Are you thinking of starting your own business? If so, you’ll need to choose the right business structure, and the Limited Liability Company (LLC) is a popular option for small businesses in New Mexico.

In this guide, I’ll explain why someone may choose a New Mexico LLC and how to form one without hiring an attorney!

Related: How to start a business in New Mexico

Why choose an LLC?

An LLC is a type of business structure (also called a business entity) that provides the personal asset protection of a corporation with the ease of operation of a sole proprietorship.

Unlike a sole proprietorship or partnership, where the small business owner can be held personally liable if the business faces legal trouble, the LLC is a separate legal entity that protects the business owner’s personal assets. So, if the LLC is sued, the owner’s personal assets are usually protected.

Besides liability protection, the Limited Liability Company provides several other benefits over the sole proprietorship, partnership, and corporation because of the multiple tax options, ease of administration, and management flexibility.

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Steps To Form A New Mexico LLC

Step 1: Choose a Name for the LLC

The first step in forming a New Mexico Limited Liability Company is to make sure the name you want is available.  It’s important to do this research first because the name of each LLC must be distinguishable from other entity names registered in the state of New Mexico. The New Mexico Secretary of State makes it easy to do a New Mexico LLC name search, so you can quickly verify if your LLC name is available. 

In addition to the name being unique, the entity designator (identifier used at the end of the business name) must be either:

• Limited Liability Company
• Limited Company
• Limited Liability Co.
• Limited Co.
• Ltd. Company
• L.L.C.
• LLC
• L.C.
• LC.
• Ltd. Co.
• Ltd Co

A comma may be used after the business name and before the designator.  “Rio Grande Roasters LLC” and “Rio Grand Roasters, LLC” are both acceptable.

If there is a name that you want to use, but you aren’t ready to form the LLC, the Application for Registration of Limited Liability Company Name can be filed with the New Mexico Secretary of State to hold the name for up to 120 days.

Before settling on a name, you may want to see if a domain name (sometimes called a URL) is also available to match your business name and website address.

Step 2: Appoint a New Mexico Registered Agent

Every LLC in New Mexico is required to have a registered agent, which is simply someone with a New Mexico street address who will be responsible for any legal correspondence, for example, if the business is served papers in the event of a lawsuit.

Many LLC owners are their own registered agent, but it is possible to hire a registered agent service like Northwest Registered Agent. The reasons why someone would hire a registered agent service include when the owner lives in another state or if the owner prefers that their personal address not be on public record.

Related: What is a New Mexico registered agent?

Be sure to note that a signed statement from the registered agent accepting the appointment is required before filing the Articles of Organization.

Step 3: File the LLC New Mexico LLC Articles of Organization

The paperwork to officially create an LLC in New Mexico is called the Articles of Organization. To submit the paperwork, you will file online through the New Mexico Secretary of State’s Corporations and Business Service’s website.

Related: How to fill out the New Mexico Articles of Organization

When filling out the Articles of Organization, there are a few sections that can trip people up, so I’ll explain a few of the more confusing ones.

Effective date request: If you want the LLC to start immediately, choose today’s date.  If you want the LLC to start later, enter a date less than 90 days in the future to start.  The main reason for delaying the LLC start date is when the filing is being done close to the end of a calendar year, and the business isn’t going to have any activity until the following year.  By delaying until the following year, they save from having to file one business tax filing.

Period of duration: If you intend the business to exist forever, which most businesses do, leave “Perpetual” selected.  If you have a specific end date in mind (typically used for investment-related businesses), choose how long the LLC will operate after selecting “The period of duration is.”

NAICS: This section is optional and asks for information regarding the activities of the business.  To answer, there is a number called NAICS (North American Industrial Classification System).  This code is a six-digit number that classifies and categorizes the different business industries.  This information is used in reporting statistical data for each of the industries in the U.S.  Remember this number, as you will need it when filing annual tax returns. 

Related: How to find the NAICS number for your business.

If the activities of your business aren’t specifically listed, choose one that is close.  The filing allows for up to three codes to be entered.

