Starting LLC in New Mexico: Peculiarities & Detailed Manual
Want to start an LLC in New Mexico? It is a profitable decision for a business, as the state has waived corporate tax in favor of gross corporate income tax. So you’ve decided to start an LLC? Not sure how to initiate the process? To start an LLC in New Mexico, you need to get ready for several stages.
We’ve prepared a guide for you with just six steps to form your LLC and to get success! You can also refer to the virtual LLC formation service.
Note: ZenBusiness is the best service to file the LLC. You’ll surely appreciate reasonable prices, company values, and other peculiarities.
An New Mexico LLC: The Notion & Essence
Many New Mexico business owners choose to start an LLC. So, unlike a corporation, they can take advantage of flexible management. We’re talking about the protection of personal assets that sole proprietorships and general partnerships lack.
The state of New Mexico puts forward simplified requirements for registration and maintenance of LLC and invites business owners to choose the type of taxation. Do you still have doubts about the LLC?
6 Stages to Form an LLC Correctly
Stage №1: Choose Your LLC Name
The LLC name is a significant aspect, as it is the name of your company that makes the first and strongest impression on the audience of your potential customers! The name must be different from existing company names and must meet New Mexico’s regulatory requirements. Now get started with the following aspects.
LLC name in terms of jurisdiction
The State of New Mexico obliges business owners to include the abbreviation DDS or the phrase – limited liability company in the name. Please note that the terms corporation or registered are prohibited. In addition, you cannot use the designations of other forms of business: banks or law firms.
Take care of the explanations
You must include in the title an explanation of the nature of your business. For example, if you are engaged in the computers’ repairing, write in the LLC title – computer wizard. If you have any values or principles, also indicate this. For example, if you are farming, use the term natural, nitrate-free, etc.
So, you need to get a little creative and fully comply with New Mexico’s legal requirements.
Stage №2: Hire a Registered Agent
A registered agent is called a statutory agent in New Mexico and will help you to start an LLC. The agent can be an New Mexico resident, natural or legal attorney responsible for sending and receiving legal documentation on behalf of the future company. A company representative can also be an employee of the company or its owner. The State of New Mexico notifies:
The Registered Agent is responsible for accepting legal documents (Processing Service) on behalf of the legal entity and forwarding these documents to the serviced legal entity.
A registered agent guarantees an excellent reputation for your New Mexico LLC. Also, if your business gets worse, New Mexico can take legal action against it without notifying you. The registered agent will always receive appropriate notification and will be able to take timely measures to protect your interests as an attorney.
You should apply to the online service to get started a business in compliance with all regulations and requirements. So, you will have the opportunity to filter spam and protect your personal and contact information. If you use the ZenBusiness and Northwest Registered Agent to form an LLC, you will receive the free services of a registered agent.
Stage №3: Applying for Registration
To register a business in New Mexico, you must file the Articles of Association with the New Mexico State Secretariat. If you are anxious about your LLC formation, you can submit your documents for pre-processing, which will allow the Secretary of State’s office to advise you of the eligibility. It can be a good option if you get started for the first time in an LLC without consulting an attorney. Be sure to provide:
- The desired name of your business.
- Personal and contact details of the registered agent.
- Business management form.
- Personal and contact details of the manager of your company.
- Signature of the applicant and registered agent.
- Date of application submission.
LLC Formation Payment: You must pay $ 50 to set up an LLC in New Mexico.
Processing period. It can take up to 2-4 weeks for the state to process the documents you sent in to establish New Mexico LLC and mail your final documents to you. But remember that most online applications are reviewed within one or more business days. Do not forget that the counting of working days begins after ALL the necessary documents are in order and correctly submitted.
Stage №4: The Operating Agreement Background
While an operating agreement is not binding in New Mexico, creating one could significantly improve the company’s climate. An operating agreement is a document that describes the structure of a project, the way it works, the rights and obligations of each partner.
This document reflects the consistency of partners and thereby reduces the chance of controversy and disputes. Therefore, it is significant that all members of the future LLC carefully read this document before joining the company.
