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

If you are trying to figure out which state to choose to form an LLC, Wyoming might be the best one to consider first. Or is it New Mexico? Let's try to find out in this article!

Today we're going to tell you about the main differences and nuances of each of these two states to help you make the right decision, i.e. successfully start and grow your business. Let's get to it!

Wyoming LLC vs New Mexico LLC Formation: What’s in Common?

As you probably already know, limited liability companies are known for being flexible and protecting owners’ assets, as well as having split liabilities. As a business owner, your personal finances and those of your company members are securely protected from any risks. This means that whatever business issues you might face on your way, your business entity type will save you from losing money and getting into trouble with the state.

This is why LLCs are so popular around e-commerce businesses - they can help you steadily build your credibility and provide a lot of benefits, including personal liability protection, flexibility in terms of taxes, management, and distribution, easy startup process, less paperwork routine, ownership limits, and so on.

However, each state has its own regulations and policies to follow and consider. With that said, let's find out what Wyoming and New Mexico have in common.

New Mexico LLC vs Wyoming LLC: Similarities and Differences

Both states allow you to register your LLC online and will maintain reliable privacy, keeping your assets and personal information safe from public access. You can also refuse to provide any personal details to your Wyoming registered agent or business formation agency.

Wyoming LLC vs New Mexico LLC: What are the Differences?

WY is popular for its asset protection laws and an unlimited number of limited liability company owners, which can't be said about New Mexico. What's more, Wyoming is very friendly in terms of income tax, especially for newly established small businesses. In WY, you will only need to pay a flat annual fee of $60 for every $250,000 asset.

As for the state filing fee, New Mexico wins here with only $50 for the filing fee. To register an LLC in Wyoming, however, you will need to pay $102 to the Secretary of State.

New Mexico is known to be more suitable for foreigners due to the privacy aspect, i.e. you don't have to file annual reports and tell who owns your company. This provides an additional layer of protection and privacy for business owners. However, if you will need an EIN (unless you're a single-membered LLC), you will still have to disclose your ownership details to the IRS (Internal Revenue Service).

Wyoming LLC Formation: Pros and Cons

Wyoming has quality living conditions - common property, no social problems, stable and reliable government, and well-funded education. There's a good supportive atmosphere and a great environment for business development. It's consistently profitable to register an LLC in Wyoming.

Whether you want to form an LLC or join a business in Wyoming, the best advantage is the tax flexibility. You won't have to pay your own Wyoming income tax if you run your business in the state.

Wyoming does not charge corporate income tax to LLCs, which helps avoid double taxation. As a new business startup in Wyoming, you will have the opportunity to take advantage of the various advantages that the state offers to various organizations. 

One of the reasons many people incorporate a new company in Wyoming is because corporate customs and restrictions are almost entirely absent in the state.

Wyoming Advantages for LLCs:

• Business data protection. Just like New Mexico, Wyoming also offers great privacy conditions for your LLC, without requestion the names of your LLCs owners and managers in the Articles of Organization. This will allow your LLC members to avoid any types of harassment;
• Registered agent as a manager. In WY, your RA can be your official LLC manager to act on your behalf. That said, the control over your LLC still remains in your hands or in the hands of LLC members. Additionally, all your LLC members will be protected from unrequested emails or physical mail. Lastly, there's also a charging order, which means that no creditor can make the member of your LLC sell its assets or ownership in the firm to pay off the required debt;
• No income or business tax. This means that LLC members will owe no state tax on income they earn from a Wyoming LLC.

Wyoming Disadvantages for LLCs

• Anonymity issues. You will need to provide your personal data along with your RA data and contact information of your managers to the Secretary of State;
• No asset protection outside of Wyoming, which means if you live outside of the state, you will have to handle other laws in terms of protecting your LLC's assets from creditors;
• No corporate tax. Wyoming doesn't require LLCs to pay corporate tax, which is, however, a controversial point since almost all LLCs are pass-through entities anyway.

New Mexico LLC Formation: Pros and Cons

If you are planning to launch a startup in one of the southern states of America or want to expand your existing business, you should register a company in New Mexico.

NM is the 5th largest U.S. state, occupying the southwestern territories of America and belonging to the Mountain States. It's washed by the waters of the Rio Grande River.

Leading industries of the state are mining of natural resources (molybdenum, zinc, lead, copper, tin, natural gas, and oil), tourism, industry (military, electronic, chemical, lumber, printing), research, energy, medicine, animal husbandry, and agriculture (grains, nuts, vegetables).

Opening your own business in America, especially registering an LLC in New Mexico will be beneficial for the following reasons:

• The strongest economy in the world (1st place), the highest level of GDP, and a strong political position;
• A favorable investment climate (state grants, over 290 major FEZs, i.e. Free Economic Zones);
• Extensive opportunities to create and run any type of business;
• NM is the 6th largest oil producer in the country;
• NM is an important tourist and economic center in the United States;
• The state has relatively low corporate tax rates;
• Easy incorporation process.

