New Mexico LLC (6-Step Guide) – How to Form an LLC in New Mexico?

Start a NM LLC With Professional Help [scroll down]

If you are considering starting a business or looking for ways to grow your existing one, then it is time to consider a New Mexico LLC (limited liability company). This structure is perfect for business owners looking to limit risk to their personal assets and keep costs low. Also, it’s the 1st choice if you live and reside in New Mexico.

One unique advantage of a New Mexico LLC is the level of privacy it offers business owners. With a New Mexico LLC, you can receive an incredible level of anonymity that is unique to this state. So, let’s take a closer look at why you might want to use this structure for your business, its pros, and cons, and once we consider these points, we will show you how you can create a New Mexico LLC in six easy steps.

Why Would You Want a New Mexico LLC?

A New Mexico LLC offers some compelling reasons to form, particularly for those looking to form out of state. New Mexico offers incredibly affordable and private formation. New Mexico does not require individuals to live in the state to form an LLC and does not make the process any harder for these individuals either. This has caused it to be particularly popular for foreign LLC formation.

Also, the state does not require Annual Reports or the associated fees. This leaves the maintenance of a New Mexico LLC incredibly affordable. Plus, with online filing, it is incredibly fast and easy to get started. Here are a few more reasons you might want a New Mexico LLC.

  • Limited Liability: It is in the name and very true with a New Mexico LLC. If your business ever suffers from debts that it cannot repay or suffers from a lawsuit, your personal assets cannot be held accountable. This can be a great benefit for many small business owners concerned about potential business failure.
  • Reduced Tax Burden: A New Mexico LLC is a pass-through entity meaning that it does not suffer from the double taxation associated with corporations.
  • Easy Maintenance: A New Mexico LLC does not have to record minutes, file any annual reports, or perform much of any business maintenance associated with corporations or LLCs in most states.
  • Flexible Structure: With corporations that receive the same protection from personal liability, it comes at the cost of mandatory management structures such as a board of directors. A New Mexico LLC has none of these requirements and can be managed however you choose.

Quick New Mexico LLCs Pros & Cons

Before forming a New Mexico LLC, it is important to consider the pros and cons of such a big decision. However, we know you are busy, so we will make this as quick as we can so you can get back to work,

Pros of a New Mexico LLC

There are definitely a number of pros to a New Mexico LLC, and here are a few to consider.

  • No Annual Report Requirement: Almost all US states require LLCs to file an annual report giving some basic information about the business. This also comes with a requirement to file an annual filing fee alongside it. But, with a New Mexico LLC, there is no annual fee or a report at all. With no annual report or fee, this is a lot less to worry about remembering and drastically reduces the cost of ongoing maintenance.
  • Few Information Requirements: New Mexico is one of the very few states that does not require the name of members or company managers with the Articles of Organization. This means you can keep your name off of the public record altogether, no matter which of these roles you play within the company. There are registered agent requirements, but most people pay for one of the many low-cost registered agent services out there, which will keep your name and address completely private with a New Mexico LLC.
  • Easy Filing from Anywhere: Even if you don’t call New Mexico home, the state’s laws make doing business very simple. There are no extra filing requirements for registering from out of state. This may convince you to file even if you don’t choose to live in the state. Just make sure your own state requirements don’t pose an extra burden because they may require another set of filing.
  • Low Cost of Formation: With a New Mexico LLC, the costs of formation are extremely affordable at only $50.This means that even with associated costs such as a registered agent, this will likely set you back less than the cost of most state’s initial paperwork.
  • Strong Asset Protection: The state of New Mexico enforces operating agreements very strongly. This means that as long as the operating agreement addresses the responsibilities of its members appropriately, you can expect it to be carried out exactly. This way, you can ensure that your own assets will be protected from any other members’ actions. This still requires actions on your part, such as keeping minutes of meetings, but there are simple ways to do this without consuming much of your time.
  • Flexible Effective Date: When you go to file your Articles of Organization, you will notice that you can enter an effective date. This will be the date that your LLC will legally begin. This means that, unlike some states, you can file for your LLC to get that out of the way and then delay the start date by as far as 90 days if you choose to take advantage of any benefits from the timing.

