How to start an LLC in New Mexico
Entrepreneurs looking to form a new business in the state of New Mexico will face a variety of requirements. The most important is actually forming the business as a legal entity. You will have your choice of sole proprietorship, corporation, partnership, or LLC. In many cases, the LLC makes the most sense, as it combines simplicity with strong liability protection.
To start an LLC in New Mexico, you must file the Articles of Organization with the New Mexico Secretary of State. This process can be done online, or through the mail. There’s a bit more to it than just filling out a form, however, so we put together this detailed guide on how to start a limited liability company in New Mexico.
Consider utilizing an LLC formation service
The first decision you will need to make is, do you want to do the formation work on your own, or do you want to hire a professional service to help?
If you complete the steps on your own, the rest of this article will explain the specific tasks that you will need to handle. If you use a service, they will walk you through everything, which can greatly simplify a sometimes confusing process.
There are two LLC formation services in New Mexico that are highly recommended. These are Northwest Registered Agent, a higher-end service that is known for exceptional service and quality and ZenBusiness, a budget-friendly choice with plans starting at only $49. Either will be a great option for your new company.
Using a professional service can expedite the process, saving both time and hassle. It will cost a bit extra (on top of New Mexico’s state fees), but for many entrepreneurs, it is well worth the cost.
Name your new company
Naming the company is the first step in creating your new LLC. You must select a name that’s available (not already taken by another New Mexico company), and that meets certain requirements. And of course, you will want to choose a name that is relevant to your business, and ideally one that is memorable for customers and clients.
New Mexico has a few rules for naming an LLC. The first is that the name must be distinguishable from all other business names in the state of New Mexico. You can conduct a business name search here to confirm if the name you are considering is available still.
Other requirements relate to the specific words or phrases that can and cannot be used in an LLC name. For instance, all LLC names must contain “Limited Liability Company”, or an abbreviation like “LLC” or “L.L.C.” On the flip side, they cannot contain government-related words that may confuse a private business for a government entity. Additionally, certain words from regulated industries are protected and require additional permissions to use. This includes “bank”, “attorney” and other protected terms.
Using a Trade Name in New Mexico
New Mexico does NOT allow for the use of trade names or “doing business as” names, as most other states do. This means that the formal LLC name that you register your business under is the only name that you will be allowed to use in the course of your business activities. Take care in choosing the right business name!
Appoint a Registered Agent
A registered agent is essentially your business’ point of contact with the state, and at times, with other businesses or legal entities. The Agent is responsible for receiving and forwarding important documents, including tax forms, official notices, lawsuit proceedings, and more.
All New Mexico LLCs are required to appoint a Registered Agent. This can be an individual living in the state (including yourself), or it can be a business registered in the state. However, the LLC itself cannot serve as its own registered agent.
Most business owners choose one of two options:
Serving as their own Registered Agent. This is free and simple, but the downside is that your personal address will be publicly listed, and you may miss important documents if you are on vacation.
Hiring a professional firm. Professional Registered Agents in New Mexico offer the benefit of using their address, rather than your own, thus protecting your privacy. In addition, their offices are always open, so your business will never miss any important communications.
Create an operating agreement (optional)
Note: This step is optional, but recommended.
Most LLCs in New Mexico will want to create an Operating Agreement, even though this is not actually required. The reason that businesses should still have one is that this is an important document that establishes many key details about the business.
The operating agreement provides information on the ownership structure of the LLC, as well as its operating procedures. For multi-owner/multi-member LLCs, this is particularly important. Having a signed operating agreement that has been acknowledged by all owners can help drastically reduce the chance of running into ownership disputes in the future.
The operating agreement, should you choose to make one, is simply kept on file. There is no need to submit it anywhere. You can draft one using the help of a local attorney, or with a template provided by a service like ZenBusiness.
File LLC Articles of Organization
The primary paperwork requirement for starting an NM LLC is to file the Articles of Organization with New Mexico’s Secretary of State department. There is a $50 filing fee to complete this, and you can complete the process online.
You must first sign up for an account with the New Mexico Secretary of State – Corporations and Business Services department. Then, follow the instructions for filing the Articles of Organization, and pay the $50 state fee.
During this process, you must also upload the Registered Agent Statement of Acceptance. This document simply lets the state know that your Registered Agent has agreed to the role, and understands their duties.
Apply for an EIN
Most businesses will want to obtain an EIN, or employer identification number. This is issued by the Internal Revenue Service and is a requirement for hiring employees. It may also be required for routine activities like opening a business bank account.
You can apply for an EIN on the IRS website. It’s a quick application, and there is no cost for the filing.
Apply for business licenses & permits
Even once your LLC is established as a legal entity, it may not be fully licensed to do business and actually operate. Full compliance requires a wider range of certifications, permits, and licenses – both from state and local governments, and the federal government.
The type of business you plan to run, as well as where it’s located, will affect the specific licenses/permits you need to obtain. In general, more regulated industries (agriculture, environmental, medical, gambling, alcohol, etc.) will need more permits, while simple retail operations may only need a sales tax permit.
Most New Mexico businesses will need to register with the New Mexico Department of Taxation & Revenue. You will need a standard tax account, and likely employer tax accounts/withholding tax accounts. These registrations will prepare you to collect, withhold, and pay taxes. You may also need a Gross Receipts Tax registration (similar to sales tax).
In addition to the tax accounts, you may need specific permits or licenses. Check with the Regulation & Licensing Department for details.
You may also need a business license, and/or special permits such as health permits. These can be obtained through the local city or county government. Specifics vary by location, so check with officials in your area.
Certain businesses will need to obtain permits or licenses. This is mostly for highly regulated industries.
You may face other requirements; be sure to conduct your own research to stay compliant.
Keep your business in good standing
Although your business is brand new, this is a good time to plan for future compliance requirements. Your business will need to file various tax returns, reports, filings, and more, in order to stay compliant.
Your business must stay on top of all federal, state, and local requirements. These can vary significantly depending on the type of business (as well as its location or locations). However, there are some general requirements that most businesses should be aware of (and there may be others for your company):
New Mexico state tax filings
New Mexico Gross Receipts Tax filings (sales tax)
Federal tax filings
Federal quarterly taxes
Local tax filings
Employer/payroll tax filings
Notice of any change to your business (change of ownership, registered agent, etc.)
This can all seem like a lot to keep track of, but it’s wise to start now so that your business gets off on the right foot. Research and make a list of all the required compliance tasks, and then set reminders so that you don’t miss anything. You can also ask questions of local/state officials if you are confused as to your specific compliance needs.
Alternatively, you can use the help of a service provider. Services like ZenBusiness have ongoing compliance services to help keep you on track. They can help with certain filings, and remind you of due dates and compliance responsibilities throughout the year. If you’d like some guidance (in initial formation and/or ongoing), using a service is worthwhile.
Open a business checking account
Once you have your EIN and business license, you will be able to open a business bank account. It’s recommended to do this right away, as soon as your company is formed.
Having a separate account is very important because it allows business owners to separate their business and personal finances. This makes accounting easier (your bookkeeper will thank you!), and also protects personal assets from business liabilities.
Simply contact the bank of your choice to discuss the requirements for opening a checking account. You may also wish to apply for a business credit card or line of credit.