First-time business owners often feel overwhelmed at the idea of starting a limited liability company (LLC) in New Mexico. But if you have the right info, the process will be easier than you think.
In this article, you’ll learn:
- The steps you need to follow to start an LLC in New Mexico
- Essential tasks to handle after you register your LLC
- The money and time it takes to form a New Mexico LLC
Keep reading to find out what you need to know about your New Mexico LLC formation!
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Step 1: Name your New Mexico LLC
When forming an LLC in New Mexico, your name choice is essential. However, you might not be able to use the exact name you want if it doesn’t follow the state’s naming rules.
New Mexico law sets down some basic requirements for LLC names. For instance, specific words are not allowed to be used, while other words are mandatory. We’ve laid out the details below.
Words You Have to Use
New Mexico Statutes Section 53-19-3 says LLC names must include one of the following terms:
- “limited liability company”
- “limited company”
The statute also lets you shorten “limited” to “ltd.” and “company” to “co.”
Words You Can’t Use
Your LLC’s name can’t suggest that your business is a different type of legal entity, like a corporation. You also can’t give your LLC a name that makes it seem like it is part of the government.
Additionally, your name can’t make people think you provide illegal services. For instance, if you don't have the license you need to provide a service, your LLC’s name can’t imply that you offer that service.
The big rule is this: if you need a license to do your job, double-check with the Secretary of State to make sure your company name complies with the law.
Section 53-19-3 also says that your LLC name must be “distinguishable” from every other business name that is already registered with the New Mexico Secretary of State. This rule helps avoid confusion and keeps people from mistaking one company for another.
Research the LLC Name You Want
Once you’ve decided on a name for your new LLC, you can use the Secretary of State Business Search to see if it is available.
If someone else has taken the name you want to use, you can’t use it unless you get a court order that says you have the right to do so.
If the LLC name is available, New Mexico Statutes Section 53-19-4 says you can reserve it for 120 days. To reserve your name, you must file an Application for Reservation of a Domestic Limited Liability Company Name and a $20 filing fee with the New Mexico Secretary of State.
In New Mexico, you can’t reserve an LLC name online. Instead, you have to mail the form and a check to the following address:
New Mexico Secretary of State Office
325 Don Gaspar, Suite 300
Santa Fe, New Mexico 87501
Get a Matching Domain
Once you settle on an LLC name, we recommend you get a matching domain, even if you don’t have immediate plans for a website.
Competitors can buy your perfect domain and its variations to block you from using them.
Domain squatters sift through public records of newly registered LLCs and will buy their matching URLs, only to relist them with huge markups.
A domain name from GoDaddy.com or a similar registrar will cost you between $20 and $50 per year, with regular specials and sales where you can get large discounts.
It pays to check now.
Once you have your domain name, you can also create a branded email address through GoDaddy.
New Mexico DBA: Using an Alternate Business Name
If you don’t want to “go by” your LLC’s legal name, you can use a “doing business as” or “DBA” name instead. This means the company will be popularly known by this name rather than its formal one.
One of the benefits of DBA is the ability to use a different name as time goes on. For many, a DBA provides more freedom to operate without the need to change the business’s legal name.
If your LLC has an official name of “Anthony Business Ventures, LLC,” you could use a DBA of “Tony’s Toy Shop, LLC.”
But say that you eventually start to sell board games as well. To make sure people know what your store offers, you could start to use a new DBA of “Tony’s Toys and Games, LLC.”
New Mexico calls DBAs “alternate business names.” Its laws differ from those in other states. While most allow you to drop the “LLC” from a DBA, New Mexico does not. Any DBA you use must contain either “limited liability company” or an abbreviation of those words.
Many other states also make you use a separate form to file a DBA. But, New Mexico Statutes Section 53-19-3 says an LLC must include any “name under which it proposes to transact business in New Mexico” in its registration documents.
If you decide to add a DBA down the road, you must submit an Articles of Amendment or Restated Articles of Organization form to the Secretary of State with a $50 filing fee. These forms cannot be filed online, so you’ll need to mail them.
Step 2: Appoint a Registered Agent for your LLC
A registered agent is a person or business that accepts important legal documents for an LLC.
New Mexico Statutes Section 53-19-5 states that LLCs must choose a registered agent in the state. Your New Mexico registered agent must be available during normal business hours to receive service of process.
Receiving service of process is a legal term that means accepting the official papers that are sent as part of a lawsuit. This means that if your LLC gets sued, the documents will be sent to your New Mexico registered agent.
New LLC owners often want to be the registered agent for their business. There are some clear benefits to this choice:
- It’s cheap: You’re not paying someone else to do it for you.
- It’s easy: The only address and contact information you have to keep current is your own.
- It’s reliable: You will receive all important documents personally.