Business purpose: Another optional section the New Mexico Secretary of State asks for is some basic information about what the business does.  Some will use a statement that keeps the business purpose open-ended that says, “The LLC will and engage in any lawful business activity for which a Limited Liability Company may be organized in New Mexico.”

Related: How to answer the business purpose statement

Principal place of business: In this section, enter the street address, city, state, and zip code of the initial principal office.  This address can be the LLC’s physical address, or it can be the address where the business records are stored.  You may not use a PO Box for the principal place of business.  This address can be the same as the Registered Agent.

Mailing address: If the mailing address is different from the primary place of business, enter that address in this section.  If the mailing address is the same as the principal place of business, click on the “Same as” box to copy an earlier used address.

Manager / Member Info – This section asks for information regarding the LLC’s managers and members.

• Managers, also known as a Manager-Managed LLC, are people hired by the members to run the LLC, similar to a CEO of a corporation.
• Members are the owner(s) of an LLC.  An LLC managed by the members is known as a Member-Managed LLC.  In this setup, the members have an active involvement in the management of the LLC.

Most LLCs are member-managed, and at least one member must be entered. 

Learn more about the differences between a member-managed and manager-managed LLC.

Organizer information: An LLC organizer is someone involved with the formation of the Articles of Organization.  The Organizer may or may not become an LLC member, such as a mentor, attorney, or accountant, but any of the initial LLC members could be listed as organizers.  Click the “Add Organizer” button and enter the Organizer’s information.

What To Do After Starting A New Mexico LLC

Once the LLC has been formed, there are a few additional steps to take care of. Below is a list of the most common tasks.

Prepare a New Mexico LLC Operating Agreement

The operating agreement is a document that governs the framework of an LLC.  This document covers items like ownership rights, member responsibilities, how profits and losses are distributed, and more.

Most states (New Mexico included) do not require an LLC to have an operating agreement, but it is still worth considering. Without an operating agreement:

• The LLC could be subject to generic state rules that may be detrimental in the event of a lawsuit.
• Member’s personal liability protection may be diminished.
• Members may not fully understand their roles and responsibilities, which could lead to costly disputes in the future.

Related: New Mexico operating agreement template

Obtain an EIN

If the LLC will hire employees or is owned by more than one member, an EIN is required. 

The EIN or Employer Identification Number (also referred to as a Federal Employer Identification Number, FEIN, or Federal Tax ID Number) is a unique 9-digit tax identification number assigned to a business by the Internal Revenue Service (IRS). Similar to a social security number for an individual, the EIN identifies business entities for tax purposes.

Related: How to apply for an EIN

Open an LLC Bank Account

Opening a bank account for your LLC is important for liability protection as the account separates the business’s funds from the member’s personal funds.

Several documents will be needed to open a business bank account, such as:

• A banking resolution is a document that authorizes the members to open a business bank account on behalf of the LLC.
• Copies of the original entity formation paperwork from the state showing the creation of the LLC.
• Driver’s licenses of the members.
• Occasionally the bank will request a New Mexico Certificate of Good Standing to prove the LLC is active and in good standing with the state.

Related: How to open a business bank account for your LLC

Apply for Business Licenses and Permits

Depending on what your business does and where it is located, there will likely be various business licenses and permits needed before starting your business. Some common registrations include:

• Business license: There isn’t a statewide business license, but some cities require businesses to obtain licensing before they can start.
• Professional license: Certain services in New Mexico, such as barbershops, accountants, salons, and others, must be licensed.
• Combined Reporting System Number (CRS): All businesses in New Mexico must register with the Taxation and Revenue Department.

Related: What business licenses are needed in New Mexico?

File the Beneficial Owner Information Report

Beginning in 2024, any individual who owns at least 25% or has “substantial control” of an LLC or corporation in New Mexico or any other state must file the Beneficial Ownership Information (BOI) form with the Financial Crimes Enforcement Network (FinCEN). BOI reports are filed electronically through FinCEN’s website.

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