An attorney can help draw up an operating agreement and determine the way income and liabilities will be distributed among the owners of your LLC. You will find more information about the operating agreement here. Prepare to enter the following information:
- Names of all participants.
- The rights and obligations of each of the listed participants.
- Description of procedures for voting or resolving differences between members.
- Regulations on the financial share of participation of LLC members.
- Description of the way you’re going to manage the LLC.
So, do not neglect this stage of LLC formation. It largely guarantees your safety and the observance of your rights by all members of the business project.
Stage №5: Tax Compliance
To conduct a business that you want to register as an LLC successfully, you need to comply with several tax requirements at various levels.
Requirements of Federal Significance
Does your LLC involve multiple owners? Then you need to take care of the EIN! The EIN, or Employer Identification Number, is a unique nine-digit number assigned by the IRS to US corporations. This number must be obtained by all business owners under whose leadership the hired employees work. A business owner can obtain an EIN from the IRS in person or by mail.
Your state’s cess requirements
When it comes to LLC taxes that New Mexico levies, in the state you pay taxes that depend on the type of business you have. For cross-cutting organizations, and this is an individual enterprise or partnership, you pay income tax on your tax returns. But some LLCs want to pay taxes like a corporation, in such cases, they will pay state corporate income tax. The corporate tax rate is 5.9%. You can find out all about corporate taxes here.
Retail LLCs will be required to pay sales tax to the government. But in New Mexico, this tax is called the gross revenue tax. The rate ranges from 5.125% to 8.6875% depending on your location in the state. You can find out more here.
The owners of the LLC with the employees should also pay some taxes. First of all, employers must pay withholding taxes on the salary of their employees. You see, you withhold a portion of the employee’s salary and give that tax to the state.
Learn more about taxes you need to pay in New Mexico here. Likewise, New Mexico employers must also pay into state unemployment insurance. Strictly speaking, this is not a tax, but you must pay it regularly, that is why we write about it in this section. You can find out more information at the New Mexico Department of Workforce Solutions.
In addition to general taxes, industry-specific taxes are also levied here. New Mexico has taxes on gaming, petroleum, and some other things. You can view a list of state taxes for businesses here.
Local Tax Business Demands
Depending on where your business is situated, you may need to pay some of the local taxes. So, you will be responsible for paying local property taxes. Did you forget the gross income tax we spoke about earlier? The sum you should pay will depend on your whereabouts. Here you can see your tariff for your municipality.
Stage №6: Getting Business Licenses & Permits
The state does not need a statewide business license that each LLC must acquire to operate in New Mexico.
But the state demands licenses that are supported by the federal government for certain professional activities, this list usually includes agricultural activities, aviation, and some other professions. For more information, see the Small Business Association Lists for Federally-Regulated Industries needing licensing.
The state has tax requirements for each industry and has licenses and permits to operate businesses in specific industries. There are hundreds of such special licenses among the documents for working in New Mexico, so there is a possibility that one of them may be needed for your LLC.
Before starting a business, every LLC owner needs to search the state license database for doing here. Also, don’t forget that local authorities can demand a license or permission too.
Other Stages for Business Owners After LLC Registration
After completing the six mandatory steps towards starting an LLC, you need to take care of the following.
Opening a business bank account
Separate your personal and LLC accounts. Thus, you will be sure of the safety of your personal and financial data. Besides, you won’t have any hassle when filing your charge returns. Your EIN will help you open a business account quickly, no matter what you choose a bank or credit union.
All owners of companies/corporations, regardless of their form of management that attracts employees, must go through the compensation insurance procedure. All basic and detailed information is available with the New Mexico Bureau of Workers’ Compensation.
This policy aims to protect the rights of workers who are injured at work and unable to work. It will not be superfluous to get a civil liability insurance policy, as well as pay attention to some other types of insurance.
Income reporting is precisely the report on the income that you received from your business. In New Mexico, there are a few useful resources for accurately understanding and filling out income statements correctly, which you can find here.
Referring to the services of a qualified accountant
The state is unique in that it does not want all LLCs to file an annual return.
But usually, this report helps you update any information that is relevant to your business and has changed in some way over the past year.