Guide to Forming an LLC in New Mexico
Follow our free guide to form an LLC in New Mexico
- Pros and Cons of Forming an LLC in New Mexico
- Starting Your New Mexico LLC
- Maintaining Your New Mexico LLC
- Additional New Mexico Resources
Starting an LLC in New Mexico involves a series of steps, which can be a little confusing. Our comprehensive guide can help you understand every phase of the New Mexico LLC formation process.
Pros and Cons of Forming an LLC in New Mexico
Low Cost of Doing Business
LLCs in New Mexico are not levied with high fees or taxes — the $50 filing fee is all that is required since the state does not charge a corporate/franchise tax or annual report fee for LLCs.
No Corporate/Franchise Tax for LLCs
New Mexico does not impose any corporate or franchise tax on LLCs. The only taxes owed on the LLC’s revenue is the personal income tax paid by the members.
No Annual Report Required
New Mexico does not require multiple-member LLCs to file an annual report.
High Poverty Rate
Recent reports cast a poor light on New Mexico’s economy; the state ranks almost at the bottom (49th) on the national list with its almost 20% poverty rate. Almost 30% of underage children live in a household with an annual income below the national poverty level ($24,860)
Low Ranking for Young Professionals
A high unemployment rate among millennials, as well as subpar salaries, are among the reasons why recent reports denounce New Mexico as the worst state in the nation for millennials.
High Crime Rate
New Mexico’s crime rates are alarmingly higher than the national average — violent crime is almost 90% above the national median and property crimes are 52% higher than the national norm.
Cost of Doing Business
- $50 filing fee/no annual report
- No corporate/franchise tax
Phase One: Starting Your New Mexico LLC
Setting up an LLC may not seem simple, but the process does not have to be stressful with the right kind of help. Start your LLC in New Mexico today by following these six simple steps:
- Step 1: Name your LLC
- Step 2: Establish Ownership of your LLC
- Step 3: Decide on a Registered Agent
- Step 4: File the Articles of Organization
- Step 5: Create your Operating Agreement
- Step 6: Register for an EIN
Step 1: Name Your New Mexico LLC
Your first major step is to name your LLC. As you work up a list, be aware that there are both state and federal guidelines concerning words that can/cannot be used in business names.
Tip: Use a free business name search tool to ensure your company’s desired name is available.
Business Name Guidelines
- The official name of your business must end with: Limited Liability Company, Limited Company, LLC, or L.L.C.
- Your business name cannot be intentionally misleading to consumers
- The name of your new LLC must not be similar to another organization’s name/trademark
- “Lottery” and “Bank” are ineligible for use (any state)
- Terms that represent educational or Veterans’ organizations are restricted
- Terms related to the Armed Forces or civil servants (police, EMT, fire)
LLC business names associated with government and/or financial entities are not always restricted - it depends on the state. Additional paperwork may be required.
Create an online presence by designing a website for your LLC. Check out domain name availability at a number of online web services sites.
Step 2: Establish Ownership
The owners of an LLC are instead referred to as members and managers. All LLCs will have members, but not every LLC will have managers — it depends on which management structure you choose for your business.
LLC Management Structures:
- Member-managed: All members participate in operating and making decisions for the LLC
- Manager-managed: An appointed manager oversees the daily operations of the LLC and the members are not actively involved.
New Mexico LLC Member Guidelines
Required Number of Members
There must be at least one member or manager to form an LLC in New Mexico.
Member Disclosure Requirements
An organizer can file the Articles of Organization on behalf of the LLC members.
Please Note: New Mexico has specific requirements for manager-managed and single-member LLCs.
LLC members in New Mexico may be of any age.
There are no residency restrictions imposed on LLC members in New Mexico.
Step 3: Find a Registered Agent in New Mexico
The registered agent is necessary for all businesses formed in New Mexico. This is a necessary requirement for the formation of your LLC.
What is a registered agent?
A registered agent can be either a person or business who is authorized to accept official mail and service of process notices on behalf of the LLC.
Why do you need a registered agent?
New Mexico law requires a registered agent so that the state government has a consistent contact person for your LLC.
What are the main requirements for a registered agent?
- The registered agent must have a physical address — not a P.O. Box
- The registered agent must be available during business hours
Who can be a registered agent in New Mexico?
- A state resident with a physical address in New Mexico
- An LLC or corporation that is licensed to conduct business in New Mexico
Is the registered agent’s contact information publicly accessible?
The name and contact information of the LLC’s registered agent is a matter of public record.
Can I be my own registered agent for my business?
You are legally allowed to be your own registered agent as long as you have a physical address in New Mexico.
Is being my own registered agent discouraged?
LLC business owners risk sharing their personal information if they decide to be their own registered agent.
Tip: Avoid the hassles and choose Swyft Filings to fill the registered agent needs for small businesses in New Mexico. Find more information here.
Step 4: File the Articles of Organization
The most important step in forming your New Mexico LLC is filing the Articles of Organization with the Secretary of State.
What is the Articles of Organization?
The Articles of Organization is a legally binding document that is filed with the state government to legally create your LLC.
Why do I need the Articles of Organization?
