A limited liability company (LLC for short) is a way to legally structure a business. It combines the limited liability of a corporation with the flexibility and lack of formalities provided by a partnership or sole proprietorship. Any business owner who seeks to limit his or her personal liability for business debts and lawsuits should consider forming an LLC.
Here are the steps you need to take to form an LLC in New Mexico.
In New Mexico your LLC's name must contain the words "Limited Liability Company" or "Limited Company," or one of the following abbreviations: "LLC," "LC," "L.L.C.," or "L.C." The word "Limited" may be abbreviated as "Ltd." and the word "Company" abbreviated as "Co."
Your LLC’s name must be distinguishable from the names of other business entities already on file with the New Mexico Secretary of State. Names may be checked for availability on the Secretary of State's business name database.
You may reserve a name for 120 days by filing an application for Reservation of Limited Liability Company Name with the New Mexico Secretary of State. The application must be filed by mail. The filing fee is $20.
Every New Mexico LLC must have an agent for service of process in the state. This is an individual or business entity that agrees to accept legal papers on the LLC’s behalf if it is sued. The registered agent may be a New Mexico resident or a foreign or domestic business entity authorized to do business in New Mexico. The LLC may not be its own registered agent. The registered agent must have a physical street address in New Mexico.
A New Mexico LLC is created by filing Articles of Organization with the New Mexico Secretary of State's office. The articles must include:
The articles must be filed online. The filing fee is $50.
An LLC operating agreement is not required in New Mexico, but is highly advisable. This is an internal document that establishes how your LLC will be run. It sets out the rights and responsibilities of the members and managers, including how the LLC will be managed. It can also help preserve your limited liability by showing that your LLC is truly a separate business entity. In the absence of an operating agreement, state LLC law will govern how your LLC operates. If an operating agreement is created, it need not be filed with the Articles of Organization.
If your LLC has more than one member, it must obtain its own IRS Employer Identification Number (EIN), even if it has no employees. If you form a one-member LLC, you must obtain an EIN for it only if it will have employees or you elect to have it taxed as a corporation instead of a sole proprietorship (disregarded entity). You may obtain an EIN by completing an online EIN application on the IRS website. There is no filing fee.
All of the paperwork and procedural steps to start a limited liability company can be done online using Nolo's Online LLC Formation service.
If you are just starting your business or have already been operating as a sole proprietor, you should consider forming an LLC. LLCs limit an owner's personal liability for business debts and lawsuits and offer a lot of flexibility when it comes to ownership, management, and taxation of the business. To learn more about LLCs and decide if it is the right business structure for you, see What is a Limited Liability Company (LLC)?
It is important to make sure that your LLC's name is distinguishable from the names of other existing businesses on file with the New Mexico Secretary of State. You can conduct a name search for free on the New Mexico SOS website to make sure your proposed name is available.
Filing on your own is often the cheapest option, but completing all of the forms and filing them yourself can be complicated. Hiring a lawyer is another option, but will often cost you hundreds, if not thousands, of dollars in the process. Nolo's Online LLC formation service can complete all of the paperwork and filings for you, with packages starting at just $49.00. To learn more about the costs associated with forming and running an LLC, see How Much Does It Cost to Form an LLC?
New Mexico does not require LLCs to have operating agreements, but it is highly advisable to have one. An operating agreement will help protect your limited liability status, prevent financial and managerial misunderstandings, and ensure that you decide on the rules governing your business instead of state law by default. For more information, see The LLC Operating Agreement.
Depending on the nature of your business, the State of New Mexico may require that you either obtain a license, certification, or registration. For guidance on state and local business permits, check the State of New Mexico business portal website. For more information, see Nolo's article How to Get a Small Business License in New Mexico.
All New Mexico and foreign LLCs authorized to do business in New Mexico must register with the New Mexico Taxation and Revenue Department and obtain a Combined Reporting System (CRS) identification number. You may register and obtain your CRS identification number online or you may file a paper ACD-31015, Application for Business Tax Identification Number, with any local tax office. See the Taxation & Revenue website for more information. There is no fee to register or obtain a CRS identification number. For more information, see Nolo's Article New Mexico LLC Annual Filing Requirements.
New Mexico also requires pass-through entities, including multi-member LLCs, to file a New Mexico Income and Information Return for Pass-Through Entities (PTE). You must file this form with the state before the due date of your federal tax return and deduct and withhold tax from each non-resident owner's share of net income. For more information, see the New Mexico Taxation & Revenue website. This requirement does not apply to single member LLCs, which are treated as sole proprietorships for tax purposes unless they elect different tax treatment.
To do business in New Mexico, all LLCs organized outside of the state must register with the New Mexico Secretary of State. Foreign LLCs must appoint a registered agent for service of process physically located in New Mexico. To register, file a Foreign Limited Liability Company Application for Registration, available on the Secretary of State's website. The application must be filed by mail. The filing fee is $100. The application must be accompanied by a certificate of good standing or similar document from the LLC's home state.
For most formation purposes, a New Mexico single-member LLC is considered the same as a multi-member LLC. The steps to form a single-member LLC in New Mexico are the same as those listed above.
Single-member LLCs do have additional flexibility when it comes to filing a tax return. To learn more, see Nolo’s article, How Single-Member LLCs Pay Federal Income Tax.
If you provide a licensed professional service in New Mexico and want to form an LLC, you will be required to form a professional limited liability company (PLLC). Examples of professional services include architects, attorneys, dentists, certified public accountants, and more. Generally, if you provide a service that requires you to obtain a New Mexico state license before practicing, then you are a professional service. Under New Mexico law, LLCs can be formed to provide professional services. However, only one specific type of service may be provided and all the owners of the LLC must be licensed or registered to perform the professional service for which the LLC was organized.
To learn more about forming a New Mexico PLLC, see our article, How to Form a Professional LLC in New Mexico.
If you reach the point where it is time to close your business and cease all operations, then you will want to properly dissolve your LLC to limit your liability for lawsuits and government fees. Learn about the steps you will need to take.