If you want to start a New Mexico limited liability company (LLC), knowing how much you will need to spend is essential. Still, it can be tricky to figure out what your expenses will be.
We wrote this article to help people like you learn about the cost of starting an LLC in New Mexico.
By the time you finish this article, you will know:
- The expenses associated with starting a New Mexico LLC
- Additional costs you may want to incur
- How to choose the right formation method for your LLC
Keep reading to learn all that you need to know about New Mexico LLC formation costs.
Total New Mexico LLC Cost – Starting at $50
According to the New Mexico Secretary of State’s Business Portal, the bare minimum cost to start a New Mexico LLC is $50.
This only includes one item:
- New Mexico Articles of Organization filing fee: $50
LLCs are also required to register with the New Mexico Taxation and Revenue Department, but doing so is free of cost. You might also need to pay for professional and local business licenses, the costs of which vary.
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New Mexico LLCs – the Basic Costs
The total cost of forming an LLC in New Mexico varies. However, the lowest possible cost is $50. In the sections below, we’ve explained the mandatory costs you may need to cover.
Articles of Organization Filing Fee — $50
Articles of Organization are the documents that legally start LLCs. To form a New Mexico LLC, you must submit articles of organization to the Secretary of State. But don’t let the name stress you out. While it might sound complex, you only need to list some basic info about your LLC.
The filing fee is $50, and you must file online.
State Tax Office Registration — Free
New Mexico requires everyone who engages in business in the state to register with the Taxation and Revenue Department. We suggest doing this online. There are no filing fees or other costs.
Professional Licenses and Business Permits — Variable
Depending on your industry, your business may need a license or permit from the state. Check out the New Mexico Business Portal’s Obtain Licenses and Permits page to learn more about your New Mexico business license requirements.
Your LLC may also be required to get a local permit or license. For instance, the city of Santa Fe requires companies to obtain business licenses.
New Mexico LLCs – Optional Costs to Consider
On top of these mandatory LLC expenses, you should consider investing in some additional costs. While they are not required, these expenditures can make it easier to run your business.
Registered Agent Fee — about $100 per year
New Mexico law says that all LLCs must appoint a registered agent to accept documents for the business. You must list your registered agent information in your articles of organization, but there is a $20 fee if you ever need to change your agent.
Many new LLC owners think the best choice is to name themselves registered agents. But they often aren’t aware that this can cause them trouble. Agents must always be available during standard business hours to receive papers. Their addresses are also publicly available online, so they often get a lot of junk mail.
Luckily, you can avoid these issues through a professional registered agent service. They only cost about $100 per year, and the service will handle all of your LLC’s registered agent duties for you.
Check out our Best Registered Agent Services article for some of our recommendations.
Operating Agreement — Variable
An LLC operating agreement is a contract that LLC members use to set the rules for the company. Operating agreements usually list basic info such as the rights and responsibilities of each member and how they can enter or leave the business.
New Mexico does not require LLCs to have operating agreements. Still, we strongly suggest that every LLC owner get one. Although you can draft your own New Mexico LLC operating agreement, it’s usually not wise to do so unless you have legal experience.
One option is to pay an attorney to write an operating agreement for your LLC. If you choose to do so, you will have a professional document that adequately addresses all of your concerns. Just keep in mind that this route isn’t cheap. So if you are looking to save some cash, you can hire an LLC formation service to draft an operating agreement for as little as $39.
DBA Fee — $0 to $50
Many LLC owners prefer to run their businesses under a “doing business as” or “DBA” name. A DBA is a name that a company “goes by” that is not its legal name. For instance, business owners often drop the “LLC” so their company’s name will sound less formal.
While many states require a separate filing to register a DBA, New Mexico allows you to include your DBA with your articles of organization at no additional cost.
However, if you want to add a DBA later on, you must file an Articles of Amendment or Restated Articles of Organization with the Secretary of State. There is a $50 filing fee, and you must submit a paper form.
Name Reservation Fee — $20
If you have picked the name you want to use but aren’t ready to start your LLC, New Mexico lets you reserve a name for 120 days. This will prevent other people from taking the name during this period.
