If you are just thinking about setting up an LLC in New Mexico, you will probably have a lot of questions. This article provides as many detailed answers as possible to help you figure things out:
We have tried to explain everything you need about starting a venture in New Mexico in clear language. Keep reading, and it will help you get your business started.
Table of Content
The first task you need to do to form a New Mexico LLC is to come up with a great company name. It should comply with the state laws, otherwise, you cannot register it.
There are certain restrictions imposed by the New Mexico regulations. Some words and phrases are prohibited to use, while others, on the contrary, are obligatory in the LLC name. We have gathered all this information for you in a convenient form.
New Mexico Statutes includes Section 53-19-3, which specifies that the LLC name is required to include one of the following phrases:
The use of abbreviations is also permitted. Instead of "limited", you may write "ltd. "The word "company" may be replaced by "co.".
Do not use any phrase in the name that indicates that the business belongs to some other type of entity, such as a corporation. It is also forbidden to name a firm in such a way as to give the impression that it is a state organization.
In addition, you may not indicate that your company operates in violation of the law. For example, you cannot state in the name the type of activity that should be licensed but you actually don't have such permission and don't intend to apply for one. You should not misinform people.
A basic rule of choosing an LLC name: If you need an LLC license for your business, double check with the Secretary of State to be sure your company name complies with the law.
Also, Section 53-19-3 requires that your name be distinguishable from any other company names already registered with the Secretary of State. This rule prevents people from confusing your company with your competitors.
When you find a good name that satisfies New Mexico law, you need to make sure it's unique. To do this, perform a search on the New Mexico business portal to see whether your company name is available or not.
If it turns out that it isn't available, the only way you can use it is to prove in court that you have the rights to that name.
New Mexico Statutes Section 53-19-4 describes your further steps. If the LLC name is free, you may reserve it for up to 120 days. This requires you to apply for a name registration with the state of New Mexico and pay the Secretary of State a filing fee of $20.
Unfortunately, there is no online LLC name registration option in New Mexico. You need to send the application and a check for payment by regular mail to the address:
New Mexico Secretary of State Office325 Don Gaspar, Suite 300
Santa Fe, New Mexico 87501.
It often happens that the LLC name is too long or there are other reasons why the owner does not want to use it. In this case, DBAs (doing business as) can be used.
A DBA is also called a trademark, i.e. it is a title that is not the name of a legal entity but is used on signs, websites, and logos. One of the strengths of this solution is the ability to change the DBA in the future and use the new name.
In New Mexico, a DBA is officially called an "alternative company name". The laws regarding DBAs are somewhat different here than in most states. As such, most DBAs allow the phrase "Limited Liability Company" or "LLC" to be removed. And New Mexico does not permit this. Regardless of the DBA you choose, you will have to apply one of the options for indicating the type of business.
In addition, most states register a DBA separately through a special form. Nonetheless, New Mexico Statutes Section 53-19-3 says that it is mandatory that all names under which the business will operate be listed on the LLC formation documents.
If you are going to use an alternative company name in the future, you will need to file an Articles of Amendment or Restated Articles of Organization form with the Secretary of State. There is also a $50 registration fee to be paid. You need to submit these documents by regular mail as there is no online filing.
If you registered the LLC name "Anthony Business Ventures, LLC" in New Mexico, you might use, for example, "Tony's Toy Shop, LLC" as your DBA.
However, let's say that after a while, you expand your product line and add board games to it. Of course, you want people to know about it. Then, you can change your DBA to a different name, such as "Tony's Toys and Games, LLC."
After choosing a company name, it's time to designate a registered agent. It is an individual or a business that will receive vital correspondence and, most importantly, legal documents, for example, if your LLC is subject to a lawsuit or other similar cases.
New Mexico Statutes Section 53-19-5 require that the registered agent be located within the state and be available during normal working hours each business day to receive paperwork and service the process.
Service of process refers to the common legal term for obtaining documents related to lawsuits. Hence, if someone sues your enterprise, a registered agent will receive all the necessary paperwork. If you work without such an agent, there will always be a risk that you will not get the relevant information on time, miss the court hearing, and the decision will not be made in your favor.
Aspiring entrepreneurs often conclude that they can be such an agent for themselves. There are several advantages to this decision:
On the other hand, it often turns out that the disadvantages of such a decision to become a self-employed agent cause a lot of trouble.
This is what you may face:
Experienced businessmen know about all these disadvantages, and thus, they most often choose a company that will be an official registered agent in New Mexico. The cost of such specialists is rather reasonable, about $100 per year. And the benefits of working with a professional agent pay off. You will be protected from unnecessary publicity and be able to get on with your work while the documents will be received and sent to you promptly by an agent.
If you want to order a registered agent service in a reputable company, study our registered agent rating and recommendations.
If you intend to operate in more than one state at the same time, then you need a registered agent in each state. The most convenient solution is to choose a large agency that works in all the states you require, and you will pay once a year and forget about any problems you might have.
The Articles of Organization is a critical document for your business. In New Mexico, you should always submit it to the Secretary of State. It contains basic information about the features of your entity. Once this form is filed with the Secretary of State, the New Mexico company is considered officially established.
