Are you planning on starting a New Mexico LLC, but don’t have any idea of how to file the paperwork and how much it will cost? We’ll help you understand the LLC filings and costs by splitting the entire process of forming a New Mexico small business into a few simple steps. Besides, we’ll discuss what you should do afterward to keep your company in good standing with the state.
Follow this guide and you can register an LLC in New Mexico and close your first deal as soon as possible!
New Mexico LLC Formation
- New Mexico LLC Formation
- New Mexico LLC Post-Filing Requirements
New Mexico LLC Name
Once you’ve decided on the type of business you want to open, it’s time to think about the name of your future company. The right LLC’s name will determine the fate of your enterprise, providing an advantage right from the beginning. A good limited liability company name must be creative and reflect its unique characteristics. It must also, of course, comply with the main New Mexico naming laws, including the following requirements:
- Having an “identifier”: words or abbreviations should be added to the business name, for example:
- Limited Liability Co.;
- Limited Liability Company.
- No prohibited words: to make launching an LLC in New Mexico go smoothly, you should avoid using words that could mislead the public regarding the nature of your company. Thus, terms indicating a company’s connection to the state are not allowed. Moreover, such words as “university,” “insurance,” “attorney,” etc. require a license and a licensed person;
- Uniqueness: make sure the name is available in New Mexico by checking the Secretary of State’s business name database before you enter it in the Articles of Organization. It will not take long, but it will give you confidence and peace of mind before you apply to the state.
Lack of uniqueness is often the reason the application is rejected by the Secretary of State, so let’s elaborate on that.
To make an LLC, the name must be free. In fact, it must be distinguishable visually from other existing business names in the Secretary of State’s records.
If a business database search shows that the desired option is already in use, then you need to come up with a new name or make substantial changes to the existing one. However, not every editing can be considered as such. Please note that significant changes do not include the following:
- Articles (“a,” “an,” and “the”);
- Special characters;
- Business type designators.
If your desired business name is available, there are two ways to proceed:
- Filing the New Mexico LLC Articles of Organization, which will automatically register the name after approval;
- If you have the right name, but you are not yet ready to register and officially operate in New Mexico, you can take advantage of the reservation. The period of the name reservation New Mexico is 120 days. To use this service, send an application for Reservation of Limited Liability Company Name and a check for the $20 mandatory fee to the address:
New Mexico Secretary of State
325 Don Gaspar, Suite 300
Santa Fe, NM 87501
Usually, the Secretary of State’s office processes such documents within 7-10 business days.
Registered Agent for New Mexico LLC
During the preparation of the Articles of Organization, the owner should already choose and appoint a registered agent for New Mexico LLC and get their written agreement. Otherwise, the company’s documents will be rejected. This requirement can be explained by the fact that the LLC registered agent serves as a liaison between the state and the business. He receives all official correspondence addressed to the company and passes it on to the owner, ensuring their stable communication.
The registered agent can be either an individual or a legal entity authorized to do business in the state.
- Individual as Registered Agent: Anyone who meets the following criteria can become an individual registered agent:
- Be a New Mexico resident and at least 18 years old;
- Have a physical address located in the state;
- Be available at the LLC’s registered office during regular business hours to personally receive the paperwork.
The legal requirements are quite flexible, so the owner or a lawyer, accountant, or even a relative has the right to act as a registered agent.
- Registered Agent Service: if you value a professional approach and confidentiality, hiring an online company is a good choice. The modern online marketplace offers a lot of Registered Agent Service companies in New Mexico for every budget and need. A special place among them belongs to IncFile and Northwest Registered Agent.
- IncFile: the cost of its starting package of formation is just $0. This company will not only help you get your business up and running quickly but also provide a full year of free registered agent service;
- Northwest Registered Agent: Although the cost of this company is somewhat higher, that is $225, its registered agent service is recognized as the best in the industry. This is the only service that offers full local scanning of all incoming documents sent to the company’s name.
Employer Identification Number (EIN) for LLC in New Mexico
The Employer Identification Number (EIN) provides quick identification of your company in the IRS records. Even though it is not required for officially opening an LLC in New Mexico, most companies need it to:
- Open a bank account;
- Hire employees;
- Pay New Mexico LLC taxes, etc.
You can apply for an EIN in New Mexico online, by fax, or by mail.
The fastest and most affordable way to get a New Mexico EIN is to file an online EIN application. This allows you to start using it as soon as you apply. However, this service is only available on the IRS website between 7 a.m. and 10 p.m. EST, Monday through Friday, and you need a valid Social Security Number.
If you have any questions, you can find more information at IRS Pub 1635: Understanding Your EIN.
If you, for any reason, cannot apply online, a completed Form SS-4 can be faxed to:
Your documents will be processed within 4 working days.
For those who prefer paper documents and don’t mind waiting about 4 weeks, you can submit by mail. Download the Form SS-4 to your computer, complete, print, and then send it to the address:
Internal Revenue Service Operation
Attn: EIN Operation
Cincinnati, OH 45999
LLC Articles of Organization
The first official step in the New Mexico LLC formation process is the preparation and filing of the Articles of Organization. This is a legal document needed to legitimize your business. To complete it, you must provide the following basic information:
- LLC’s name;
- The name and address of at least one member or manager;
- Registered agent’s name;
- The mailing address of LLC’s principal office;
- Whether the LLC will be member-managed or have a manager;
- Signature of applicant, etc.