Unfortunately, many people find out too late that serving as their own LLC’s registered agent can create additional problems.
Some of the issues you might face include:
- No privacy: Your name and address will be published on the Secretary of State’s website. This means that anyone with an internet connection can find your personal information.
- Junk mail/spam: You will get a ton of junk mail in addition to a small amount of real mail and any service of process.
- No breaks: You also must be available at all times during regular business hours to receive documents. This means no vacations, sick days, or leaving the office for lunch.
- Business interruptions: Client meetings can be interrupted by people serving process. That could be embarrassing or hurt your reputation.
- It’s your fault if you miss something: You always have to make sure your address is correct and up to date. If you make a mistake or miss something, you are held responsible.
Some business owners are wary of hiring a professional registered agent service, but the benefits far outweigh the cost. These businesses only charge about $100 per year, and they let you know as soon as your business gets any documents.
If you are looking for a professional registered agent service, take a look at our Best Registered Agent ranking for some of our recommendations.
We suggest that you use a nationwide registered agent service if you plan to expand past New Mexico. This will make it much easier to register as a foreign LLC and find an agent in each state where you want to do business.
With a national service provider, you’ll make one payment for all your registered agents. And, you won’t have to find a local agent for each state.
Step 3: File Your New Mexico LLC Articles of Organization
An articles of organization form is a document you will submit to the Secretary of State. It lists basic info about your business. Filing this form marks the official start of your New Mexico LLC.
If you would like to avoid the hassle of handling your LLC filing yourself, you can also use a professional LLC formation service. Check out our Best LLC formation services article for some of our suggestions.
What to include in my New Mexico Articles of Organization?
Under New Mexico Statutes Section 53-19-8, your articles of organization must list the following details:
- The LLC’s name.
- The name and address of the registered agent.
If the existence of your LLC has a set end date, you must include that in your articles. You’ll also need to note if you plan to have a manager or if you’re the only owner.
In New Mexico, you must file your articles of organization online using the Secretary of State’s online business portal.
New Mexico LLC Filing Fee
According to the New Mexico Business Portal, the filing fee to register your new business in New Mexico is $50.
New Mexico LLC Processing Time
The processing time for articles of organization is usually about 10 to 15 business days.
Step 4: Draft your New Mexico LLC Operating Agreement
Operating agreements are contracts used by an LLC’s owners to specify how the company will be run. They document the rights and duties of the members, as well as other basic rules for the business.
New Mexico does not mandate that LLCs have operating agreements. However, making one can help members decide what they want to do in certain situations. It may also prevent future disagreements about how things are being run.
For instance, say one of the owners wants to sell their interest in the LLC. An operating agreement can explain how they can sell their interest and what happens with their duties once they do.
Operating agreements can also be helpful because:
- They determine the rights and duties of LLC members. If one LLC member is responsible for running the business or managing the books, the operating agreement should say so.
- They say what the manager has the right to do. Managers also have special duties to the company and the members. The LLC operating agreement should state these.
- They outline what the LLC is legally able to do. The operating agreement should also set down how the company is allowed to conduct its business from day to day.
- They say how new members can join the company. They also have rules about how exiting members can leave.
- They set down how and when profits are paid to members. They can also create different types of membership and payment schemes.
- They say whether members or managers are in charge. They also say how to hire and fire managers.
- They say how and under what circumstances the LLC should end. You might not want to dissolve your business entity now, but you might in the future. It’s best to think about it and plan before it becomes an issue.
- They say how to change the rules. You may need to amend your operating agreement in the future. The operating agreement should set down the rules for making changes.
Your operating agreement should be created by all the LLC’s owners. This ensures everyone is aware of the company's procedures and prevents disagreements between members.
Step 5: Get an EIN (Employer Identification Number) for Your New Mexico LLC
An EIN is a 9-digit number that the IRS assigns to a business. Like an SSN, an EIN can be used to identify the company in various contexts. However, EINs are assigned to entities, not people.
Here are the most common times when you need an EIN:
- Does your LLC have more than one member?
- Does your LLC have any employees?
- Is your LLC taxed as a C corporation or S corporation?
If you answered “yes” to any of these questions, your LLC must get an EIN to operate.
Owners of single-member LLCs can use an SSN instead of an EIN to file taxes. But having an EIN can still help prevent fraud. Plus, most banks require an EIN to open a business bank account.
You can get an EIN through the IRS website or fill out Form SS-4 and mail it in. We suggest doing it online, as it will only take a few minutes. It is free to get an EIN, so you don't need to pay someone to get one for you.
First Tasks After Registering your New Mexico LLC
Once you form your New Mexico LLC, there are a few more things you should take care of. While not required, these tasks will help you set your business up for success.