Cons of a New Mexico LLC

Filing for a New Mexico LLC has few disadvantages, but as with any major decision, there are some to consider. Let’s take a look at them.

  • Out-of-State Formations Still Require a Registered Agent: This is the same with every state, but given the other unique benefits of New Mexico that reduce the fees and filing requirements, it certainly could prove a con to some individuals. The fee for filing your registered agent with the state alone is $125, and if you do not choose to serve as your own registered agent and there is no one else willing and able within the state, there may be a cost to hiring a service to act as your agent.
  • New Mexico Taxes: If your LLC is set up in order to be taxed as a corporation, you may be on the line for some taxes even if you don’t make any sales. The corporate franchise tax will be a minimum of $50 in this case, no matter your earnings. In addition, there is a state sales tax and, in most areas, local tax requirements. This may amount to a lot depending on your type of business.
  • LLC Registered Agents Must Include Information: New Mexico’s Secretary of State does not require LLCs to disclose the name and address of managers and members, but it does require this for registered agents. It is easy to understand why though as a registered agent must be available at the address marked on the Articles of Organization during all regular business hours to receive official correspondence.
  • A Well Written Operating Agreement Is a Must for Asset Protection: To protect personal assets from the actions of other members, LLCs need to have a well-written operating agreement providing for precisely what assets belong to which member. A well-written operating agreement that protects each member should carefully detail the roles each member will play within the company.
  • A Street Address Will Be Listed: This is not a large disadvantage because though a street address will be listed no matter what. If you fail to list one, the state will simply default to the location of your registered agent, which generally will not cause any harm so long as you are using a registered agent service. If you act as your own registered agent, this could be a severe nuisance.

How to Form Your New Mexico LLC in Six Easy Steps

Now you have had the opportunity to see why you would want a New Mexico LLC, as well as all the pros and cons. If you are still with us, then congratulations! Now it is time to see how you can form a New Mexico LLC in only six easy steps.

Step 1: Choose Your New Mexico LLC’s Name

Choose-your-LLC-Name-1

Your very first step to forming your New Mexico LLC should be to choose a name. A good name should provide an idea of what your business provides. It also should be unique, both because this will make it stand out and because the Secretary of State will turn it down if it resembles another business’s name too closely.

In order to guarantee your LLC’s name is unique enough, you can check on the Business Search tool on the New Mexico Secretary of State’s website. This will search the Secretary of State’s database of all previously registered business names. By using keywords from your chosen name, you can ensure that it does not resemble any others too closely.

After finding a unique name, you will also need to follow a few other state guidelines. First of all, every New Mexico LLC must include a designator at the end of its name to let the public know it is a limited liability company. Acceptable designators include:

  • Limited Liability Company
  • Limited Liability Co.
  • Limited Company
  • Limited Co.
  • Limited
  • LLC
  • L.L.C.
  • LTD.
  • Ltd.

Most businesses just settle on using LLC, but you can choose from any of these depending on what you feel looks right. This designator is required to let the public know what your business is, and as such, you also cannot use any words that might lead others to believe your business is another type of entity.

This means not using words such as “corporation,” which would lead others to believe your business is a completely different type of entity. Here are a few words you should avoid to help guarantee your name is accepted:

  • Corporation
  • Incorporated
  • Corp.
  • Inc.
  • Non-Profit
  • LLP
  • Profession Association
  • Professional Corporation

The name you choose will be the first thing other see about your business, so be sure to pick one that will leave a good impression. Also, be sure it is unique and legal to be sure it will be accepted. You do not want to submit your Articles of Organization only for them to be rejected by the New Mexico Secretary of State and need to file again. Also, if you pick a name but decide not to file for a while, you can reserve a name for a period of time.


Step 2: Choose Your New Mexico LLC’s Registered Agent

Appoint-Registered-Agent

The state of New Mexico requires every LLC to appoint a registered agent. This registered agent is a person or business who will receive official correspondence on your LLC’s behalf.

Whether you live in New Mexico or not, the registered agent you appoint can receive and perform official correspondence for you. Often if you choose a registered agent service, it will remind you about any important deadlines, scan and store important mail for you to review, and sometimes even perform some essential filings on your behalf.