If you are interested in incorporating a U.S. company and opening a corporate account with Bank of America, in 2022, we advise you to choose one of these business areas: food industry, R&D (biotechnology, energy, materials science), eco-farms, oil and fuel industry, pharmaceuticals, hospitality industry.

New Mexico LLC Advantages:

• No annual fees. In NM, LLCs don't have to pay any annual fees to remain compliant with the state and operate legally;
• No annual reports. LLCs in New Mexico don't have to submit annual reports to the Secretary of State;
• Low state filing fee. The fee is only $50, which is one of the lowest in the U.S.;
• Privacy. In New Mexico, your LLC will have no problems with staying 100% anonymous. Your Articles of Organization will only need to include the names of your RA and the organizer (who does not have to necessarily be a member of your LLC). These individuals will act as the link between your company and the state;
• No visit is required. To register an LLC, you don't have to visit the state or be a US Citizen.

New Mexico LLC Disadvantages:

• Poverty and unemployment rates. According to worldpopulationreview.com, in 2022, the poverty rate of New Mexico is 18,59%.

Here are the 10 states with the highest poverty rates:

• Mississippi (19.78%);
• Louisiana (18.88%);
• New Mexico (18.59%);
• West Virginia (17.66%);
• Kentucky (16.65%);
• Arkansas (16.31%);
• Alabama (16.08%);
• Oklahoma (14.93%);
• Tennessee (14.24%);
• Michigan (13.99%). 

As for the unemployment rate, according to bls.gov, in May 2022, the preliminary rate was 48.4, compared to 9.2 in Wyoming.

Anonymity

There are good reasons to maintain the privacy of your personal data, no matter how you compare Wyoming LLC vs New Mexico LLC. This is especially true for the digital age when information about company owners can easily be found online.

No matter what reason you have for keeping your data private, LLCs in New Mexico are completely confidential. Thus, you can be sure that your personal information will never become public. The same goes for New Mexico vs Wyoming corporation reviews.

Registered Agent

The only obligation for a company owner is to have a registered agent in New Mexico and renew the services when required. Many professional RA services offer the first year of free registered agent services. After one year, these services will need to be renewed, which will also include the use of a registered address and the ability to receive business documentation from the state.

Taxation

As mentioned above, LLCs have the most flexible taxation among all types of business entities. The tax law provides incentives for LLCs. By default, they are not subject to double taxation.

You may still want to get an EIN for your NM LLC, though. This is to open a separate bank account under the name of your company, get the necessary business licenses, and manage employee payroll (if applicable).

Single-member LLCs can refuse to get an EIN, but you will not be able to open a corporate account, get a Resale Certificate, and register an Amazon account. So we advise every LLC owner to get an EIN. One of the few times you can have a company without an EIN is if you plan to use it as a "holding company."

What is the corporate veil and how is it implemented in New Mexico?

The idea is to separate the company from its owner. The LLC can enter into contracts and take on debt. This separation helps protect the owners' personal assets, and creditors cannot seize them. That's the beauty of the limited liability of the founders.

LLC Wyoming vs New Mexico: Self-Service Registration

Yes, you can, but there are certain nuances to consider. As a rule, most "freelance" resident agents will not be prepared enough to answer every question you have. Let's say more, many such agents don't have a convenient communication channel, let alone customer service. All communication is by email only.

If you register on your own, you won't get the initial package of documents, including the EIN. You will even have to get an Operating Agreement for your company because the Secretary of State will not provide it.

Services for registration of a legal entity for a small price with a minimal set of documents are suitable for US residents who have an SSN (Social Security Number) and it is not difficult for them to quickly get a tax document.

However, if you register a New Mexico or Wyoming LLC on your own, your privacy is at risk. That said, if you apply for LLC registration independently, your name will be entered into the public database. Truth is, you can't open a Wyoming or New Mexico LLC and remain anonymous at the same time.

Your Articles of Organization will “identify” you as the registrar. Even the fact that it will not say that you are the founder will easily prove your involvement in the company.

Popular business formation companies like Northwest, ZenBusiness, Incfile, or LegalZoom do their work professionally. The service will be provided as agreed upon by the client. When you register your company, they will provide their contact information as the registrar, keeping yours anonymous in New Mexico and beyond.

Wyoming LLC vs New Mexico LLC: Taxes and Fees

The cost of registering an LLC in WY is $102, whereas, in NM, the Secretary of State will only charge you $50 to file your Articles of Organization.

Wyoming LLC vs New Mexico LLC: Tax and Fee Comparison

New Mexico vs Wyoming LLC: Conclusion

Now that you know the most important aspects of Wyoming vs New Mexico incorporation, we can safely share the most valuable insight with you.

If you're based in one of the U.S. states, it’s best you set up an LLC in your home state. However, if you're outside of the U.S., NM will be a cheaper option, compared to the WY. Additionally, it’s a more private state to open your LLC in.

Hopefully, you have found the answers to all your questions in this article. Good luck with your LLC registration, whether you are going to incorporate in Wyoming vs New Mexico, or your own state!