How to Incorporate in New Mexico (August 2024 Update)

Incorporating a business in New Mexico can be an affordable and straightforward process that also allows business owners to protect their personal assets. The Land of Enchantment offers business owners privacy protections and tax benefits that make it an appealing state to form an LLC or corporation in. This comprehensive guide will walk you through the entire process step-by-step.

Overview of Incorporating in New Mexico

New Mexico lets business owners form limited liability companies (LLCs) and corporations to register their companies with the state. The primary advantage of incorporating is that it separates your business assets and finances from your personal assets. As a corporation or LLC owner, you cannot be held personally liable if your business is sued or goes into debt beyond the extent of your investment in that company.

Incorporating also unlocks additional credibility, tax savings, and funding opportunities you would not have access to as a sole proprietorship. And in New Mexico specifically, LLCs and corporations safeguard the privacy of business owners by allowing anonymity when filing paperwork.

Other draws of launching in New Mexico include:

• Low business taxes and fees. New Mexico’s corporate tax rate ranges from 4.8% to 5.9%, while the $50 LLC formation fee is one of the most affordable in the U.S.
• Growing population and business-friendly environment. More people and businesses are migrating to New Mexico thanks to an attractive regulatory climate.

Steps to Form an LLC or Corporation in New Mexico

Follow these eight steps to legally create your business structure in New Mexico:

Choose Between an LLC or Corporation

The first decision is whether an LLC or a corporation best fits your business needs. Main differences include:

LLC

• Owned by "members"
• Personal liability protection
• Profits/losses pass through to personal tax returns
• Less paperwork than corporation

Corporation

• Owned by "shareholders"
• Personal liability protection
• Subject to corporate taxes on profits
• More complex than LLC

Check Name Availability

Make sure another business isn't already using your preferred name by searching New Mexico’s business entity database. Then file paperwork ($25 fee for corporations, $20 for LLCs) with the Secretary of State to officially reserve your business name for 120 days.

Appoint a Registered Agent

All New Mexico corporations and LLCs need a registered agent with a physical address in the state (not just a P.O. box) on record to receive important legal documents. You can act as your own registered agent or hire a registered agent service to handle this.

Submit Formation Paperwork

To form an LLC, file your Articles of Organization. Corporations file Articles of Incorporation. The filing fee ranges from $100 to $1,000 depending on the number of shares, and paperwork must be mailed/delivered by hand.

Obtain Licenses & Permits

Research whether your industry needs additional licenses or permits from the state or county/city in which you plan to operate. Common examples include healthcare, construction, alcohol sales, etc.

Get an Employer ID Number (EIN)

Apply for free EIN instantly from the IRS, which you’ll need to open a bank account, pay taxes, and hire employees later on.

Make Organizational Decisions

Draft corporate bylaws or an LLC operating agreement to outline member roles, voting procedures, ownership breakdown, rules for distributions, amendments protocols, and more. Hold an initial meeting to appoint positions and adopt bylaws/operating agreement.

Open a Business Bank Account

Visit a bank or credit union to open a bank account in your LLC or corporation's name using your EIN, filed Articles of Organization/Incorporation, and official ID.

For more information, take a look at our article on the key benefits of business checking accounts.

Additional Steps to Consider

After checking these basics off your list, some next moves include:

• Purchasing business insurance
• Filing for S-corp status (for taxation benefits)
• Creating internal processes and best practices
• Hiring employees
• Developing a growth/funding strategy
• Building out marketing plans to attract customers