How to Qualify as a Foreign Business in New Mexico

Learn the rules for qualifying your LLC to do business in New Mexico.

By , Contributing Author

If you own a business that was created in a state other than New Mexico, you will need to qualify or register that business in New Mexico if you want to do business there. Here is an overview of the rules on how to qualify your foreign (non-New Mexico) limited liability company (LLC) to do business in New Mexico.

What is a Foreign LLC?

For New Mexico purposes, if your LLC is formed in another state, then it is known as a foreign LLC in New Mexico. In other words, foreign doesn't mean from another country. Instead, it means your business was organized under the laws of another state. A domestic LLC, on the other hand, is one that is formed in the state where it is doing business. This is common usage throughout the United States. For example, an LLC formed in Wisconsin is a foreign LLC in Minnesota.

Transacting Business in New Mexico

According to New Mexico's LLC Act, you are required to register your foreign company with the state of New Mexico if you are "transacting business" in New Mexico.What does this mean? Well, like most states, New Mexico's LLC Act does not specifically define the phrase "transacting business" in relation to foreign registrations.

However, state laws governing when foreign companies must collect state sales tax in their state provide some guidance on the issue. Under these laws, a business must have a physical presence in—or nexus with—the state in order to be required to collect state sales tax on sales to that state's residents. Generally speaking, physical presence and nexus are synonymous, and mean having:

  • a warehouse in the state
  • a store in the state
  • an office in the state, or
  • a sales representative in the state.

Certain exceptions may apply and the rules can get more complicated with things like Internet sales. Nevertheless, in general, if you have an office, a store, a warehouse, or employees in another state, you will need to qualify your LLC as a foreign company in that state. For more details, including some possible distinctions between physical presence and nexus, check Nolo's articles on Internet Sales Tax: A 50-State Guide to State Laws.

Certain Activities Are Exempt

Like most states, New Mexico's LLC Act specifies certain activities that do not constitute transacting business in the state. The items listed include:

  • defending or settling a lawsuit
  • dealing with internal business affairs such as holding member or manager meetings
  • having a bank account in the state
  • having an office, agency, or persons in the state for handling your company's own securities
  • selling through independent contractors
  • soliciting or obtaining orders where the orders require acceptance outside the state before they become contracts
  • creating as borrower or lender or acquiring indebtedness or mortgages or other security interests in real or personal property
  • securing or collecting debts
  • investing in or acquiring, in transactions outside New Mexico, royalties and other nonoperating mineral interests; executing division orders, contracts of sale and other instruments incidental to the ownership of such nonoperating mineral interests; and, in general, owning, without more, real or personal property
  • conducting an isolated transaction that is completed within 30 days and is not one in the course of similar, repeated transactions; and
  • transacting business in interstate commerce.

For the actual legal description of each of these items, check Section 53-19-54 of the New Mexico Statutes.

If your LLC's only activity in New Mexico is one or more of the listed items, you should not need to register with the state.

Application for Registration

To register your business in New Mexico, you must file a Foreign Limited Liability Company Application for Registration with the New Mexico Secretary of State (SOS). You can download a copy of the application form from the SOS website.

To complete the form, you must provide more or less the same information that you need to create an LLC in your home state.However, since every state is a little different, there may be items that New Mexico asks for that you did not need to provide when you first organized your LLC.More specifically, for a New Mexico application for registration, you need to provide:

  • the name of your LLC as registered in the state where it was formed
  • if different, the name under which your LLC will do business in New Mexico (you may need a different name if your LLC's original name is already being used by another registered New Mexico business)
  • the state where your LLC is organized
  • the date on which your LLC was organized
  • if required by the state where your LLC was organized, the address of the office your are required maintain in that state
  • if you are not required to maintain an address in the state where your LLC was organized, then the address of your LLC's principal office
  • the name and street address and of your registered agent in New Mexico
  • the names of the persons in who are legally responsible for managing the LLC, and
  • an authorized signature.

You must include a form stating that your New Mexico registered agent accepts appointment. A blank acceptance form is included with the application form available from the SOS.

In addition, you also must include a certificate of good standing or certificate of existence issued by the appropriate agency of the state where your LLC is organized (such as a secretary of state). The certificate may be original or electronic, and must be current within thirty days.

The application filing fee is $100.

What Happens if You Don't Register?

If your LLC does business in New Mexico without being registered, it cannot bring a lawsuit in the state. In addition, the LLC will be liable for fees and penalties.Among other charges, this includes a potential civil penalty of up to $200 for each year business is transacted without being registered.However, not being registered does not invalidate your LLC's contracts or prevent your LLC from defending a lawsuit in New Mexico. Also, a member or manager of the LLC is not liable for the LLC's debts and obligations solely because the company transacted business in New Mexico without registration.

Registering a Foreign Corporation

If your business is organized as a corporation rather than an LLC, the rules and requirements for foreign qualification in New Mexico are similar. You will, however, have to use a different application form, Form FPR,Application for Certificate of Authority. See the New Mexico Secretary of State website for forms and filing instructions.

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