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Start an LLC in New Mexico in 6 easy steps

Which business structure would be ideal for a particular business entity is a crucial query for business owners. Having an LLC allows you to take advantage of pass-through taxation, flexibility, and limited liability protection.

Owners are often not held personally liable for business debts and other liabilities if they form an LLC. As income is not taxed at the entity level, forming an LLC enables pass-through taxation; nevertheless, if the LLC has several owners, a tax return for the LLC must be filed.

The owner receives a pass-through of any LLC earnings or losses shown on this tax return. The owners, also called "members," are then required to disclose the gain or loss on their individual tax returns for their personal assets and to make any required tax payments.

Because of these benefits, small firms frequently choose this option. It also helps small business owners keep their personal and business assets separate.

How to set up a foreign LLC in New Mexico

An LLC that was incorporated outside of New Mexico but has registered to conduct business there is referred to as a New Mexico Foreign LLC.

Foreign LLCs must submit an Application for Registration with the New Mexico Secretary of State plus a $100 registration fee before it is permitted to operate legally in New Mexico.

Selling services or goods, paying employees, and owning or renting a storefront, warehouse, or office in New Mexico are all activities that almost always qualify as conducting business in New Mexico.

If you’re considering starting an LLC in New Mexico, the six steps mentioned below will give you a thorough understanding of the process.

  1. Choose a name for your LLC.

    The first step of LLC formation will be picking a business name for your company. Your articles of organization must include the business name. When naming an LLC, New Mexico has particular regulations.

    Naming guidelines

    Be distinct. The name must be different from other New Mexico-registered business names. According to New Mexico LLC naming guidelines, you must include the designation "limited liability company" or "limited company" in your LLC name. For example, "limited" might be shortened to "ltd" and "company" to "co."

    Alternatively, you can use the initials L.L.C., LLC, L.C., or LC. Keep in mind that your LLC name shouldn't have any words that could be misconstrued as belonging to another corporate or governmental body.

    How to choose a name for a New Mexico LLC

    Start by checking the New Mexico Corporations and Business Services portal to see if the name you want to use for your company has already been used. Search for a different name if the one you selected is taken.

    Next, browse the internet to make sure no other company is using your name. Enter the name of your LLC in New Mexico into your preferred search engine to check if any results match. Check to discover if your New Mexico LLC name hasn't already been trademarked by another company to prevent trademark infringement.

    The United States Patent and Trademark Office

    The trademark database of the United States Patent and Trademark Office is searchable. When you are confident that the name is original and not already taken, check to see whether the domain name is still available. This is a crucial step if you intend to have a website for your company.

    Protect the LLC name you’ve chosen by visiting the New Mexico secretary of state's website.

    Your company name serves as your brand. Trademarking your company name in New Mexico will help you protect your brand. The New Mexico secretary of state's website accepts online trademark registrations, and you will be required to pay a $50 registration fee.

    Reserve your LLC name

    Your company name can also be registered as a domain name, making it exclusive to you. If you wish to reserve the name but aren't ready to file your articles of incorporation, submit an application to the New Mexico secretary of state along with a $20 reservation fee. For 120 days, the name reservation remains valid.

  2. Get a registered agent for your LLC.

    A limited liability company is required to have a registered agent to take care of the service of process before legally filing with the State of New Mexico.

    Can a business owner be the business's registered agent?

    A company's registered agent may be the business owner. This is something that plenty of owners do. It's particularly true for owners who operate at the business's company office, also known as the registered office.

    Who else can hold this position?

    The position of a registered agent can also be held by other individuals, including friends, coworkers, and even other businesses.

    What does a registered agent do?

    A New Mexico LLC's own registered agent would accept process or legal paperwork. Any individual or business entity, domestic or foreign, can act as a registered agent in New Mexico, but they must have an actual street address in the state. Entrepreneurs frequently pick a reputable registered agent service provider to act as the LLC's registered agent.

    The cost factor

    Cost should always be taken into consideration, especially for freshly formed LLCs. A registered agent service may cost as little as $50 per year, though prices will vary.

    The registered agent services company will act as your registered agent and let you know anything that falls within their purview, plus any additional state taxes. Prices will increase if you want a registered agent service with more sophisticated capabilities.

