will have to register as a foreign LLC with the new state’s Secretary of State.

Businesses that require state licensing and offer professional services such as accountants, attorneys, podiatrists, physical therapists, acupuncturists, etc. often must file as a Professional Limited Liability Company (sometimes referred to as a Professional LLC or PLLC) instead of an LLC. Filing for a PLLC is very similar to that of the LLC.

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