You have a wide selection of options when it comes to who can serve as your LLC’s registered agent. You could opt to serve as the registered agent for your own LLC, or you can select a friend, family member, another member of your LLC, or a paid service.

Whoever you do choose must have a valid street address located within New Mexico. It is important to note that P.O. Boxes are not an acceptable address. Your LLC’s registered agent also must be present at the address you list and capable of receiving correspondence during all regular business hours. Also, If you reside out of state, your registered agent’s address can also serve as the business address for your LLC that will be used on record with the Secretary of State.

Why Should You Consider Using a Registered Agent Service?

When you pick your New Mexico LLC’s registered agent, you will want to strongly consider using a registered agent service. Most LLCs use these services, and there are a number of good reasons why. Let’s take a look at some of them.

  • Reduced Paperwork: When you run a business, there will always be some official notices and due dates to keep track of, and a registered agent service can make this a lot easier. Your official documents will be scanned and stored online for you to review as many times as you need at your leisure. Plus, having everything in one place can be a great timesaver, and speaking of time, many of these services send regular reminders when business filing deadlines are coming up, which can be a lifesaver. Many registered agent services cost as little as $100 annually, and most LLC owners find the benefits outweigh the cost.
  • Privacy: If you serve as a registered agent for your own LLC, this will often involve listing your home address on the public record. Unfortunately, this means your address will be available for anyone to see and contact. This often results in a lot of sales visits and disruption to your day. This may be a big annoyance to you or anyone else you select. But, by using a registered agent service, you do not need to worry about this at all.
  • Lack of a Physical Location: Many businesses today operate solely online, so they don’t have a physical address for their business. This means if the owner wanted to serve as the registered agent, they would need to use their own address and be present at the address during all regular business hours. This could be difficult for some business owners. But with a registered agent service, this isn’t a problem, the registered agent service’s address is used, and they will be present during all business hours.
  • Unusual Business Hours: A registered agent is required to be available during all business hours to receive service of process and any other official notices. This can be difficult for businesses that operate outside of typical business hours or are frequently away from the office. But with a registered agent service, this isn’t a problem; they will be there during all business hours.
  • Located in Several States: If your business operates in more than one state, you will need to register your business in each state it operates in. You will also need a registered agent in each of these states with a physical location in each one. This is easier to do if you hire a registered agent service. Many services have offices in every state, and they will make sure to comply with each state’s regulations in addition to making sure you receive any important notices.

Step 3: File Articles of Organization for Your New Mexico LLC

File-your-Atricles-of-Organization

This is a vital step in forming your LLC. In fact, this is the step that actually starts your LLC. Once your Articles of Organization are processed by the New Mexico Secretary of State, your LLC is a legal entity. This is true for both single-member and multi-member LLCs.

It’s quite easy to file your Articles of Organization with the state of New Mexico. However, to make the whole process run smoothly, you’ll want to have certain information on hand. You’ll need to have your chosen business name, the name and address of your registered agent, and the names of all of the managing members of your LLC.

You have two choices for how to file your Articles of Organization. You can file them by mail or online. Either way, you will be filing them with the New Mexico Secretary of State. If you want to file by mail, you will fill out the form and send it with your $50 fee, and in approximately 15 business days, your LLC should be approved. If you choose to, you can pay extra to expedite your request. But, you will need to send a separate check or money order for the fee to expedite the order, and it must be sent with the $50 filing fee. You also have the option of paying a $100 fee if you want two-day processing or a $150 fee if you want one-day processing.

If you decide to file for your LLC online, you will get your LLC formed much quicker. If you file for your New Mexico LLC online rather than by mail, it will take about three days for the processing to be completed. The fee is the same at $50, and you’ll have no need for expedited processing since instead of taking 15 days, it should take three days. So, if you are in a hurry to get your LLC formed, you’ll want to file online.


Step 4: Create an Operating Agreement for your NM LLC

Operating-Agreement-02

An operating agreement is a very important document for your LLC, even if New Mexico does not require you to have one. If you do not create an operating agreement, you are risking your business. An operating agreement outlines all of the important details of your business, such as its structure and the right and responsibilities of all of its members. This can be vital in the case of arguments between members and may help keep the business together. We will discuss some of the important details you should include in your operating agreement below.

