How to File an LLC in New Mexico

Whether you’re starting a new business or want to incorporate your side hustle, an LLC is a popular business structure offering personal liability protection and a flexible tax structure. 

Forming an LLC in New Mexico is a bright idea for small business owners and entrepreneurs because of the state’s various business incentives. So, how do you get your New Mexico LLC up and running? 

Key Takeaways:

• New Mexico is a small business-friendly state that offers entrepreneurs multiple advantages, such as anonymous ownership, no franchise tax, and no residency requirements. You can form a New Mexico LLC even if you’re not a US resident.

• You must go through a state filing process to form an LLC in New Mexico. You’ll have to make fundamental decisions about the organization of your LLC, comply with state requirements, and fill out the necessary paperwork. 

• One of the main reasons entrepreneurs decide to form an LLC is because it protects their personal assets from liability in case of a lawsuit or debt collection. 

You must go through a state filing process to form an LLC in New Mexico. You’ll have to make fundamental decisions about the organization of your LLC, comply with state requirements, and fill out the necessary paperwork. 

Forming an LLC in New Mexico may seem daunting initially, but this guide will walk you through the filing process step-by-step. You’ll have all the information you need to successfully incorporate your New Mexico LLC. 

What Is an LLC Formation?

LLC stands for limited liability company. It’s a flexible business structure that offers several advantages to its owners, otherwise known as members.

Personal Liability Protection

One of the main reasons entrepreneurs decide to form an LLC is because it protects their personal assets from liability in case of a lawsuit or debt collection. 

Only your LLC assets can be seized if your limited company is sued or has debts [1]. Your personal assets, such as your house, car, or savings, are protected. This gives many entrepreneurs and business owners peace of mind. 

The same principle applies if the owner of the LLC is personally sued or has debts. Only their personal assets are on the line, while LLC assets are protected. 

Pass-Through Taxation 

A flexible tax structure is another crucial reason entrepreneurs and business owners decide on LLC formation. 

The federal government sees LLCs as a “disregarded entity.” This means you can choose how your LLC will be taxed. The IRS can tax your LLC as a sole proprietorship (if you have a single-member LLC), a partnership (if you have a multi-member LLC), an S Corp, or a C Corp. 

Unless your LLC is treated as a C Corp, you can avoid separate federal taxes on your business entity. Instead, your LLC’s profits and losses will “pass through” to each member, who will report them on their income tax return. 

This structure allows you to avoid double taxation, which is when you have to pay tax on your business profits and then are taxed again when you pay your personal income tax. 

Management Flexibility 

With an LLC, you control how your management team is structured. 

Your LLC can be member-managed when the owner or owners manage the day-to-day operations. Alternatively, you can also designate a manager to run your business operations. In this case, your LLC will be manager-managed. 

You can also create an operating agreement to establish the framework for how your LLC will operate. It’ll outline standard processes, such as meeting rules and voting rights, and the relationships between owners and managers. 

When Should You Form an LLC? 

A common misconception is that you should wait to form an LLC until your business has revenue or is more established. However, incorporating your LLC as soon as possible will help you protect your personal assets and create a solid foundation for business growth. 

How Are LLCs Formed? 

LLCs are formed under state statutes, and each state has a distinct LLC formation process. In New Mexico, you need to file for your LLC with the New Mexico Secretary of State and pay a filing fee. 

After you incorporate your LLC, keeping it in good standing with the state is relatively straightforward. Unlike most states, New Mexico doesn’t require you to file an annual report, but you may need to cover some state fees. 

Step-By-Step Guide to Starting Your New Mexico LLC

To successfully start your LLC in New Mexico, you need to do research, complete the necessary paperwork, and cover filing fees. In this step-by-step guide, we’ll cover: 

• Business name rules for your New Mexico business 

• What paperwork you need to complete 

• Crucial filing process requirements 

• How much it costs to form an LLC in New Mexico

Step 1: Choose a Business Name for Your New Mexico LLC

The first step of the LLC filing process is to decide on your business name. When choosing your LLC name, you have almost complete agency, but it must comply with New Mexico naming requirements. 

1. Your company name must be unique, simple, memorable, and express your business focus. It needs to be distinguishable from other business names registered in the state. 

