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by Mike Vestil 

LLC Considerations For New Mexico Businesses

Starting a business in New Mexico is an exciting undertaking that requires careful planning. It’s important to consider all the necessary steps before launching your venture to ensure that you are adequately prepared.

In this article, I'll explain the process of forming a limited liability company (LLC) in New Mexico, helping you understand the steps that need to be taken and the documents you will need to remain compliant with state regulations.

Steps To Starting An LLC In New Mexico

Here are the steps you need to take to start an LLC in New Mexico.

Step 1: Choose A Name For Your LLC

The name of your LLC must contain “Limited Liability Company” or one of its abbreviations (LLC or L.L.C.). It should also not include certain words that could confuse it with other entities such as Bank, Trust, Insurance, Corporation, etc. In addition, it must be distinguishable from other registered LLCs and corporations in the state. .

Step 2: File Your Foreign LLC Application For Registration With The Secretary Of State Office

The next step is to file online or via mail with the $100 fee and $25 filing fee per member/owner listed on the attached application form. The processing time for applications filed online is usually faster than those sent through regular mail. They are processed within ten working days or less after submission if all requirements are met correctly.

You will also need to provide information about your business address in New Mexico and contact details of any members/owners listed on the application form. You’ll also need their  consent to become part of this new company set up.

If you have already formed your LLC before registering as a Foreign Limited Liability Company in New Mexico, you must provide proof of registration from another state along with additional documents. These include the Articles of Organization, Operating Agreement, etc., which can be submitted digitally via email attachment or faxed over before submitting your application. Doing so helps the application be processed faster by the office staff reviewing it for approval.

Step 3: Obtain Necessary Permits & Licenses

Next up, you will need to obtain the necessary permits and licenses for your business operations in New Mexico. This depends on the type of company you are setting up and any additional regulations it may be subject to from local municipalities or governing bodies. These requirements can include anything from health department certifications to environmental impact assessments, so do your research beforehand.

Step 4: Get An Employer Identification Number (EIN)

In order to pay taxes and open a business bank account, your LLC must have its employer identification number (EIN). You can apply for one through the Internal Revenue Service (IRS), which is free and available online. Once obtained, you’ll need to provide this number whenever filing taxes or dealing with other financial institutions.

Step 5: Open A Business Bank Account 

The last step is to open a business bank account in the name of your LLC. Once opened, this will be used for all financial transactions related to your company, such as deposits and payments. Most banks require that you provide them with proof of registration from the state before they can set up an account for you, so make sure you have everything ready beforehand.

Following these steps should help ensure that everything runs smoothly when starting an LLC in New Mexico.

Benefits Of Starting An LLC In New Mexico

Here are a few reasons why starting an LLC in New Mexico can be a good idea.

No Biennial Reports Needed

Unlike many other states, New Mexico does not require businesses to file annual or biennial reports. This means that once the Articles of Organization are filed, the only additional paperwork needed for the state is a one-time tax return filed in the first year after formation. 

After that, no extra paperwork or fees are necessary, making it easier than ever to keep your business compliant with state regulations.

Flexible Management Structures

New Mexico also offers flexibility regarding management structures and ownership of LLCs. For example, members can manage the company themselves or hire a manager—it’s entirely up to them. Request can be held by as few as one person or as many as fifty; again, it’s entirely up to the members. Plus, members can be individuals from any state in the U.S., making it easy for entrepreneurs from across the country to take advantage of all New Mexico offers.

Tax Benefits

New Mexico also offers several tax benefits for businesses that register as LLCs within its borders. For example, no corporate income taxes are imposed on LLCs (though members may still need to pay personal income taxes). Additionally, business owners can deduct their business expenses from their taxes if registered as a pass-through entity such as an LLC. This is a huge bonus compared to other states where this type of deduction isn't allowed. Finally, New Mexico's gross receipts tax rate is low compared to other states, meaning fewer taxes are paid overall.

How To Legally Protect Your LLC Name In New Mexico

In New Mexico, you must take specific steps to protect your LLC name before registering the company.

If you want to reserve a domestic limited liability company name in New Mexico, you can do so with an Application for Reservation of a Domestic Limited Liability Company Name. This document allows you to reserve a specific LLC name for up to 120 days before forming your LLC. If you want to book a foreign limited liability company name, your reservation can be up to 180 days long. Make sure that when filing this application, you also include payment of $25 plus additional fees payable to the Secretary Of State.

Once your LLC is registered and established, you may seek additional proof that it exists and operates legally within New Mexico. To do this, you can request a Certificate of Good Standing from the Secretary Of State at just $25 per certificate requested. A Certificate of Good Standing is an official document verifying that your LLC has satisfied all filing requirements with the state and is compliant with current legal regulations. This document can be used as proof when applying for loans or other financial services and is required by some overseas customers when conducting business internationally.