Ownership

In most cases, the ownership of an LLC will be based on the member’s initial investment. So, if you provided 20% of the money used to start the business, you would own 20% of the business. But, this is not a requirement. If the members want to give someone a larger percentage of the business, they can. This could be done because someone has more relevant experience, they will be expected to do more of the work or any other reason. It’s just important to include the percentage of ownership and the method used to determine ownership in the operating agreement, especially when the ownership percentages do not match the percentage of the initial investment.

Member-managed or Manager-managed

The members of your LLC will need to choose the form of management they want for the LLC. Member-management is the most common. In this type of management structure, all of the members of the LLC make the decisions for the business and handle the day-to-day management themselves. Although the members are free to split up duties as they see fit, they should still outline these duties in the operating agreement.

You can also choose to have a manager or managers run the business for you. In this case, all of the members need to agree on the managers. If the members choose to have a manager run the business, the manager will make all of the decisions for the business, and the members will act as advisors. The managers can choose to take the advice but are not required to. If the members want to reserve certain decisions for themselves, these decisions should be stated in the operating agreement.

Profits and Losses

The allocation of profits and losses can easily cause disputes, so it’s essential to include how this will be done in the operating agreement. Generally, profits and losses are allocated based on ownership percentages. This means that if someone owns 25% of the business, they will get 25% of the profits and losses, but the members can choose a different method. It’s just important to explain what method you will be using in the operating agreement.

Voting Rights

If your LLC is member-managed, there are likely to be many instances in which a decision will require a vote. You should clearly state how voting rights will be allocated. This is often based on ownership percentage, but it doesn’t have to be. You’ll also want to specify the required votes for decisions, such as whether a majority or supermajority is necessary to approve a decision.

Member Entrances and Exits

You may admit a new member at some point, so it’s best to have a process in place to do so. Once you have decided on a process, you’ll want to have this in your operating agreement. Most LLCs require a vote for admitting a new member and sometimes additional requirements as well.

It’s also good to include a procedure for exiting members in your operating agreement. You’ll want to address whether or not the member will be required to offer to sell their shares to other members before selling them to outsiders. This is a common requirement. If members are allowed to sell their shares to outsiders, does the new party need to have any qualifications? How will it be handled if a member gives their shares to a family member?

Ending Your LLC

You probably don’t want to think about it, but your LLC may end someday, and you want to be ready. One of the best ways to be ready is to put the terms of the dissolution in your operating agreement. Some things you’ll want to cover are how any assets remaining after your business’s debts are paid will be divided, as well as whether any members will have the right to continue the business and under what conditions. You’ll also want to state any requirements for a vote to end the LLC. What percentage of members will be required to vote to dissolve the LLC? Including these things in your operating agreement could avoid months of arguments and maybe even lawsuits.

An operating agreement may seem like a bother to create, but it could easily save you a lot of difficulty in the future. It can help avoid arguments between members, and in case of a lawsuit, help make it clear that your business is a separate entity. An operating agreement may be requested by other businesses at times, such as when opening a bank account.


Step 5: Obtain an EIN

Obtain-EIN

An Employer Identification Number (EIN), also known as a Federal Tax Identification Number, is a nine-digit number used by the IRS to identify your business for tax purposes. It is a lot like a Social Security Number for your business.

You will probably need one of these numbers; most businesses do. Any business that hires employees is required to have one, and if your LLC has more than two members, you will need one. Also, most banks will require it if you want to open a business bank account. You’ll also find that some vendors will use your EIN during transactions.

It’s easy to obtain an EIN and free as well. You can apply for this number through the IRS website if you or another member of your LLC has a Taxpayer Identification Number; a Social Security Number will work as well.

You can also apply by mail, fax, or for international applicants, by telephone. If you choose to apply by mail or fax, just fill out Form SS-4, and then to file by mail, send it to:

Internal Revenue Service
Attn:  EIN Operation
Cincinnati, OH 45999

If you are filing by fax, send the completed form to (855) 641-6935. International applicants can file by phone by calling 267-941-1099 between 6 a.m to 11 p.m. Eastern Time Monday to Friday.


