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If you want to start an LLC in New Mexico but don’t know where to begin, you aren’t alone. In this guide, we’ll walk you through the whole process step-by-step, as well as cover the benefits and total cost involved to help you avoid any missteps.
Ready to embark on your entrepreneurial journey in New Mexico? Read on.
Why Starting an LLC in New Mexico Is Worth It
Starting an LLC in New Mexico is incredibly easy and affordable.
All you need is a business name that meets the state’s requirements, a New Mexico-based registered agent, a principal office and an organizer, and approved Articles of Organization. You won’t need anything else—no other document or legal procedure to worry about.
The fact that New Mexico LLCs enjoy the strongest asset protection regulations in the US is a huge advantage. Under state law, your personal assets will be protected against the actions of other members when they are listed within the operating agreement.
What’s more, other than the one-time fee of $50 to create your New Mexico LLC, there are no ongoing annual fees. While you do have to pay start-up and maintenance costs, these are very minimal. This makes the state an excellent choice for bootstrapped entrepreneurs.
New Mexico is also one of the few states that don’t require the name of the company’s manager to be included as part of the Articles of Organization. This means your name and business won’t be a part of the public record, giving you more privacy.
Moreover, the state rules allow you to do business in your home state, or any other state without additional filing requirements—even when you aren’t based in New Mexico itself.
That said, it would be better to check with your home state to determine what your local rules for incorporation might be. Even though New Mexico allows out-of-sales states without any restrictions, your state may require additional paperwork.
The Investment Needed to Start an LLC in New Mexico
You’ll have to file your New Mexico LLC’s Articles of Organization online with the Secretary of State. This will cost you $50, after which you’ll also need to enlist the services of a registered agent service.
Yes, you can appoint yourself as your company’s registered agent, but hiring a service is simply a much better bet.
As a registered agent, you have to stay in your registered office from 9 AM to 5 PM every day, which will be unrealistic for you considering you‘re the owner and will have other tasks to attend to.
Reputable companies like ZenBusiness offer a registered agent service, which currently costs $199 per year and only takes a few minutes to set up.
You may also need federal, state, and local permits or licenses to legally operate in New Mexico. This will obviously cost extra money, which will vary depending on the nature of your business.
You may also find yourself paying additional LLC filing costs, but these are mostly optional. They include the following:
- LLC name reservation — $20
- Foreign LLC name reservation — $40
- Certified document copies — $25
- Certificate of good standing — $25
As mentioned, New Mexico has very flexible laws concerning out-of-state sales. If you already have an LLC registered in another state and would like to expand your business into New Mexico, you can register your company as a foreign LLC in New Mexico. The cost for registering is $100.
New Mexico LLCs don’t have to file annual reports, which eliminates any annual fee.
5 Steps to Start an LLC in New Mexico
Here’s a step-by-step guide on how to start an LLC in New Mexico. By the end of it, you’ll know exactly what to do to embark on your entrepreneurial journey:
Step 1: Choose an LLC Name That Meets State Guidelines
Naming your LLC is serious business. Not only is it a part of your brand identity, but it’s also how your customers will differentiate you from your competitors.
At the same time, you want your business name to be memorable, easy to remember and type, and of course, available. But before we talk about availability, you must ensure your list of prospective names meets New Mexico naming requirements.
Here’s a list of pointers to remember:
- LLC name must be distinguishable from other New Mexico LLCs, corporations, and partnerships
- LLC name must include the phrase “limited liability company“ or one of its abbreviations (LLC or L.L.C.)
- LLC name cannot include words that could potentially confuse your company with a government agency (Treasury, FBI, State Department, etc.)
- You’ll have to file additional paperwork and include a licensed individual, such as a doctor or attorney if the LLC name includes restricted words (Bank, Attorney, University, etc.)
Similar to other states, New Mexico also requires business owners to choose unique names that haven’t already been taken by another business entity. To avoid this, you can do a quick name search on the state of New Mexico’s website.
While you’re at it, we also recommend checking whether your business name is available as a web domain. Even if you don’t plan to make a business website right away, it’s best to buy the URL to prevent others from taking it.
Step 2: Appoint a Registered Agent for Your New Mexico LLC
Under New Mexico law, you are required to appoint a registered agent for your company.
A registered agent can either be an individual or a business entity with a physical address in New Mexico. A P.O box or anything similar just won’t cut the bill.