As for the method of filing, the New Mexico Secretary of State’s office accepts online applications only, charging a $50 mandatory fee. To submit the Articles of Organization, you must go through the following steps:
- Visit the online filing portal;
- Create an account or log in to an existing one;
- Open the “Corporations” section and select “Domestic (NM) LLC Formation,” then follow the instructions.
If you need a more detailed guide, use the video walkthrough to get more information.
It usually takes 1-3 business days for the Secretary of State’s office to process, so after that, you can run an LLC in New Mexico officially.
New Mexico LLC Operating Agreement
Although there is no legal requirement for an LLC Operating Agreement in New Mexico, lawyers and experienced entrepreneurs strongly recommend that one be drafted. This document makes it easier to conduct business in New Mexico by regulating the company’s basic procedures and management structure. Generally, it includes the following clauses:
- Procedures for the profits and losses distribution;
- Dissolution of the company;
- Procedures for changing LLC members;
- Issues requiring a mandatory vote and its rules;
- Rights and obligations of the participants;
- Bookkeeping procedures;
- How to make changes to the Operating Agreement, etc.
The advantages that a well-drafted Operating Agreement brings to a company include the following:
- Standardization and acceleration of the LLC;
- Increasing the business’ reliability in the eyes of potential partners or investors;
- Establishing a separation between the LLC’s assets and the personal funds of New Mexico LLC owners, ensuring that their personal assets are protected in the event of a lawsuit;
- Preventing misunderstandings between managers and providing a smooth work of the LLC;
- The chance to avoid the New Mexico default laws, which are often general in nature and do not fully take into account the interests of the company.
An operating agreement is an internal document, so its content is entirely determined by the owners. Remember that there are no ready-made forms.
Of course, you can entrust the writing of this document to an attorney, but you should take into account that their services are quite expensive. Most LLC owners prefer to draw up an Operating Agreement on their own, using free online templates. Nevertheless, you can also use a template provided by a professional online company, like ZenBusiness. If you purchase any of its service packages, you will get a free Operating Agreement.
New Mexico LLC Post-Filing Requirements
New Mexico LLC Reporting
Unlike most other states that require regular reporting to update information, the New Mexico business LLC does not have to file an annual report. This is really good news for those who plan to do business here. You can maintain the company’s good standing and, at the same time, ease the strain on your budget by saving tens or even hundreds of dollars annually on the New Mexico LLC annual report.
However, LLCs are required to file an Income and Information Return for Pass-Through Entities (PTE). The forms required to be completed are publicly available on the New Mexico Taxation and Revenue Department (TRD) website.
In addition, new rules regarding alternative business names went into effect on July 15, 2021. From that date, the old forms became obsolete. Today, you can find the new ones available on the Secretary of State’s website.
If you need any assistance with filing alternative business names online, please call 505-827-3600.
LLC Taxes in New Mexico
Another advantage of this state is that you don’t have to think about Federal Income Tax and New Mexico State Income Tax, as companies are exempt from paying them. LLCs are treated as “pass-through” tax units. This means that the obligation to report business profits and losses is passed on to their owners, who file personal returns.
Furthermore, New Mexico businesses do not pay the “franchise” or “privilege” tax, as well as Sales Tax and Use Tax.
However, there are a number of additional taxes that you should not forget about. They are usually determined by state filing specifics and are related to the peculiarities of each particular business. For example, LLCs with employees pay Unemployment Insurance Tax and Withholding Tax, which requires Taxpayer Access Point, and some businesses are also subject to Gross Receipts Tax.
Please note that all New Mexico LLCs have to obtain a CRS tax identification number by registering with the New Mexico Taxation and Revenue Department. Make sure you don’t miss any important information to avoid possible difficulties in the future. If you want to get more tax information for your New Mexico LLC, visit New Mexico’s tax website.
Registration makes your business legal, but for doing business in New Mexico, most LLCs need to obtain special permits. The number and types of licenses and permits depend on the location or the area in which the company operates. They can be provided at any level:
- Federal: Use the U.S. Small Business Administration (SBA) guide to see if your LLC falls into one of the categories;
- States: Check out the Regulation & Licensing Department website to find information on occupational licenses for an LLC and the specifics of licensing in New Mexico;
- Local: To learn about local licenses set by cities or counties, contact your local county clerk.
The most common types of licenses and permits are as follows:
- City business license/tax permits;
- Building permit;
- Occupational permit;
- Health permit;
- Zoning permit;
- Signage permit;
- Liquor license;
- Alarm permit;
- Sales and use tax permit;
- Alcohol & tobacco permit;
- Seller or reseller permit.
We’ve covered the process of getting an LLC in New Mexico and the basic current requirements, including taxes, reporting, and licenses, that will keep your business in good standing. If you follow all these steps to starting an LLC listed above, you will have a fully legitimate and ready-to-operate business. This procedure is fairly straightforward, but it is important to understand New Mexico LLC fees or where to get the necessary forms.
For those who don’t want to handle the process of establishing an LLC themselves or just don’t have free time to do it, there are many online LLC services that can take some of the work off your hands. One of the best among them is ZenBusiness, which is a reliable and cheap online company offering professional business creation and setup services. Its prices start at $49, which are affordable even for small businesses. Moreover, for that money, the company will provide you with a free New Mexico LLC registered agent service for one year. Hiring such a company will not only save your time and money but will also be a great investment that will speed up the development of your NM LLC in the future.