How to Start an LLC in New Mexico (Step-by-Step Guide)

When starting a new company, choosing a business entity is the most important decision that the founders must make. For most businesses with more than one founding member, forming an LLC is often the best option for a number of reasons.

An LLC is an uncomplicated business structure that affords business owners legal protection by separating personal assets from business debts. Moreover, LLCs often enjoy a lower tax rate than corporations. Nevertheless, creating an LLC can get complicated depending on where you are based, with the formation process, filing fees, and continuing legal obligations differing from state to state.

Forming an LLC in New Mexico follows a standard process that shouldn’t give entrepreneurs much trouble. What’s more, LLCs in the state are not required to file annual reports or pay the associated fees, which are common requirements in most states.

Starting an LLC in New Mexico step-by-step

1. Select a name for your New Mexico LLC

Follow naming requirements

There are 2 major guidelines to follow when naming your LLC in the state of New Mexico:

1. An LLC’s name must be distinguishable from the names of existing businesses on file with the New Mexico Secretary of State.
2. An LLC’s name must contain one of the following phrases or abbreviations: “Limited Liability Company”, “LLC”, “L.L.C.”, “L.C.”, or “LC.” The abbreviations “Ltd.” and “Co.” may be substituted for the words “Limited” and “Company”, respectively.

Need help coming up with a business name? Check out our free business name generator.

Check LLC name availability

After selecting a name that complies with state naming guidelines, check its availability by performing a search with the New Mexico Secretary of State Business Search.

Reserve your LLC name with the New Mexico Secretary of State

Reserving your LLC name with the Secretary of State is a good idea since it prevents another New Mexico business from using it before you file your Articles of Organization. File a Reservation of Limited Liability Company Name application by mail to reserve the name for up to 120 days. The filing fee is $20.

2. Designate a registered agent

As in every U.S. state, forming an LLC in New Mexico requires the appointment of a registered agent service to handle state and federal legal documents and service of process on the business’s behalf. The registered agent must either be a state resident or business entity with a street address in New Mexico OR if the individual or business is based out-of-state, they must have a business office in New Mexico.

3. File Articles of Organization

An LLC is legally formed in New Mexico through the filing of Articles of Organization with the New Mexico Secretary of State.

The Articles of Organization must provide the following details:

• LLC’s name, address, email address, and phone number (optional)
• Registered agent name and address
• Date that the Articles become effective
• LLC’s duration (if not perpetual)
• LLC’s purpose of business
• Whether the LLC is member-managed, manager-managed, or has a single member
• LLC organizer name and contact information

The filing must be done online (the creation of a user account is required). The filing fee is $50 and can be paid by credit card.

4. Create an operating agreement

Although not a legally mandated step for forming an LLC in New Mexico, drafting a comprehensive LLC operating agreement is strongly recommended for all nascent limited liability companies.

The operating agreement should do the following:

1. Describe the LLC’s business structure
2. Establish the individual responsibilities and obligations of LLC members
3. Detail how the LLC will be run

Without an operating agreement clarifying the specific duties of its members, an LLC may face significant legal and operational difficulties.

5. Obtain an IRS Employer Identification Number (EIN) 

All newly formed LLCs in the United States must acquire an Employer Identification Number (EIN) from the Internal Revenue Service (with the exception of single-member LLCs). The nine-digit EIN is like a social security number for a business and is necessary to pay income tax, file tax returns, open business bank accounts, and perform many other important functions.

You can apply for an EIN online on the IRS website without paying a filing fee.

6. Fulfill your legal obligations

Once an LLC is registered, its members must devote attention to fulfilling legal requirements that apply for the duration of the company’s existence.

Obtain business licenses and permits

Some New Mexico LLCs are required to obtain one or more state or local business licenses, permits, or certifications depending on the nature of their business and their location.

• Visit the State of New Mexico Business Portal: Obtain Licenses and Permits page for guidance on obtaining necessary state business licenses and permits.
• Review the site to fulfill local and municipal licensing requirements too.

Understand state taxes

Every New Mexico business owner pays state income tax and sales. LLCs, by nature, are pass-through entities, which means any business income and expenses pass to the owner’s personal tax return.

LLCs are different, unlike a corporation that’s taxed twice, once as a business and once as personal income. LLCs don’t face double taxation. Instead, they pay taxes based on what their business earns on their personal taxes.

New Mexico tax rates: New Mexico has a 5.0% state sales tax rate, a max local sales tax rate of 3.813%, and an average combined state and local sales tax rate of 7.72%.

An accountant or accounting software can help: If you’re unsure how to quantify business income or don’t understand what you can write off, it’s best to ask an accountant for help. Many businesses develop relationships with accountants and maintain that connection for years. While you’ll likely use small business accounting software to help track your day-to-day sales and streamline reporting, an accountant can use your records to file your taxes and comply with all tax codes.