Open a Business Bank Account
While you don’t have to open a business bank account to make an LLC, we recommend using one. It separates the finances of the LLC from your personal accounts, which provides you with more flexibility and better protection.
Business bank accounts give many advantages to LLC owners, such as:
- Convenience: Keeping things separate makes your LLC’s bookkeeping much simpler.
- More business opportunities: Your LLC can only receive credit card payments through a business account. You can also do business with people who won’t take personal payments.
- Personal asset protection: Mixing your personal and business funds could cause you to be held responsible for the LLC’s debts.
Of these benefits, asset protection is the most vital.
LLCs can protect your personal assets from being seized by the company’s creditors. This is because the “corporate veil” (a corporate law doctrine) protects your personal assets from being taken to pay for your company’s debts.
But if you use business assets for personal bills or “commingle” your money with the company's funds, you may be at risk. This could lead to the corporate veil being “pierced” in lawsuits, which means that you may be held personally liable for the LLC’s debts.
If you want to protect your personal assets, it is best to separate your individual and company finances by using a business bank account. This will allow you to avoid financial trouble if the LLC gets sued and keep your personal assets safe.
Get Business Insurance For Your New Mexico LLC
We suggest that you invest in a business insurance policy as part of your New Mexico LLC setup. You can choose the coverage you need to protect your company from the different types of risks you face in your industry.
Some popular types of business insurance include:
- General liability insurance: You’ll need this if there’s an injury on your property. It pays for damages and a lawyer if you need one.
- Commercial automobile insurance: This works like your own car insurance. It covers drivers and vehicles for your business.
- Workers’ compensation insurance: New Mexico law requires employers with three or more workers to carry workers' compensation insurance coverage. You can decide to buy a policy from a private insurance company or get approved by a court to self-insure.
- Commercial property insurance: This protects your property in the event of damage. Keep in mind that flood insurance is often a separate policy.
- Professional liability insurance: Lawyers, doctors, architects, and other professionals need this insurance. It provides coverage and legal defense in the event of a malpractice case.
- Business income insurance: If you have to close for some time, business income insurance can pay back the loss of income. Policies vary, though. Make sure that you know exactly what kinds of losses will be covered.
Keep Your New Mexico Company Compliant
By starting an LLC in New Mexico, you agree to abide by certain regulations and requirements. For example, some industries may require a business license or the payment of taxes.
It's crucial for all businesses to stay up-to-date on the latest legislation in their area. This will ensure that you don't miss any changes in the law and continue to meet any requirements set out by local authorities.
New Mexico Business Permits and Licenses
Depending on the industry and location of your business, you may need to obtain a license or permit. You can find more information on the New Mexico Business Portal’s “Obtain Licenses and Permits” page.
New Mexico Tax Requirements
New Mexico LLC owners must register to obtain a New Mexico Combined Reporting System (CRS) number. You can do this on the New Mexico Taxation and Revenue Department’s Taxpayer Access Point (TAP).
You will likely also need to pay some state taxes, such as Gross Receipts Tax. Learn more about your state tax obligations on the Business Taxpayers section of the Taxation and Revenue Department’s website.
Federal LLC Tax Filing Requirements
Because they are a type of “pass-through” business entity, LLCs are not taxed on their profits. Instead, that income will have to be reported on a Schedule C form and then submitted to your own taxes.
Your LLC must also pay Social Security and Medicare taxes, even if you don’t hire any workers. If you do have employees, you’ll also be required to withhold payroll taxes from their paychecks.
Annual Report and other Filing Requirements
Unlike many other states, New Mexico does not require LLC owners to file annual reports. However, you may need to file an Information Return for Pass-Through Entities form each year with the Taxation and Revenue Department.
New Mexico Business Formation Quick Links
- Internal Revenue Service — apply for an EIN online
- IRS information regarding the federal tax treatment of LLCs
- Business Search (SOS)
- Online Business Portal (SOS)
- New Mexico Business Portal
- New Mexico Taxation and Revenue Department
- Name Requirements: New Mexico Statutes Section 53-19-3
- Name Reservation: New Mexico Statutes Section 53-19-4
- Registered Agent: New Mexico Statutes Section 53-19-5
- Articles of Organization: New Mexico Statutes Section 53-19-8
New Mexico LLC FAQs
How much does it cost to start a New Mexico LLC?
According to the New Mexico Business Portal, the filing fee to register your business in New Mexico is $50.
What is the processing time to form my New Mexico LLC?
The processing time for articles of organization is usually about 10 to 15 business days.
What are the benefits of a New Mexico LLC?
Starting an LLC protects your personal assets from business creditors, while a sole proprietorship does not. Some small business owners also receive tax advantages.
Where do I check if my New Mexico LLC name is available?
Once you’ve decided on a business name for your new LLC, you can use the Secretary of State Business Search to see if it is available.