If you do not have the opportunity to register New Mexico LLC yourself or you want to save your time, then you can use the help of professionals. Many firms offer this service. You can learn the list of the best of them and a comparison of the providers in our article about the top services for creating an LLC.
New Mexico Statutes Section 53-19-8 describes the information that has to be covered by the document. Here are the basic requirements:
You can register your New Mexico Articles of Organization online on the Secretary of State's portal.
How much does an LLC cost in New Mexico? The cost of registration is provided on the New Mexico business portal. The filing fee for the Articles of Organization is $50.
New Mexico business formation documents are processed within 10-15 working days.
The document called Operating Agreement refers to the contract between the LLC owners. It defines the type of your company, the specifics of its management, the duties and rights of each LLC member, and the rules of the business as a whole.
In New Mexico, it is not necessary to draft an Operating Agreement, and there is no need to register it. Nevertheless, this paper is used in almost every venture as it helps determine how the firm runs and makes decisions in any difficult situation. If a company operates without an Operating Agreement, all disputes will be resolved in court based on state laws.
An example of such a situation is one of the owners leaves the business. How can they sell their share of the LLC? What happens with the obligations they have? How and when will they be paid their profits? All these things are stated in your Operating Agreement.
Why is this paper useful for the functioning of the enterprise?
If you want your business to run securely, drafting an Operating Agreement should involve all the owners of an LLC. Coordinating each clause and signing the document will ensure that your organization will operate smoothly in the future.
An EIN is similar to your SSN, which is assigned to legal entities. It is issued by the IRS and is used to identify a company when paying taxes and in many other cases.
Your LLC needs an EIN in the following cases:
If you are an owner of a single-member LLC, you can use a personal SSN number instead of an EIN when paying taxes. But in this case, you risk your assets if some lawsuits or problems occur. The danger of becoming a victim of fraudsters also increases. In addition, many banks will not agree to open a commercial account without an EIN.
It is very easy to get an EIN, you can definitely do it without the help of specialists. Therefore, we do not recommend that you order this service if it is not included in your chosen business registration package by default. You need to go to the IRS website, fill out Form SS-4 online, and submit it right there to obtain a number. You can also mail this form if you want. However, online registration will be faster. It takes no more than 5 minutes, and an EIN is free.
Compare the conditions for opening an LLC in New Mexico with other states:
Once you have completely set up an LLC in New Mexico, you can start running it. There are some other things you should take care of right away, though. They are not necessary but will help you ensure a safe and successful operation of your firm.
It is not necessary to open a separate business account when creating an LLC, you can use a personal one, and it is quite legal. We do recommend that you have a separate business bank account, though. This way, you will separate personal assets and company finances, and it will protect your savings and provide better control and flexibility in your work.
An LLC bank account will help you get these benefits:
The last advantage is the most critical one. In many cases, an LLC is opened specifically to protect personal assets, especially if it is a single-owner enterprise. Otherwise, you can just operate as an entrepreneur. An LLC with a commercial bank account provides a "corporate veil" that protects your funds from the company's liabilities.
If you use a personal account for work, you are mixing the organization's money with your own. As a result, the corporate veil is pierced. And in court, you are more likely to be personally liable for any LLC financial problems.
The best idea is to separate all company assets and personal funds. A commercial business account can help with this task. That way, even if your LLC faces some problems, you'll be able to secure your money.
You protect yourself and your property with insurance policies. We advise you to do the same with your company. Proper business insurance is your defense against the many risks that are involved in your industry.
The most popular insurance plans are:
If you consider how to create an LLC in New Mexico, you are have to agree that you are complying with the state's rules and requirements. For example, some industries will require a license to conduct business. Other industries will require you to pay additional taxes.
You will need to keep track of all current legislation in your sector. That way, you won't miss important changes and can meet all local business needs in a timely manner.
Check whether your new enterprise needs a license in New Mexico. Some industries can't operate without one. For others, there is no such requirement. You can learn more about this issue on the New Mexico business portal called Obtain Licenses and Permits.
To operate here, your LLC has to register and obtain its own New Mexico Combined Reporting System (CRS) number. This can be done through New Mexico Taxation and Revenue Department’s Taxpayer Access Point (TAP).
You will probably also pay some state taxes. As such, many companies pay a Gross Receipts Tax. You can find out more about tax obligations you will be expected to pay on the Business Taxpayers section of the Taxation and Revenue Department’s website.
LLCs are of the "pass-through" type of taxation, and therefore, such firms do not pay income taxes. However, each member of an LLC is required to report company income on a Schedule C form, after which that profit is included on their personal income tax return.
In New Mexico, any LLC pays Social Security and Medicare taxes even if the employees are not employed. If you hire employees, remember to withhold taxes on their wages as well.
The state of New Mexico, unlike most others, does not require LLC owners to file annual reports. Nevertheless, you may be required to file an Information Return for Pass-Through Entities form each year. It is submitted to the Taxation and Revenue Department.
A limited liability company is a welcoming legal structure for many businesses. Start an LLC is easy. Select your state to start.