2. Your LLC name must include the words “limited liability company” or the abbreviations “LLC,” “L.L.C.,” “L.C.,” “LC,” or “LDT.” 

3. Your business name can’t include words that may create a false impression that your business is associated with the government, such as “State Department” or “Treasury.” 

4. Your business name needs to be appropriate and respectful. Avoid using puns or vulgar language[2]. 

You don’t have to use your official LLC name to conduct business. You can also have a doing business as (DBA) name. If your business name is “John’s Pizza Limited Liability Company,” you can still do business under “John’s Pizza.” 

New Mexico LLC Name Search 

Before setting your mind on your LLC name, it’s essential to do a name search to ensure that there are no other businesses in the state with the same or similar name. You can search for your business name on the New Mexico Secretary of State website. 

Once you find a distinguishable name for your New Mexico LLC, you can reserve it for up to 120 days for a $20 fee. This way, no one else can use your name to start a business in New Mexico while you’re getting all your paperwork together. 

Do I Need to Trademark My New Mexico LLC Name? 

A registered trademark is a legal way to secure exclusive rights to your LLC name on a federal level. This way, no other business in the U.S. will be able to start a company under your name. 

Trademarking your LLC name can be a good idea for your business, but it’s advisable to form an LLC before you apply for a trademark. Typically, the practice is to make your LLC the trademark owner, so it must exist first legally. 

Should I Secure My Domain Name? 

This stage of the LLC filing process is a great time to ensure that the domain for your chosen LLC name is available. Almost all businesses will need a website at some point, so securing a domain name to build it is crucial. 

Step 2: Fill Out New Mexico Articles of Organization

To officially register your LLC with the New Mexico Secretary of State, you must file your Articles of Organization. It’s a legal document that establishes your limited liability company. This is also when you’ll need to cover your filing state fees. It costs $50 to form an LLC in New Mexico. 

Include the following information in your New Mexico Articles of Organization: 

• LLC name

• LLC address and mailing address

• Your registered agent’s name

• Your registered agent’s address

• Your LLC’s purpose

• Whether your LLC is member-managed or manager-managed

• LLC duration (typically, it’s perpetual, which means that your LLC will exist indefinitely) 

• Signatures of the organizers 

Your Articles of Organization is one of the most crucial formation documents, so spend adequate time on it. It sets the legal foundation for your LLC, so small mistakes can be costly. 

You can file your Articles of Organization online with the New Mexico Secretary of State. 

Step 3: Hire a New Mexico Registered Agent

The law requires every LLC to designate a registered agent (RA). Your registered agent receives legal documents and important notices for your business. Service of process and IRS notices are just some examples of the mail your registered agent may have to accept. 

You can be your own registered agent if you have a New Mexico address. However, becoming your own registered agent comes with a particular set of challenges. 

Rigid Schedule 

As a New Mexico registered agent, you must be present at your provided street address during business hours. If your business has a physical office or location, you won’t be able to leave it Monday through Friday, from 9 am to 5 pm. Similarly, if you run your business from home, you must stay there during business hours. 

Not complying with this requirement can cause severe problems for your business and its good standing with the state law. However, this schedule is significantly limiting to entrepreneurs and business owners who are always on the move or have responsibilities outside of their registered physical address. 

Lack of Privacy

Your LLC’s registered agent address is public record. If you have an office, you may not want sensitive documents served in front of your customers and employees. If you work from home, everyone can find out where you live, which can raise privacy concerns. 

Disorganization 

When you’re a busy entrepreneur, keeping up with mail and paperwork may not always make it to the top of your agenda. As a result, essential documents can fall through the cracks or even be lost. 

Hiring a Registered Agent Service

Many small business owners hire a registered agent service to fulfill their legal obligations and make their lives easier. This way, you can regain your flexibility and privacy while being confident that all your documents are in order. 

Swyft Filings offers a reliable and effective registered agent service for just $149/quarterly. You’ll get access to an online dashboard to access all of your mail whenever needed. Moreover, Swyft will also send you reminders about important due dates and deadlines to keep your LLC in good standing with the law. 

