New Mexico vs Florida LLC: Which State is Better to Start Business?

Choosing a state to start your limited liability company is always a responsible decision. It determines what benefits you will get for your business in the future. Or it will be the other way around, and you will have to deal with high tax rates, state fees, the high cost of renting and buying real estate, and a bunch of other downsides.

To start a business in the state with the best conditions, aspiring businessmen conduct an in-depth analysis of information about all of them. But it's best to discover the truth by comparison. That's why we have created this article to compare New Mexico vs Florida LLC formation. For this purpose, we thoroughly studied tax rates, state fees, the company formation process, list of required documents in these states, and are ready to share our conclusions with you. Let's get to the point!

New Mexico vs Florida LLC Formation: What's in Common?

In any U.S. state, the main advantage of forming an LLC is the protection of its members' limited liability. This means that all of their personal assets will not be affected if the company is in debt to creditors. This clear separation of personal and business assets gives the founders of the company the protection often termed the corporate veil. Of course, this applies to both New Mexico and Florida LLCs.

In addition, it is worth noting the simplicity of reporting to the IRS. In most cases, New Mexico or Florida LLCs are pass-through legal entities. This is another significant advantage that is relevant to both states. In this way, it is easier for founders to pay their taxes by doing so through their tax returns. C-corporations, for example, are taxed twice (company income and personal income), which many business owners find a significant disadvantage of this business structure.

Also, there are a couple of other common details for New Mexico and Florida LLC formation. Among them, we would like to highlight:

• The unlimited number of members. You can be the sole founder of your limited liability company or have more than one partner. This is up to you to decide because you have all the privileges and possibilities in both states. Moreover, you can also decide how you will distribute profits and responsibilities in your company;
• Ease of management. If you decide to start a corporation, you will have to learn what the corporate protocols and other additional documents are. All of these things make the process of running a company much more complicated. In the case of founding an LLC in New Mexico or Florida, both states give you the freedom of management and a minimum of paperwork;
• Cost. In both states, founding an LLC will cost you more than starting a partnership or registering yourself as a sole proprietorship;
• The list of documents for registering a company and the process of filing them with the state are similar. All steps that you have to go through on the way to create your LLC will be similar in both states: filing Articles of Organization, preparing an Operating Agreement, appointing a registered agent (required to do business in New Mexico and Florida), getting EIN, etc.

However, the above information will be relevant for many states in the U.S. If we focus on the differences between the New Mexico and Florida LLC formation, we can see more revealing results.

New Mexico vs Florida LLC Formation: What Are the Differences

Although the states in the country have a lot of autonomy, in the case of LLC formation, they have similar requirements.

If we compare New Mexico vs Florida LLC formation, we notice little difference in tax rates. For example, the tax rate on gross receipts in Florida is 6% and 5.125% in New Mexico. So, both states are quite favorable for setting up a business based on these figures.

Also, we want to note that New Mexico authorities do not require LLC owners to file annual reports as the Secretaries of other states, including Florida, do. In addition to saving time and effort to fill out additional paperwork, this saves a lot of money. For example, in Florida, the state fee for processing your annual report is $138.75. But if you don't file your report on time, add another $400 fine to the cost. Although you only pay this fee once a year, in New Mexico, you can avoid it at all. In general, state fees are higher in Florida than in New Mexico. For example, it would cost $100 in Florida for the Secretary of State to review your company's main document (Articles of Organization). In New Mexico, the cost for this service is half that - $50. However, these are still competitive prices because, in Massachusetts, you have to pay $500 for the Secretary of State to review your document.

New Mexico LLC Creation: Pros and Cons

The state of New Mexico is a popular choice for registering an LLC. This is all because it gives company founders some benefits favorably affecting the ease of doing business in this state. However, there are a couple of disadvantages that we can't avoid mentioning.

Advantages

Let's take a closer look at each of the benefits mentioned above in the article.

• Low State Fees. The state offers to create your LLC in New Mexico for as little as $50. On average, other states charge $100 for registration. But prices can go as high as $200 and even $500 in Alabama and Massachusetts respectively. When comparing New Mexico vs Florida LLC formation fees, the first option is clearly a better deal;
• No Annual Fees. The Secretary of State has also eliminated annual fees. Although LLC owners in other states pay annual fees of $100-800, in New Mexico, you won't be charged a dime;
• No Annual Reports. In most states, LLC owners file an annual report and pay a fee to review it. The amount varies from state to state. But if you decide to start your company in New Mexico, you don't have to do that and can focus on the important processes of your business.

Disadvantages

• High Poverty Rate. If you are considering starting a company in New Mexico, in addition to the financial benefits, you need to learn all the ins and outs of life in this region. For example, this state has the third-highest poverty rate. These values are twice the national average poverty rate;
• High Unemployment Rate. The unemployment rate in New Mexico is dropping fast. Last year, the state's unemployment rate was 7.20%. Now, it is 5.1%. However, it is still not a positive figure compared to other states.

Florida LLC Formation: Pros and Cons

Florida is one of the most preferred states to start a company in and is always in the top 10 states for business in various rankings. Let's take a closer look at why business people choose this state.

Advantages

• Reasonable Tax Rates. With an individual income tax rate of 0% and a sales tax rate of just 6%, Florida is a great place to do business;
• Low Unemployment Rate. In this New Mexico vs Florida LLC formation review, we have already discussed the importance of learning about the side aspects of doing business in the state you choose. For example, Florida's unemployment rate is clearly lower compared to a competing state. It is 3.8%.

Disadvantages

We should note the relatively high cost of registering and doing business in Florida in a separate paragraph. Although state fees are not the highest in the country, they are clearly higher than in New Mexico. In addition to the fact that the cost of registration of an LLC in Florida is twice as high, you will also have to pay for the processing of your annual report. Also, add the mandatory annual fee (which is not required in New Mexico) to the amount.

Florida LLC vs New Mexico LLC: Taxes and Fees

To conclude our article, we suggest comparing Florida LLC vs New Mexico LLC fees and taxes to make it easier for you to see the difference.

Conclusion

In our comparison of Florida LLC vs. New Mexico LLC, we analyzed the company formation process in these states. Although Florida is a very popular place to do business, we want to note the New Mexico Secretary's commitment to providing a favorable environment for founding an LLC in that state. We wish you the best of luck!