Fact checked for accuracy by Billie Anne Grigg, a bookkeeper and Mastery Level Certified Profit First Professional.
Forming a limited liability company, or LLC, is a popular way for business owners to get the advantages of a corporation while still having the flexibility of a sole proprietorship or partnership. If you are looking at creating a business in New Mexico, an LLC can be a great way to go about it. In doing so, you can protect your own personal assets by separating them from the business.
If you aren’t sure where to begin when forming your LLC in New Mexico, here’s a handy step-by-step guide to getting you started.
Step 1: Name Your Company
Finding a good name for your company is the first step to creating a business in New Mexico. You may already have a name in mind, but you will need to check that your potential business name is not already taken by another LLC in the state. Check for name availability at the New Mexico Secretary of State’s business name database.
Then you will need to add the suffix to your chosen business name. All LLCs in New Mexico need to contain one of the following:
- Limited liability company
- Limited company
You can also abbreviate the word “limited” as “ltd.” and the word “company” as “co.”. Check out the other naming rules here.
If you are concerned that your chosen business name will be taken before you officially form your business, you can reserve your name for up to 120 days for a small fee.
Step 2: Appoint a New Mexico Registered Agent
New Mexico state law requires every LLC to appoint a registered agent. A registered agent is an appointed individual or business that can accept legal mail on behalf of the company. The chosen registered agent can either be a New Mexico resident or a business authorized to do business in New Mexico. But the caveat is that the appointed agent must have a physical address in the state.
You can choose anyone to be your registered agent, but the LLC itself cannot act as its own agent. Instead, you can appoint yourself or another member of the LLC. A popular route is to appoint a third-party registered agent company. You can hire one for an affordable yearly fee if you prefer to avoid receiving summons at a personal address.
Step 3: File the Articles of Organization
The Articles of Organization is the document that officially forms your LLC. Thankfully, it is a simple form that requires basic information about your LLC, so this step is not as complicated as it may sound. You can file online, and the filing should include the following information:
- LLC name
- LLC period of duration
- LLC purpose
- LLC contact information
- Registered agent name and address
- LLC address – the place of business and mailing address
- LLC organizer name and contact
Step 4: Create an Operating Agreement
While an operating agreement is not a requirement in the state of New Mexico, it is highly advised to create one. The operating agreement will serve as the governing document of the company and can come in handy in the future to resolve disputes and other issues. If you aren’t sure where to start, use a template to draft an operating agreement at an organization meeting.
By creating one, you will not only protect your company from any disputes from inside the company but will also help preserve your limited liability.
Step 5: Get an Employer Identification Number (EIN)
An EIN is necessary if you have more than one member in your LLC. If you are the sole member and do not plan on hiring any employees, you may not need to get an EIN, but it is recommended to get one anyway in case you change your mind. An EIN is also required to open a business bank account, so if opening one is in your plans, plan on getting an EIN as soon as your LLC is officially established.
To obtain an EIN, simply complete an EIN application online. There is no filing fee for this.
Step 6: Obtain Licenses and Permits
You may be required to obtain certain licenses and permits to legally run your business, depending on what type of business you have. You will need to use the US Small Business Administration guide to get an idea of what kind of licenses and permits are required at the federal level. And you should also use New Mexico’s Regulation and Licensing website to apply for licenses needed at the state level. Check your local regulations as well.
Step 7: Get a New Mexico CRS Tax Identification Number
In addition to the federal EIN, all companies registered in New Mexico must obtain a New Mexico CRS Tax ID number. Simply apply for one online. You will need the following to apply:
- An email address
- A federal EIN or social security number
- Business owners / partners / shareholders information
- Liquor, cannabis, and contractor license information, if applicable
Cost to Start an LLC in New Mexico
Starting an LLC in New Mexico is on the low end compared to many other states. Filing the Articles of Organization with the New Mexico Secretary of State costs $50. If you were to reserve your business name would cost an additional $20 at the time of filing. So, essentially, you can start an LLC for under $100.
