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New Mexico LLC Formation

limited liability company (LLC) is a business entity that many small businesses organize themselves as when they are just getting started. An LLC has a few advantages for small businesses but may not be appropriate for larger ventures or startups seeking investors. In addition, LLCs have a unique business structure that can get very technical.

It would be best to look closely at other business entities like partnerships and S-corporations before launching a New Mexico LLC.

We make business formation EASY. Learn about our DIY business formation services here.

Advantages of LLCs:

  • Limited personal liability for members for business debts and lawsuits
  • Fewer reporting and recordkeeping requirements than other kinds of entities, including corporations
  • Avoiding the double taxation—business and personal—of corporations if taxed as a pass-through entity
  • Unlike corporations, New Mexico LLCs do not have to file annual or biennial reports with the state

Disadvantages of LLCs:

  • An LLC is not a good investment vehicle for outside investors
  • LLCs and S and C-corporations pay commercial activity taxes, unlike sole proprietorships and partnerships
  • LLC owners may pay self-employment taxes

Step-By-Step: Forming a New Mexico Limited Liability Company

With all of that, you have decided to form an LLC in New Mexico. You have your members, your business plan, and a little startup capital, and you are on your way.

Here is a step-by-step guide for creating a fully operational New Mexico LLC.

Note: While professionals (doctors, lawyers, architects, etc.) may form a professional LLC, there is no separate designation (like PLLC) under New Mexico state law for a professional LLC. They are created like any other LLC.

Registering Foreign LLCs in New Mexico

Any foreign (out-of-state) LLC that wants to do business in New Mexico must register with the Secretary of State.

Step I: Name Your LLC

Creating a legally proper LLC name and then protecting it is one of the first actions in LLC formation. This process can be complex and time-consuming, but the LLC needs to operate legally in New Mexico.

The first thing you have to do is create a great name (that's up to you). New Mexico law requires that the name be unique and different from any other company's name.

So your first task will be to search the Secretary of State Business Services business name search page to make sure that your chosen name isn't already in use for an existing business.

The New Mexico Secretary of State office warns that this is just a preliminary step to the state filing. You still need to reserve the name or go through the registration process to get your name approved by the state.

The name must contain one of the legal suffixes "limited liability company": L.L.C."; "LLC." The name cannot have any other business entity indication, like "Co.", "Corp.", etc.

Step II: Appoint a Registered Agent

The State of New Mexico requires an LLC to appoint a registered agent for service of process before formally filing with the state. A registered agent is designated to receive process (legal documents) on behalf of the LLC. A New Mexico registered agent can be an individual or a company (domestic or foreign), but it must have a physical New Mexico street address. A forming LLC will often choose a professional registered agent service or the company lawyer.

Step III: Legally Protect Your Business Name

Next, make sure that no one else can use it in business or on the internet. This means that you have to make sure that no one else uses that name. You do this by doing a name search to ensure that the internet domain name is available. If available, grab it immediately (that will only cost a few dollars).

If you want to do business nationally or operate in several other states, you should trademark the nonprofit's name with the United States Patent and Trademark Office (USPTO). This process takes some time and money. While that application is pending, the name is still protected as a common law trademark.

Once you receive your federal trademark, apply to the New Mexico Secretary of State to register it as a New Mexico trademark or service mark. You may also trademark the New Mexico LLC name with just the state, without a federal trademark.

Now that name is yours, you can keep anyone else from using it, and it conforms to New Mexico law.

Step IV: Structure the Business

An LLC has a particular, unique business structure.

To begin with, the stakeholders of an LLC are called “members." There is no stock issued, so they cannot be “stockholders." This is the primary reason that an LLC is not a good investment vehicle for either the founders or potential investors.

There is no number of members required. You can have a single-member LLC-- say, for a one-person office.