Domestic vs Foreign Entities

While the steps for forming a domestic and foreign entity in New Mexico are generally the same, there are specific differences.

Steps For Domestic Entities

If your business is based in New Mexico, you can easily create an account and file online for only $50. All the forms and documents needed for registering your LLC can be found on the Secretary of State’s website. Once you have completed all the necessary paperwork, submit it online and await approval from the Secretary of State.

Steps For Foreign Entities

A few more steps must be taken before registering your LLC if your business is based outside New Mexico. First, complete a Certificate of Registration form and provide proof from your originating state. 

This can include any documents such as articles of incorporation/organization or a certificate of good Standing from the originating state's Secretary of State office. Once this paperwork has been submitted with a filing fee of $100 payable to the “New Mexico Secretary of State,” you will be able to register your business.

How To Secure Your LLC Name In New Mexico

Picking an LLC name isn’t hard, but it does require you to follow a few critical rules. The name you pick should include the words “Limited Liability Company,” “LLC,” or “L.L.C.,” and it shouldn’t contain any restricted terms such as ‘bank’ or ‘credit union.’ You should also check to ensure that no one else has already taken your ideal URL.

Reserving your name is also crucial as it can be disheartening to find out that someone else had already taken your LLC's name before you could register it yourself. The good news is that New Mexico has a 120-day rule explicitly designed for this very situation. If you pay a fee and submit a form available on the Secretary of State website within 120 days from when you conceived of the perfect LLC name, nobody else can swoop up that name during this period.

This means that even if someone else tries to register during this period, they will not be able to do so because your registration form will already have been submitted.

This 120-day window made tracking when you conceived of your perfect LLC name easier since all forms must be submitted online via their website. You don't have to write down or remember precisely when you decided on your desired name. Once you do this, you can wait until the expiration date (120 days later) and then proceed with filing for formation documents with the Secretary of State's office.

However, a few things are worth considering before submitting your form and paying the fee.

Here are some questions to ask yourself:

  • Are you sure this is the best LLC name?
  • Is it catchy enough?
  • Does it accurately reflect what type of services or products you provide?
  • Does it stand out from other businesses in the same industry?

These are essential questions worth asking yourself before committing fully because once you submit that form and pay that fee, there's no going back.

Other Factors To Consider When Starting An LLC In New Mexico

Before forming your LLC in New Mexico, here are a few final things to consider.

Budgeting Your Business

Budgets play an essential role in the success of any business. Before forming your LLC, it’s wise to consider the financial aspects of starting and sustaining a business. A well-thought-out budget should include all costs associated with the initial startup, such as licenses, permits, insurance premiums, accountant fees, legal fees, employee salaries, and any other expenses you may incur. Remember that your budget will help shape how successful your venture can be by ensuring that there are enough funds available for operations.

Appointing Your Registered Agent

When starting an LLC in New Mexico, you must appoint either yourself or one of your employees who resides within New Mexico as registered agents.

Having this entity appointed helps ensure that all legal documents related to the LLC are correctly filed and received promptly. This entity must be accessible during regular business hours and will serve as the point person between you and government agencies when filing paperwork or answering questions about your LLC.

Tax Obligations

Forming an LLC also requires understanding any new business's tax obligations. These obligations can include filing federal income tax, state income tax, payroll tax, and sales tax. 

Depending on the industry and state regulations, other taxes may apply. Therefore, researching beforehand to ensure your business meets all applicable requirements is crucial. Most states require businesses registered within their borders to pay taxes on income generated in that state. 

In New Mexico, this means writing with the state tax department for any applicable business taxes. Government entities may require additional licenses at all levels depending on what kind of work you do. It’s best to get everything squared away before starting so you can focus solely on running a successful enterprise.

Additional Licenses Required By Government Entities

Depending on what kind of work you'll be doing, there may also be additional licenses required by government entities at all levels - don't forget these! Different types of businesses will have different requirements, so make sure to do some research and find out precisely what kind of license or permits are needed to operate legally in New Mexico. 

Free resources are available online and at local government offices, where you can get more information about specific requirements for particular industries or professions.

Conclusion

Knowing the key steps to form an LLC in New Mexico is essential for any entrepreneur looking to get their business off the ground. From acquiring an EIN to registering with the state tax department and obtaining applicable licenses, many detailed procedures must be followed to ensure your venture operates legally and profitably. 

With some research and patience, setting up a business in the Land of Enchantment is an achievable goal that will yield many rewards.

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About the author 

Mike Vestil

Mike Vestil is an author, investor, and speaker known for building a business from zero to $1.5 million in 12 months while traveling the world.

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