There is an option to hire an LLC formation service for an additional cost. Although not necessary, hiring a service can be a good investment for those who prefer not to handle their own paperwork.
What To Do After Forming Your LLC in New Mexico
Forming your LLC is only the beginning of running your company. There are a few other important steps to follow.
Open a business bank account
One of the most significant advantages of creating an LLC is the personal liability protection you receive. And the best way to solidify this advantage is by separating your personal finances from your business finances. To do this, open a business bank account. You will need to provide your EIN and your Certificate from the state.
Opening a business bank account will also make it easier for you when tax season comes around.
Get a business credit card
In the same vein as opening a business bank account, you should also seriously consider getting a credit card. A credit card can categorize your purchases and help you keep track of all expenses. And as a plus, it can also help build up your LLC’s credit score, increasing your chances of getting a loan in the future, if needed.
Hire an accountant
Money and taxes can become complicated. If you prefer to spend your time and energy on other aspects of the business, hire an accountant to take care of your bookkeeping and payroll. By hiring an accountant, you can avoid costly mistakes that can come about from overpaying taxes.
Get business insurance
Every business should get some type of insurance. With insurance, you can manage risk. At the very least, you should get general liability insurance, which protects your business from lawsuits. Other types of popular business insurance include workers’ compensation and professional liability insurance. There are many types of insurance out there to meet every business owner’s needs, so it is worth having a look around.
Create a website
Every business should have a website. Many platforms out there can make creating a website a painless process – with everything already precoded. You can even find good templates to match the look of the website you are looking for. Having a website shows that you are an established business.
At a minimum, you should have the following information available on your site:
- About the business
- Contact information
Get your business on social media
Once you create a website, you should establish the rest of your online presence by putting your business on social media. The most popular platforms to promote a business are Facebook, Instagram, YouTube, and TikTok.
How to Keep Your LLC Compliant in New Mexico
It is important to remain in good standing with the state at all times. Your LLC may become dissolved if you are not compliant with federal or state business laws.
To keep your LLC compliant, take the following steps:
- Obtain all necessary licenses and permits and make sure they stay up to date
- Pay all necessary taxes
- Maintain a New Mexico registered agent
- Hire a business lawyer if you need extra help
Tax Filing Requirements for LLCs in New Mexico
LLCs in New Mexico are subject to any federal taxes required. Most LLCs need to report their income through either the Form 1065 Partnership Return or the Form 1040 Schedule C.
For state taxes, you’ll need to pay any income tax for the money you pay to yourself. Depending on what kind of business you own, you may also be required to pay New Mexico’s Gross Receipts Tax (for taxable sales) or the Unemployment Insurance Tax (if you have employees).
Frequently Asked Questions
How long does it take to register an LLC in New Mexico?
The processing time for the state to review and approve your Articles of Organization in New Mexico is generally around 1 to 3 business days if filed online. If you file by mail, expect a longer waiting time of up to 3 weeks plus mailing time. There is no option to pay for expedited filing in New Mexico as online filing already has a quick turnaround.
What tax structure should I choose for an LLC in New Mexico?
By default, your LLC will be taxed as a pass-through entity, meaning the tax requirements fall to the individual members of the LLC instead of the LLC itself. This is a great option for those that are wanting to avoid double-taxation.
However, sometimes, being taxed as a corporation can be an advantage. It tends to be ideal for businesses that earn more than average, as there can be some tax benefits that come with being taxed as a corporation.
To understand the best tax structure for your particular business, consult a tax professional.
Should you hire an LLC formation service in New Mexico?
There is no absolute need to hire an LLC formation service in New Mexico. Filing to form an LLC is quite a straightforward process. But if you prefer to focus on setting up your business instead of figuring out paperwork, hiring an LLC formation service could be of good use. For just a small fee, there are many LLC formation services out there that can file everything on your behalf. Many formation services can also act as a registered agent for your company after formation as well.
Filed under: New Mexico Business Guides