Secondly, an LLC can be (and should be) governed by an “Operating Agreement." This is similar to but different from "bylaws," "charters," or other forms of corporate organization. New Mexico does not require an Operating Agreement, but most LLCs will have one.

The New Mexico LLC operating agreement is a private business formation contract among the members/business owners. It is not filed with the state, but it is essential to forming an LLC. It should include the following points, according to the Small Business Administration:

  • Percentage of members' ownership
  • Voting rights and responsibilities
  • Powers and duties of members and managers
  • Distribution of profits and loses
  • Holding meetings
  • Buyout and buy-sell rules (procedures for transferring interest or in the event of a death)

The members may manage an LLC or hire an outside manager. You will indicate which you have chosen on your registration application.

Step V: Write and File Your New Mexico Articles of Organization With the State

You are now ready to compose and register your new LLC as your business registration with the New Mexico Secretary of State Business Services Division.

The first step in this process is to create a user account with the Secretary of State. Then follow the LLC business formation steps.

Unlike other business formations, new New Mexico LLCs must file online and online only. Because of this, it only takes a few hours for approval (or rejection).

Foreign LLCs cannot use this form. They must register separately, as noted above.

Also, if you are registering a DBA, that must be done at the County Clerk's office in the county where your main office exists. You do not register DBAs with the Secretary of State.

Your LLC Articles of Organization documents must contain the following information:

  • The name and principal business physical address of the LLC
  • Effective date of the LLC
  • Either determine an ending date or indicate it is “perpetual"
  • The name and physical address of the LLC's registered agent
  • The purpose of the LLC
  • Email address and mailing address of the LLC
  • The structure of the LLC: (manager-managed or member-managed)
  • Names and contact information of the initial managers or initial members and if it is a single-member LLC
  • Organizer information (an LLC organizer is the same as an “incorporator" for a corporation)
  • $50 filing fee

After You File Your Articles of Organization

You will have numerous state and federal requirements for your new LLC after filing with the state.

30-Day Report

You will file a report 30 days after your LLC is approved. The Secretary of State's office will send you a letter explaining this process. There will be no other reporting requirements.

State Business Licenses

Certain kinds of businesses (professionals, construction, liquor businesses, etc.) must be licensed with New Mexico. In addition, there may be local business licensing requirements, environmental impact requirements, etc.

State Employer Filing Requirements

Your LLC will be subject to state rules if it has employees—even if the employees are also members. All new employees must be registered with the New Mexico New Hire program within ten days of starting the job.

You must also register for Workers' Compensation Insurance and Unemployment Insurance.

Taxation

Register for your Business Tax Account. After registering your new LLC, you have to open an account with the New Mexico Division of Taxation and Revenue. You can then apply for a New Mexico business tax identification number and register for sales tax, and use taxes as appropriate.

You will be subject to both state taxes and federal income taxes. This is a job for your accountant, but here is a brief outline of your tax obligations.

LLC tax can be determined in one of two ways, and the choice will be up to you. The LLC can be a pass-through organization, in which case each member is taxed individually. Or it can be taxed as a corporation.

You will be subject to both federal withholding tax if you have employees and, of course, to business income taxation.

If you have employees, you must file to receive an IRS Federal Employer Identification Number (FEIN) on the Internal Revenue Service website. You must also apply for your FEIN if the LLC has more than one member. You will be subject to all federal tax-withholding rules.

In addition, because of the structure of an LLC (versus a corporation), you will be paying federal self-employment income taxes unless you choose to be taxed as a corporation.

LLCs also have particular requirements for filing taxes. If you choose to be taxed as a pass-through organization, then the individual members file individual taxes.

No Annual Reporting Requirement

New Mexico has no annual report requirements for LLCs.

Want Help Forming a New Mexico LLC?

Fortunately, forming an LLC can be a straightforward process with FindLaw’s Business Formation Service. If you have questions about forming or operating your business, get in touch with a New Mexico business and commercial lawyer today to get your New Mexico LLC started.

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