Your New Mexico LLC will not be legally formed without this document. The Articles of Organization is a major part of your LLC’s foundation.
What information is included in the Articles of Organization?
- The name and address of the LLC
- The organizer filing the paperwork
- The name and location of the registered agent
- The chosen LLC management structure
- The duration of the LLC
Please Note: For manager-managed or single-member LLCs, the name of the manager(s) or single member must be listed in the paperwork.
Step 5: Create an LLC Operating Agreement
An LLC Operating Agreement is necessary for the successful formation of your New Mexico LLC.
What is an LLC Operating Agreement?
The LLC Operating Agreement is an in-house legal document that defines the rights and responsibilities of each person involved in the business and lays out the details involving how the business will operate.
Why do I need an LLC Operating Agreement?
The LLC Operating Agreement is necessary for the business because it provides structure through definition of member roles, protects business assets, and reduces the likelihood of disputes among members.
Do I need to file the LLC Operating Agreement?
The Operating Agreement is for the benefit of your LLC and does not need to be filed anywhere.
What goes into an LLC Operating Agreement?
While there is not a set rule of how to draft your LLC Operating Agreement, most documents include the following information:
- List of the members/managers and their roles
- Designation of authority in the LLC
- Initial capital contributions of the members
- Voting designations and percentages of the members
- Member transfer/addition rules and restrictions
- Distribution of profits
- Meeting schedule
Tip: Get a customized LLC Operating Agreement for your small business with Swyft Filings. Add structure to your LLC now.
Step 6: Register for an EIN
Most businesses formed in New Mexico must obtain an EIN. Your LLC will not be able to conduct business without this ID.
What is an EIN?
The EIN is a nine-digit number that is assigned to your business by the Internal Revenue Service (IRS) as a means of identification; it is similar to a personal Social Security number.
What does EIN stand for?
EIN is an acronym for Employer Identification Number. It is also known as a Federal Tax ID.
Are all businesses required to have an EIN?
Federal law dictates that certain types of business entities register for an EIN:
- Any business with employees (even if owned by one person)
- Any business with more than one member
- A partnership (LLC or C-corp)
Please Note: A sole proprietorship is not required to have an EIN, but it is still recommended.
Why does my LLC business need an EIN?
The more common reasons you would need an EIN are:
- To hire employees
- To open a bank account in the U.S.
- To file your company’s taxes
- To pay independent contractors
In short, if you make money through your business and it has employees, you must have an EIN.
Is the EIN publicly listed?
The EIN for your LLC will be part of public record.
Can I use my Social Security Number as the EIN?
You can use your social security number; however, be aware that your EIN is part of public record.
Swyft Filings offers EIN services for small businesses in New Mexico. Find more information here.
Phase Two: Maintaining Your New Mexico LLC
The first phase of setting up your New Mexico LLC is completed; the following steps help move your business forward and stay compliant. The next few steps are:
- Step 1: Register for Taxes in New Mexico
- Step 2: Apply for Permits and Licenses
- Step 3: Request a Certificate of Good Standing
Step 1: Register for New Mexico State Taxes
New Mexico does not charge LLCs with a corporate or franchise tax. LLC members are still required to pay state and federal income taxes on their earnings.
State Income Taxes
New Mexico’s state income tax rates are listed in the chart below:
Corporate Tax Information
You can also choose to have your LLC taxed as a corporation; if so, you will be responsible for paying the corporate income tax. Corporations in New Mexico pay two taxes: a corporate tax and a franchise tax.
The franchise tax is a $50 fee that is imposed on traditional corporations and S-corporations.
Corporate Tax Rates
*Businesses only pay 5.9% for income over $500,000.
Additional Tax Information
Other taxes your LLC may need to pay:
- Sales and Use Tax at 5.125%
- Employee Withholding Tax
- Unemployment Tax
Step 2: Obtain Business Licenses and Permits
The licenses and permits required for an LLC in New Mexico can vary, depending on a number of variables:
- Location (city and county)
- Type of Business
Tip: If you would like to see more in-depth information on licenses and permits, please feel free to visit the content in our learning library that covers business licenses and permits.
Step 3: Request a Certificate of Good Standing
There is one more step for officially forming your LLC in New Mexico — requesting a Certificate of Good Standing for your business.
What is a Certificate of Good Standing?
The Certificate of Good Standing is an official notification that confirms your New Mexico LLC is compliant with all state requirements.
Who issues the Certificate of Good Standing?
The Certificate of Good Standing is generally issued by the Secretary of State.
When can I request a Certificate of Good Standing for my business?
You can obtain a Certificate of Good Standing from the Secretary of State after your LLC is officially formed.
Why do I need a Certificate of Good Standing?
The Certificate of Good Standing adds confidence to your LLC with other businesses and financial institutions. Some banks may even require the certification before doing any business with you.
Additionally, some states require a Certificate of Good Standing before a business can apply for Foreign Qualification.
Does the Certificate of Good Standing have an expiration date?
The Certificate of Good Standing does not need to be renewed.
Swyft Filings can create a Certificate of Good Standing for your New Mexico LLC. Click here for more information.