New Mexico limited liability companies are popular with privacy minded individuals, cost-conscious investors, e-commerce companies and those looking to establish holding companies. Over half of new business registrations are limited liability companies due to their asset protection, privacy and tax benefits.
Holding companies and other location independent companies, e.g. e-commerce stores, choose to do business in New Mexico for the privacy and to avoid high fees. Other states which allow privacy, such as Nevada, Wyoming and Delaware, also charge hundreds of dollars in annual fees. Learn more about forming a New Mexico LLC here.
As stated above, a driving reason many form LLCs in New Mexico is due to their privacy. The Secretary of State does not ask for the names of members or managers. Plus, you can use our name for the organizerr and list our address for your mailing address and place of business. This keeps your information out of a public database and makes your LLC anonymous.
Anonymity is an advantage when dealing with creditors, or if you have nosy neighbors and needy family. In each case, your information will be kept private. Learn more about New Mexico LLC Anonymity here.
New Mexico LLCs are popular because the Secretary of State has created a friendly atmosphere for businesses.
Below are just a few ways the Secretary makes doing business easy. The online filings and moderate fees show a commitment to creating a friendly haven for companies:
Your only annual requirement is to have a registered agent in New Mexico. These advantages check off a lot of boxes for small companies and help make make New Mexico LLCs some of the most advantageous for small business owners and privacy minded individuals.
It is common to confuse corporations and LLCs. This is in part because LLCs can be taxed as S-Corporations. This means if you need S-Corp taxation, then you do not also need a corporation. A limited liability company will do. The differences between the two entities have to do with how they are taxed and managed.
Corporate Governance: Corporations carry a lot of baggage in terms of governance. They must have a board of directors, officers and shareholders. There must, at minimum, be a President, Secretary and Treasurer. Frequent meetings are required and minutes must be taken. These minutes must be held at the principal place of business and be accessible to shareholders on demand.
An LLC, by comparison, may only have members, or can also add managers. Only one annual meeting is required.
Taxes: Corporations may only be taxed as C-Corps or S-Corps. An LLC may be taxed as a disregarded entity, partnership, S-Corp or C-Corp. This flexibility means you are more likely to find a tax election which suits you and provides the most savings.
A corporation is infrequently the better choice due to higher taxes and compliance costs. Only in rare situations will the split share classes and defined management structure be anything more than a barrier to doing business. Learn more about incorporating in New Mexico here.
The simplicity of starting an LLC, and the benefits it brings, make LLCs the go to entity for most small businesses. These advantages almost always make LLCs a better fit than sole-proprietorships or corporations:
Reason 1) Corporate Veil: This means the company's creditors cannot pursue the owners personally in case of an accident or lawsuit for example. This very benefit is in the name "Limited Liability" Company.
Reason 2) Lower Taxes: The IRS provides benefits to business owners that sole-props do not receive. You can reduce your income taxes, social security, medicaid and other payments to the government.
Reason 3) More Professional: Clients and vendors have more faith you are serious when you go through the effort of making a company.
The reasons above provide a strong incentive to form an LLC. The resulting asset protection, lower taxes and professionalism outweigh any formation costs. Plus, recent changes to tax laws make setting up an LLC more beneficial than ever.
This site is solely intended for informational purposes. It is beyond the scope of this site to provide any legal or tax advice. Rather, we only intend to make you aware of the forms of ownership available to you. We advise you seek professional advice before embarking upon any course of action.