  3. Submit your LLC’s article of organization.

    The Business Services Division of the New Mexico Secretary of State is where LLC owners should file articles of organization for their business entity.

    The creation of a user account with the Secretary of State is the initial stage in this procedure. In contrast to other states, New Mexico solely permits online filings for new LLCs.

    The following data must be included in your New Mexico LLC Articles of Organization:

    1. Name of the LLC in New Mexico and its physical address for its main place of business.
    2. The date when the LLC became operational.
    3. You must indicate whether the LLC is “perpetual” or if it has an ending date in the articles of organization.
    4. The registered agent of the LLC’s name and their physical address must be included.
    5. You must also clearly state the purpose of the LLC.
    6. The mailing address and the email address of the LLC should also be mentioned.
    7. You must also state the LLC’s structure. That is, whether the organization is member-managed or manager-managed.
    8. If it is a single-member LLC, you must specify its single-member status. An SMLLC or single member limited liability corporation is an LLC with just one owner. The term “member" is used in this case to refer to LLC owners. This is an excellent alternative to the sole proprietorship for anyone starting or maintaining a one-person firm because it offers a few benefits. Be sure to include the names and contact details of the initial managers or members.
    9. You must also include the organizer's contact details. An LLC organizer is equivalent to a corporation's "incorporator."

    How much do you have to pay?

    The cost of filing an LLC is $50, and it can be paid by a credit card.

  4. You must abide by the tax laws and other laws that are in place.

    The taxes an LLC pays depend on the tax option it selects. Each member of the New Mexico LLC may be subject to individual taxation if it is a pass-through entity. Alternatively, it may be subjected to New Mexico taxation as a corporation.

    Depending on the tax structure, you might pay state income tax on your personal tax returns or New Mexico business taxes.

    The New Mexico Division of Taxation and Revenue requires you to open a business tax account after you have registered your new LLC. Then, if required, you can register for sales, use taxes, and apply for a New Mexico business tax identification number.

    Having proper business licenses is a must. To find out whether your company needs a business license, contact the county or local office.

  5. Form an operating agreement.

    The operating agreement for a New Mexico LLC is a private business formation contract between the members and the business owners.

    It is optional to submit the operating agreement to the state. Although, when opening a business bank account or applying for a business loan, it's possible that you will require an LLC operating agreement in New Mexico even if your LLC only has one member.

    An operating agreement is necessary during LLC formation and is also helpful because it specifies the organizational structure.

    The following could be included in New Mexico LLC operating agreements:

    1. How much of the LLC do the members own in percentage?
    2. Responsibilities and voting rights.
    3. The duties of the members and the managers and their powers.
    4. Profit and loss distributions.
    5. Buyout and buy-sell rules
    6. All about holding meetings.
  6. Get an Employer Identification Number or an EIN for your New Mexico LLC.

    If your LLC has more than one member or you recruit staff, you will require an Employer Identification Number (EIN). It is also called Federal Tax Identification Number or FTIN. The Internal Revenue Service (IRS) issues a special tax identification number called an EIN (IRS).

    How does it work?

    For businesses, an EIN functions similarly to a Social Security number. When opening a business bank account, paying staff, or making an application for a business credit card, you must provide your EIN.

    The IRS website makes obtaining an EIN an easy process. You can file online, by fax, or by mail. EINs are issued by the IRS at no cost.

Conclusion

There are several benefits of forming an LLC in New Mexico.

Your private property is shielded from lawsuits and LLC liens. You have the option of choosing a tax structure resembling a single partnership or proprietorship. Compared to companies, there are fewer reporting and recordkeeping obligations.

In New Mexico, LLCs are exempt from filing annual reports and paying yearly fees. The names and addresses of your registered agent, directors, and managers, as well as other pertinent information about your business, are all included in an LLC annual report. It is a thorough report on the business's operations for the previous year. Shareholders and other interested parties can learn about the company's operations and financial performance from annual reports.

A manager or member may be anonymous. The name of the manager of a New Mexico anonymous LLC is not listed on the public record known as the Articles of Organization in New Mexico.

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