To reserve a name, you must submit an Application for Reservation of a Domestic Limited Liability Company Name to the Secretary of State. There is a $20 filing fee, and you must file a paper form.
Domain Name — about $20 per year
Most of today’s business owners want to have a website. An important part of making a website is to buy a domain name. If you know where to look, domains are reasonably priced and easy to obtain.
Still, we suggest you purchase your domain name ASAP. This will keep others from getting it before you. For instance, “domain squatters” will buy up all of a new LLC’s likely domains to resell them at a much higher price.
You can purchase a domain from GoDaddy.com or a similar website for about $20 to $50 a year. Plus, sales and other discounts are available, so you can often buy one for even less.
Getting an Employer Identification Number (“EIN”) — Free
An EIN is a 9-digit tax identification number that the Internal Revenue Service assigns to a business. You can think of your LLC’s EIN as its social security number. The IRS requires some LLCs to get an EIN, but others don’t have to get one.
No matter what, we strongly suggest that all LLCs apply for an EIN. This is because banks often require an EIN to open a business account. Having an EIN can also help you avoid identity theft by keeping your SSN secure.
You can get an EIN online or mail in Form SS-4 to the IRS. Either way, it’s always free. So, you should never pay to get an EIN unless it is part of a larger service package.
Read More: How to Get an Employer Identification Number in New Mexico
Foreign LLC Qualification Fees — about $100 per extra state
If you want to expand your business into other states, make sure you set aside some extra money. While you don’t need to start a new LLC in every state where you plan to operate, you will be required to register as a foreign limited liability company.
Foreign LLC filing fees vary, but they are often around $100.
Writing Formation Costs Off
You can typically deduct your LLC formation expenses as business startup costs on your federal income taxes. The IRS provides a substantial amount of advice on this issue, so we suggest that you review the IRS website to learn more.
LLCs are usually considered to be “pass-through” tax entities. This classification lets LLC owners deduct up to $5,000 in startup expenses from their federal taxes in their first year.
Olive decides to start a single-member LLC and open a clothing shop in Santa Fe, New Mexico. Her formation costs are as follows:
- New Mexico LLC Articles of Organization: $50
- Santa Fe Certificate of Occupancy: $75
- Santa Fe Business License: $35
- Operating Agreement: $50
- New Mexico Registered Agent service Fees: $90
- Name Reservation Fee: $20
- Web Domain Costs: $30
As a pass-through entity, the LLC won’t be required to pay income taxes. Instead, Olive will report her earnings from the LLC and any deductions on her personal state and federal income taxes.
Olive’s total formation costs were $330. Before deducting these expenses, her total taxable income was $46,000. However, by deducting her formation expenses, Olive lowers her taxable income to $45,680. This will drop her 2023 federal income taxes from $5,869 to $5,798.
Even though this is not a substantial decrease, business owners who regularly deduct their costs will realize a significant amount of tax savings over time.
Cheapest Way to Start an LLC in New Mexico
It’s important to consider your LLC’s unique needs when choosing an LLC formation method. To help you make your decision, we’ve outlined the most popular options in the sections below.
Formation Service – $39 + state fees
Many new LLC owners use a business formation service. While these services aren’t run by lawyers, they have substantial experience starting LLCs and other business entities.
A formation service is a suitable choice for many LLCs. The benefits of this method include:
- They’re easy. In most cases, a formation service will have helped hundreds of people through the exact process you are struggling with now. They have all the documents, information, and expertise you need right on hand.
- They don’t cost much. Because formation services have such a large volume of business, they don’t have to charge their clients that much money.
- They’re reliable. All of the formation services’ products and procedures have been tested hundreds of times over in the real world. That kind of experience should give you peace of mind and confidence going forward.
- They’re fast. Formation services have seen almost every business formation situation already. Chances are, they have many solutions for you that are ready right now before you even know you need them.
However, LLC formation services aren’t right for everyone. The weaknesses of this method include:
- They’re not the best solution for complex LLCs. If you are forming a complicated company or one in a heavily regulated industry, you will have concerns that probably need more focused expertise in that area of business.
