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 as 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. To avoid a misstep in the filing process, follow these steps to start an LLC in New Mexico, and refer to the checklist at the bottom of the post to familiarize yourself with the legal and financial requirements for LLCs in the state.  

Find more information on starting an LLC here.

 

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.

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 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

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

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.

4. Draft 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 New Mexico LLC’s additional 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.  

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 LLCs members should be deducted and withheld when filing the form. Single-member LLCs are treated as sole proprietorships for tax purposes and not required to file the form.

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

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. The site also has a site dedicated to helping businesses to fulfill local and municipal licensing requirements. 

New Mexico LLC Checklist

Naming requirements:

A New Mexico LLC’s name must obey the following guidelines:

  1. Must be distinguishable from the names of existing businesses on file with the New Mexico Secretary of State. 
  2. 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.

Formational documents and filing fees:

Registration procedure:

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

Additional legal obligations:

  • Register with the New Mexico Taxation and Revenue Department – Required for all LLCs doing business in New Mexico
  • File a New Mexico Income and Information Return for Pass-Through Entities form – Required for multi-member LLCs
  • Obtain state and local business licenses – Required for certain types of LLCs