New Mexico LLC Formation
By Catherine Hodder, Esq. | Legally reviewed by Ally Marshall, Esq. | Last reviewed November 19, 2022
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A critical question for entrepreneurs is which business structure is best. A limited liability company (LLC) is a business entity offering limited liability protection, pass-through taxation, and flexibility. These advantages make them a popular choice among small businesses. If you want to start an LLC in New Mexico, you can follow the step-by-step guide below.
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Steps to Form an LLC in New Mexico
Name Your LLC
The first step of LLC formation is choosing an LLC name for your business. The business name goes on your articles of organization and becomes the LLC's legal name. There are specific rules when it comes to a New Mexico LLC name.
- Be distinctive: Your name must differ from other registered business names in New Mexico.
- Contain an LLC designator: Your LLC name should include "limited liability company" or "limited company". You may use an abbreviation such as "limited" to "ltd." and "company" to "co.". Or use the abbreviations "L.L.C.", "LLC", "L.C.", or "LC".
Your NM LLC name should not contain any language to confuse it with another type of business structure, such as a corporation or a government entity.
Search Your LLC Name
First, determine if your name is available in New Mexico by doing a name search for the business entity name on the New Mexico Corporations and Business Services website. If the name is in use, choose a different name. Next, do an internet search to ensure no other business uses your name. Type your LLC name into your favorite search engine and see if there are any matches. Finally, to avoid trademark infringement, check to see if no other businesses have trademarked your name. You can search the United States Patent and Trademark Office (USPTO) trademark database. Once you are confident that your name is unique and not trademarked, check for domain name availability. If you want to have a website for your business, this is an important step.
Protect Your LLC Name
Your business name is your brand. Protect your brand by trademarking your business name in New Mexico or with the USPTO. You can register a trademark in New Mexico online with the secretary of state and pay a $50 registration fee. You can also register your business name as a domain name, so only you can use it.
If you are not ready to file your articles of organization but want to reserve the name, file an Application for Reservation of a Domestic Limited Liability Company Name with the secretary of state and pay a $20 reservation fee. The name reservation is good for 120 days.
Get 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 receives 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. Often entrepreneurs choose a professional registered agent service company to serve as the LLC's registered agent.
File Your Articles of Organization
You are now ready to register your new LLC 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. Unlike other business formations, New Mexico only allows online filings for new LLCs.
Your New Mexico articles of organization documents must contain the following information:
- LLC name and principal business physical address of the LLC
- Effective date of the LLC
- LLC ending date or indicate it is "perpetual"
- Name and physical address of the LLC's registered agent
- 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)
The LLC filing fee is $50 and payable by credit card.
Draft an Operating Agreement
The New Mexico LLC operating agreement is a private business formation contract among the members/business owners. You do not file the operating agreement with the state. An operating agreement is helpful and essential to forming an LLC as it details the management structure.
The LLC operating agreement for your small business might include the following:
- 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
Even if you are a single-member LLC, you may need an operating agreement when opening a business bank account or seeking a business loan.
Get an EIN
You will need an Employer Identification Number (EIN) If you have more than one LLC member or hire employees. An EIN is a unique tax identification number issued by the Internal Revenue Service (IRS). An EIN is like a Social Security Number for business. You use your EIN when you open a business bank account, pay employees, or apply for a company credit card. Getting an EIN is a simple process on the IRS website. You can file by fax, mail, or online. The IRS does not charge a fee for the EIN.
Set Up Business and Tax Accounts
The tax election an LLC makes determines the taxes the LLC pays. The LLC can be a pass-through organization wherein each member is taxed individually. Or it can be taxed as a corporation. Depending on your tax structure, you may pay state income tax on your individual tax returns or pay state corporate income tax on the LLC's profits.
After registering your new LLC, you have to open an account a business tax 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 and use taxes if necessary. Contact your county or city office to determine if your business needs a business license.
Business and Tax Requirements in New Mexico
When you start a new business and hire employees in New Mexico your LLC will have tax and withholding obligations. Additionally, your LLC may need business licenses and permits to conduct business in New Mexico.
State Business Tax
When you apply for a business tax account with the New Mexico Division of Taxation and Revenue, you will receive business tax identification numbers for taxes that apply to your business.
LLCs operating as pass-through entities (PTE) do not have to pay a state tax. The earnings of the LLC pass through to the members' individual tax returns, and they pay a state income tax on those earnings.
Multi-member LLCs must file Form PTE, New Mexico Information Return for Pass-Through Entities. Single-member LLCs are exempt. If your LLC elects corporate tax status with the IRS, the LLC must pay a franchise tax and file a CIT-1, Corporate Income, and Franchise Tax Return to report the $50 annual Franchise Tax.
State Employer Tax
Your LLC is subject to state rules if it has employees—even if they are also members. Set up wage withholding tax accounts with the state. You register all new employees 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.
Sales and Use Taxes
You might pay a gross receipts tax if you perform services in New Mexico. Check with the New Mexico Taxation and Revenue Department to see if your business is exempt from gross receipts tax.
Business Licenses and Permits
Depending on your business or profession, you may need a license or permit in New Mexico. Check with the New Mexico Regulation and Licensing Department to apply for a license or permit.
Registration in Other States
If you want your New Mexico LLC to do business in another state, contact the Secretary of State's office in that state to register as a foreign LLC. You may need a certificate of good standing to show the new state your LLC is compliant with New Mexico's regulations. Use the Secretary of State's portal to request a certificate of good standing. The fee is $25.
Annual Requirements in New Mexico
Most states require your LLC to file an annual report to update the secretary of state's office about your LLC. Typically, you pay a yearly fee along with the report. The good news is that New Mexico does not require LLCs to file an annual report or pay a yearly fee to the Secretary of State's office.
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New Mexico LLC Formation FAQs
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