The agent will be your point of contact with the state and responsible to receive legal documents and service of process on behalf of the company. Additionally, they should also notify you about the same beforehand, so you have enough time to have a plan of action.
You’ll also need written consent from the registered agent. This should include the name of LLC, a statement confirming the designated person consents to serve as your company’s registered agent, the name and signature of the registered agent, and the date of execution.
New Mexico allows business owners to assign themselves as their company’s registered agents. However, as we explained before, the cons outweigh the pros.
If you’re worried about hiring the wrong service, you’ll be happy to know many reliable LLC services offer registered agent service in addition to other LLC offerings, such as LLC formation and tax filing.
We highly recommend ZenBusiness’s services. This LLC service is more than capable of handling all correspondence and paperwork with the New Mexico Secretary of State responsibly and securely.
Step 3: File Your New Mexico LLC’s Articles of Organization
Next, you must file your Articles of Organization with the New Mexico Secretary of State. This is an incredibly critical step to be recognized as a legal entity in the eyes of the state.
Unlike other states, you cannot file the document by mail. New Mexico only allows business owners to e-file. Here’s what you need to do to file your Articles of Organization:
- Visit the Secretary of State Corporations and Business Services web page.
- Click on Create User Account, and enter your name and the required contact information. This will create your account on the site.
- File your Articles of Organization once your account is created.
Remember, you don’t want to make any mistakes when filling out your Articles of Organization. Typically, the document will include the following information:
- LLC name
- LLC’s physical address
- Registered agent’s name and address
- A six-digit North American Industry Classification System (NAICS) code, indicating the type of trade your business engages in
- Duration of LLC (choose “perpetual,” meaning without limit, or designate a timestamp for how long the business is supposed to last)
- Management model (“member-managed” is ideal if only a few people are involved in the business, and all of them plan to be a part of daily operations, while “manager-managed” is ideal for LLCs with many members who can’t all take part in daily activities)
You’ll also need to pay a small filing fee when submitting the document.
If all this looks intimidating, you can always use the same LLC service you hired for a registered agent to file your Articles of Organization on your behalf. ZenBusiness, for one, completely takes over the process. In fact, once the state approves your LLC, all your paperwork will be available on your ZenBusiness dashboard, along with your other important paperwork.
Step 4: Draft an Operating Agreement
An operating agreement outlines how your business is structured and managed, as well as including other details.
In New Mexico, LLCs don’t have to maintain an operating agreement, but it’s a good practice to have one. This document will ensure all business owners are on the same page, which, in turn, reduces the risk of future conflict. It details all the rights and responsibilities of the members and managers, a management structure, among other critical details.
Here are a few pointers a well-drafted operating agreement should include:
- The products and services offered by the company
- Every member‘s name and address (and even the managers, if there is one)
- Members’ financial contributions or percentage interest in the company
- Every member’s rights and responsibilities
- Every member’s voting powers
- How profits and losses will be allocated
- Rules for holding meetings and taking votes
- Procedure for admitting new members
- Buyout or buy-sell provisions that outline what happens when a member wants to sell their interest, dies, or becomes disabled
- Dissolution procedure
An operating agreement can also come in handy to preserve your limited liability by proving your business is truly a separate business entity. Moreover, if you’re ever incapacitated, your LLC will continue running as defined in the operating agreement. Without it, state LLC law would’ve governed your company, which isn’t very desirable.
Step 5: Apply for an EIN
An Employer Identification Number or EIN is a nine-digit number assigned to you by the IRS. It helps identify your LLC and tax paperwork, which is why getting an EIN is critical if you have more than one member in your New Mexico LLC or if you hire employees.
To reiterate, an EIN is required to:
- Hire employees
- File and manage federal and state taxes
- Open a business bank account
You can get your New Mexico LLC’s EIN by applying through the IRS website, by mail, or by fax. Again, you can also get an LLC service like ZenBusiness to do this for you if you want to focus on the other parts of your business—it’s your call!
So that’s all you need to know about starting an LLC in New Mexico!
Start looking for good prospective names for your LLC that meet New Mexico guidelines to get the ball rolling. If you’re considering hiring a third party for the other steps—appointing a registered agent, filing Articles of Organization, and applying for an EIN—make sure you check out our best online legal service guide. We‘ve compiled a list of the six best options that offer excellent subscription plans and comprehensive services.