Step 6: Open a Business Bank Account in New Mexico

Open-a-Business-Bank-Account

Although your LLC is not required to open a business bank account, it is still a very important step. It’s important because your LLC’s finances must be kept totally separate from any of its members’ finances, or it could lose its limited liability status. If this happens, your personal assets would be at risk for satisfying business debts.

There are other advantages for your business in having a business bank account as well. It will make it easier to track your business’s revenue and expenses as your business transactions will be separate from any personal transactions. It will also allow your business to accept credit cards which could increase business since many people prefer to use a credit card.

A business bank account also gives you a chance to establish a relationship with a bank. This could be useful in the future if you want to obtain a loan or open a line of credit.


Steps for Growing and Maintaining Your New Mexico LLC

Just because forming your New Mexico LLC is done doesn’t mean your work is. Running any business requires continuous growth and maintenance. Here are a few ways to get a headstart on keeping your business running and growing.

1. Obtain Any Necessary Licenses and Permits for New Mexico

Obtain-the-Necessary-Licenses-and-Permits

The state of New Mexico does not have a general requirement for a business license. However, a number of cities will require you to have a business license to operate. So, it’s essential to check the requirements for whatever locale you are operating in. There are other licenses and permits you may need as well, such as a professional license for certain occupations or a permit for transporting agricultural products. There are many different licenses and permits that might be necessary, and it’s important to find out if your business needs any and to make sure you renew them as needed.


2. Pay Your Taxes On Time

Pay-your-Taxes

It’s essential to keep detailed records and pay any taxes you owe. There is no franchise tax for LLCs in New Mexico. But the members of the LLC will pay taxes. LLCs are pass-through entities, and this means the income for the LLC will pass through the business and be taxed on the individual tax returns of the members.

You can also choose to have your business taxed as a C-corporation or an S-corporation (full s-corp guide here). For some LLCs in New Mexico, it could be advantageous to be treated as a C corporation. The income tax rate that applies to the first $75,000 of taxable income for corporations is lower than the rates for non-corporate taxpayers. Although, it is always best to consult with a tax attorney to determine the best tax status for your LLC.


Form a New Mexico LLC with Professional Help Today

Forming your New Mexico LLC is a great way to start your business or upgrade an existing one. But, if you are too busy to do all the work of formation yourself, don’t worry. There are a number of companies out there that can handle the work for you. Here are two of the best.

#1. Form a New Mexico LLC with ZenBusiness

ZenBusiness offers very reasonable prices on all of their packages, and customers seem to be very happy with them. ZenBusiness gets excellent customer reviews with 4.8 out of 5 stars on Trustpilot. They also provide some very useful services with all of their packages, such as a free operating agreement and filing your annual report for you for free as well.

$49

star rating image

Rating: 4.8/5
Review count: 4500+

zenbusiness logo new

Form an LLC today with ZenBusiness for only $49. They Have 98% customer satisfaction rating and over 4500+ verified reviews.


#2. Form a New Mexico LLC with Incfile

Incfile is a great choice for helping you to form your LLC, especially if you are on a budget. They are one of the few companies with a free option. All you need to pay is the state fee. You will also get a year of free registered agent service with any of their packages. In addition to this, you will get free lifetime company alerts. With these alerts, Incfile will inform you of any upcoming filing requirements so that your business can stay in good standing with the state.

$0+State Fees

star rating image

Rating: 4.8/5
Review count: 3900+

incfile logo

Form an LLC today with IncFile starting from $0 + state fees. They Have 97% customer satisfaction rating and over 3900+ verified reviews.


Final Thoughts

A New Mexico LLC can be a great option for many businesses, and hopefully, yours is one of them. With a high degree of anonymity as well as low formation and maintenance costs, many entrepreneurs have found a lot to love with this structure. So, you can feel confident starting your business off as a New Mexico LLC today.

Learn How to Form an LLC in Any U.S. State:

Get Some More Knowledge About Business & LLCs

About the Author
Author Photo
Founder & author

Ian Broderick is an avid author and owner of LLCGuys.com. He's been involved with the LLC formation field for over 4 years. On top of that, he has worked in several well-known LLC formation service providers. Now he decided to share his knowledge and advice with everybody. Since there are a lot of questions and concerns surrounding this field - his aim is to make LLCGuys a top-notch information provider in regards to LLC creation, service reviews and etc..

Scroll to Top