- Even if a formation service is a good fit, you can expect upselling. Formation services have to make money too, and some of them may pressure you to buy formation products or business services you don’t need. Even when you are using a formation service, you need to be a smart and informed consumer.
Using a professional LLC formation service can be a great way to set up a business. Check out our Best LLC formation services article for some of our suggestions.
The most dependable option is to hire a lawyer. This method will allow you to entrust your business to an experienced legal professional. But this level of expertise comes at a price. Lawyers usually bill hourly for their services, often at a rate of several hundred dollars.
Even with the costs, there are considerable advantages to using an attorney:
- Lawyers help you manage risk. If you are starting a business with complicated legal issues, hiring a lawyer would be the best choice.
- Lawyers offer more customization when you need it. Do you need specific things put in an operating agreement? Is your company going to have a unique ownership structure? You may need an attorney to make sure these issues are handled properly.
But the disadvantages of this approach usually outweigh the benefits for most LLC owners:
- Lawyers cost more than any other option. The price tag alone should convince you that if you don’t need a lawyer, it’s not worth hiring one.
- Finding a lawyer takes a long time. Getting a lawyer who specializes in what you need, costs what you’re willing to pay, and can work with you well is a tall order.
- Lawyers also take longer to form a business than a formation service. Because lawyers are also very careful people, they will generally take much longer to form your company than non-lawyers would. Fortunately, most people don’t need a lawyer. In 90% of cases, a formation service will do just fine.
Do it Yourself
Of course, there is always the tried and true do-it-yourself approach. Just remember to take the value of your time into account. The hours you devote to completing LLC formation paperwork could be spent working on other aspects of your business.
The benefits of a DIY formation method include:
- Personal knowledge. A DIY business owner will learn a lot about the process while forming their own business, and they probably will retain that knowledge for years to come.
- It costs less upfront. If you don’t account for the value of your time, a DIY solution is the cheapest option.
But don’t forget about the drawbacks to this option:
- You’re losing money when you consider how much time it takes to DIY. If you figure out that your time is worth $30 per hour, and you take 20 hours to complete your business formation, you have essentially spent $600 on business formation.
- There’s the risk of making a mistake. DIY business owners can easily make a mistake with all the paperwork that can cost them even more time and money.
- It’s a headache. State workers are very helpful, capable people. But they will also tell you that the laws and rules governing business formation are not easy, and they follow those rules for a living. It’s going to be even harder for you.
Annual New Mexico LLC Fees: How Much Will it Cost to Maintain your LLC?
Unlike many states, New Mexico does not require annual reports for LLCs. However, LLC owners may be required to submit an Information Return for Pass-Through Entities to the Taxation and Revenue Department.
You also may need to periodically renew your LLC’s business licenses and permits.
Additionally, some of your optional costs will be due every year. Examples of these ongoing expenses include:
- Registered agent service fee: approximately $100
- Domain name registration: $20 to $60
How Much are LLC Taxes in New Mexico
As “pass-through” business entities, LLCs do not have to pay income taxes on their profits. Rather, you will need to report your earnings from the LLC on your personal income taxes. However, your LLC may be subject to gross receipts tax, which is similar to a sales tax.
New Mexico LLC Formation Costs Quick Links
- New Mexico Online Filing
- New Mexico Business Portal
- New Mexico Secretary of State
- New Mexico Taxation and Revenue Department
- IRS — apply for an EIN online
- IRS information regarding the federal tax treatment of LLCs
New Mexico LLC Formation Costs FAQs
How much does it cost to start an LLC in New Mexico?
The lowest cost is $50. But, it could be more expensive based on your LLC’s industry and location.
What is the cheapest way to start an LLC in New Mexico?
A do-it-yourself method is the least costly in terms of cash spent. But if you consider the value of your time, the most cost-effective option is typically an affordable LLC formation service.
Do I need to hire an attorney to form an LLC in New Mexico?
No. Most LLCs can be started without an attorney’s help. A DIY approach or an LLC formation service will be more than adequate for the average LLC.
Can I pay to form an LLC more quickly in New Mexico?
No. New Mexico does not offer expedited LLC processing.