Register with the New Mexico Taxation and Revenue Department: All LLCs active in New Mexico must register with the New Mexico Taxation and Revenue Department to acquire a Combined Reporting System identification number. This includes LLCs formed outside of the state that are doing business in New Mexico.

You can register to get a CRS ID number online using New Mexico’s Taxpayer Access Point (TAP) or print a paper copy of Form ACD-31015 and submit it to a local tax office.

File a New Mexico Income and Information Return for Pass-Through Entities form (Multi-member LLCs only): All New Mexico LLCs with more than one member must file an Income and Information Return for Pass-Through Entities form before the federal tax return due date. The net income of non-New Mexico resident LLC members should be deducted and withheld when filing the form. Single-member LLCs are treated as sole proprietorships for tax purposes and are not required to file the form.

Visit the New Mexico Taxation and Revenue website for instructions on how to file the PTE form.

File a BOI Report

No matter where your place of business is, you need to file a Beneficial Ownership Report with the federal government’s Financial Crime Enforcement Network. This requirement is new this year after Congress passed measures to help authorities limit financial crime.

The report asks you to provide:

• Company information
• Owner and stakeholder information

You’ll provide each owner’s name, address, and birth date or anyone with controlling interest in your company. Once you file this report, which is required within 90 days of creation, you’ll update it as needed. In other words, you won’t file this report annually.

Learn more about BOI reporting.

Post LLC tasks

Open business bank accounts

Set up a business checking account and stream all sales and expenses associated with the business through it. You can transfer the money to your personal account when you generate a fair amount of sales. At first, that amount might not be consistent, but in time, it will stabilize.

It’s important to keep your business and personal finances separate to keep tabs on what your business is doing, establish a financial history, and streamline tax payments.

Consider different financial institutions: Once business formation documents are filed and you’ve obtained an EIN, explore your banking options and consider small business accounting software, too. You’ll need the ability to send invoices, collect payments, pay vendors, and run reports. Look for banks that integrate with these tools. Mercury, a bank for small businesses, integrates with QuickBooks, for example.

Consider looking into these banks to enhance your business and its financial health: Found, Relay, and Mercury.

Obtain a Certificate of Good Standing and Existence

Once you’ve registered your business with the state, LLC owners should request a Certificate of Good Standing and Existence. This certificate shows you’re legally able to conduct business and follow the rules to stay compliant.

You can request this certificate online through the NM Business Portal.

Set up a business website

A business website gives you a lot of opportunities. You can attract customers, make sales, and educate newcomers. Think about how you’d like to use your site and jot down which pages you’ll need to meet the needs of your target audience.

Follow these steps to get started:

1. Search for and purchase a domain name.
2. Sign up for web hosting.
3. Pick a web builder like Domain.com or GoDaddy to create a site with no coding experience necessary.
4. Tailor your site to your customers, adding appropriate pages, content, and images.
5. If you’re selling goods, add an e-commerce section to your site.
6. Review, test, and publish your site.

Pages to add: Most sites have a homepage, an About Us page, a Contact Us page, and a Features page. You might decide to add more pages, depending on your needs.

E-commerce considerations: If you plan to sell products online, you’ll need an e-commerce store attached to your site. You’ll need to upload images of each product, write descriptions, and ensure you have the backend capabilities to collect payments.

Costs to set up an LLC

Average cost to set up an LLC in New Mexico: $50-$250

Whether you set up a business in Santa Fe or Albuquerque, there’s a cost to doing business. As a business owner, you can project sales, but you should also project startup expenses. Take a look at these setup costs:

• Incorporation fees: To get an LLC up and running in New Mexico, you must submit LLC formation documents, which cost $50 to file with the state.
• Registered agent service fees (optional): You choose to pay an annual fee to a registered agent service. By hiring a professional registered agent, this entity will receive all official notices on behalf of your company. When documents arrive, they alert owners through a personalized portal, where you can find scanned copies of the documents. The cost for this service varies but can range from $50 to $200 annually.

Foreign LLC registration

An LLC formed in a state other than New Mexico that intends to do business in the state must register with the New Mexico Secretary of State.

Follow these steps to do business in New Mexico as a foreign LLC:

1. Comply with New Mexico LLC naming guidelines and confirm that your LLC’s name is available for use in the state using the Secretary of State Business Search.
2. Appoint a New Mexico registered agent.
3. File a Foreign Limited Liability Company Application for Registration with the New Mexico Secretary of State. The application must be filed by mail and the filing fee is $100.  The certificate must be accompanied by either a Certificate of Good Standing or a Certificate of Existence from LLC’s state of origin.