Step 4: Create an LLC Operating Agreement

You should file an LLC operating agreement to start your business entity on the right foot. Its purpose is to outline how your LLC will function so you can control its operations and prevent disputes from arising. 

You aren’t required to file a written operating agreement to form an LLC in New Mexico. However, it’s highly advisable to have this document on file with the state, whether you have a member-managed or a manager-managed LLC. 

You can include the following information in your LLC operating agreement: 

• Standard processes for your LLC’s operations 

• Protocols to aid dispute resolutions

• Shares, rights, and responsibilities of LLC owners 

• Standard procedures for transfer of ownership, dissolution, division of profits and losses, and other important matters 

This is a non-exclusive list. An operating agreement gives you more control over your LLC’s operations and gives you agency as a business owner. If you don’t have an operating agreement, the state will apply default state law to your operations and disputes. 

Step 5: File for an Employer Identification Number and Business Licenses

To ensure the smooth operation of your New Mexico business, you must also apply for your EIN and any necessary business licenses. 

What Is an EIN? 

An EIN — or an employer identification number — is a nine-digit tax identification number that the Internal Revenue Service will use to identify your business. It’s similar to a social security number but for business purposes. 

You will need an EIN to open a business bank account, pay your employees, do business tax returns, and pay federal taxes. You can apply for your EIN on IRS’s website. 

What Business Licenses Do I Need? 

The primary type of business license in New Mexico is the New Mexico Business Tax Identification Number. 

However, depending on the nature and location of your business, you may need to apply for a standard commercial business license, a home-based business license, or a cannabis business license. 

Many business licenses are issued at the city or county level, so ensure you know your local requirements before starting your business. 

Let Us Handle Your LLC Paperwork

LLC formation in New Mexico takes multiple steps and can require much time and effort. Not to mention that small mistakes and inaccuracies can push your incorporation timeline back and result in frustration. 

With Swyft Filings, you can apply for your New Mexico LLC in as few as 10 minutes. We’ve incorporated over 250,000 small businesses, and our five-star business formation service has multiple advantages. 

Affordable Business Formation

We offer a 2-Easy Payment Plan to get your business up and running quickly. Many other online legal providers charge over $100+ and have hidden fees, but with Swyft Filings, you always know exactly what you’re paying for. 

Personalized Customer Service 

Many entrepreneurs need guidance while navigating the process of New Mexico LLC formation. Our team is available 24/7 to answer any questions at any step of the way. 

Speedy Turnaround Times 

Our business services are among the fastest in the industry regarding LLC formation. From verifying your company name availability to filing your paperwork with the New Mexico Secretary of State, your Business Specialist will start working on it immediately. 

Get started on forming your New Mexico LLC with Swyft Filings today. 

FAQs:

How much does it cost to set up an LLC in New Mexico?

At the very least, you can expect to pay a $50 fee when you file your Articles of Organization. You may also have to cover additional costs to reserve your name with the New Mexico Secretary of State, apply for business licenses, or trademark your LLC name. You must also pay more if you’re forming a foreign LLC. 

How is an LLC taxed in New Mexico?

One of the benefits of starting an LLC is the ability to choose your tax structure. Whether you have a single-member or a multi-member LLC, your LLC can be taxed as a sole proprietorship, a partnership, an S Corp, or a C Corp. Many LLC owners take advantage of pass-through taxation and report their LLC earnings on their personal tax returns. 

What are the benefits of a New Mexico LLC?

New Mexico is a small business-friendly state that offers entrepreneurs multiple advantages, such as anonymous ownership, no franchise tax, and no residency requirements. You can form a New Mexico LLC even if you’re not a US resident. 

How do you dissolve an LLC in New Mexico?

To dissolve your New Mexico LLC, you must file Form DLLC-DV (Articles of Dissolution) with the Public Regulation Commission (PRC)[3]. It costs $25 to dissolve a limited liability company in New Mexico. 

Bibliography:

1. U.S. Small Business Administration. Choose a Business Structure. Accessed February 26, 2023. 

2. New Mexico Business Portal. Q&A. Accessed February 26, 2023. 

3. New Mexico Secretary of State. Domestic Limited Liability Company. Accessed February 26, 2023.