One question business owners face is whether to incorporate. Some don't because they believe they are too small or the process is too complicated. Fortunately, there is no such thing as too small to form an LLC. Recent tax laws make it beneficial for nearly everyone with the opportunity to operate as a company to do so. Incorporating doesn't need to be difficult either. We can do it for you!
There are several advantages to starting a business. One of the greatest is that the company is considered its own person under the eyes of the law. This allows for flexibility when minimizing taxes and protecting assets. There are 3 ways that you can structure your business:
Sole-proprietorship: It is the simplest and easiest to understand. Basically, you just set up shop and go to work. What you make is what you earn. Every cent passes through your pocket and the IRS demands that you show it that way. The downsides to a sole-prop are unlimited personal liability and higher taxes.
Limited Liability Companies: LLCs have better tax treatment than sole-props and corporations. They also enjoy the corporate veil and limited liability. Learn about forming an LLC here.
Corporations: They can do pretty much anything that a human being can do except for breathe. They have all the same rights that a human does under law. And so any money that the corporation makes belongs to the corporation. This often means double taxation as well. Learn about forming a corporation here.
Why use a business entity? Tax advantages. By setting up a separate entity than yourself you can structure the money so that you minimize how much taxes you payout. Also if somebody decides to sue you, the corporation will take the hit. Remember that you are not your corporation.
The new tax laws make an LLC the easy choice. Just a few thousand dollars in income will provide more than enough tax savings to cover our $199 incorporation cost. Additional savings are like found dollars. Sole-proprietorships also have the downside of unlimited liability. Any accident or debts the company incurs you will be personally liable for. This puts you at constant threat of bankruptcy. The combined tax savings and asset protection make forming an LLC the obvious choice.
Those living outside of New Mexico will prefer an LLC 99% of the time. They are less expensive, anonymous, have fewer filing requirements and fewer corporate formalities. These benefits make a New Mexico LLC a clear favorite for most going into business. We generally advise clients to form an LLC unless they have received specific advice otherwise. Limited liability companies can also be taxed as sub-chapter s-corporations for those needing a specific tax framework.
The incorporation community does business in New Mexico because of its low fees and simple maintenance requirements. Other states over charge AND force you to disclose information about the owners. Then it gets worse. In future years, other states require an annual report - which is really just an excuse to collect another fee. New Mexico does not require its limited liability companies to file an annual report. The reduced fees make New Mexico the cheapest LLC in the United States.
Either you or us may form your New Mexico company. Doing it yourself will save you some money, but it comes at the cost of having to provide your personal information. When new companies are filed, the Secretary asks for the name of the personal handling the paperwork. Only go this route if you do not care about privacy.
Having us form your company comes with a few benefits. The first is that we will list our information rather than yours. This ensures your ownership is private. We charge $199 total, this includes all fees, first year of registered agent service, important documents, free mail forwarding and more. We submit your information to the Secretary on the same day we receive it from you. Follow the relevant links to form an LLC or a corporation.
So you're aware, if you form your company yourself, then your identity will not be kept private, nor will you receive important documents such as an operating agreement.
Perform a business name search here. The secretary does not consider singular and plural usages of a word to be distinguishable. They also do not consider words such as "the" and "and" to be distinguishable. Keep this in mind when choosing a company name!
Use our professional New Mexico registered agent service for $49. You may use the document center for storing corporate documents.
File your articles here. The first step is to create an online account. After registering and validating, you may proceed to complete the required forms. The whole process takes approximately 25 minutes.
Pay your $50 filing fee. The Secretary will usually accept your company within 24 hours of receiving the paperwork.
Congratulations, the Secretary now has your filing! While the filing is done online, it is not processed immediately. The Secretary takes 48-72 hours to review the documents before returning them. You will receive a notification the documents are ready on the Secretary's site. You may use your online document center to store the articles the Secretary provides back. What you receive back on the website are your originals. You may now transact business.
Each state targets a different audience. Which is best is ultimately your choice, though in most cases the simplicity and cost savings of New Mexico win out.
New Mexico: With NM, you enjoy all the benefits of an LLC at a fraction of the usual cost. New Mexico acknowledges the corporate veil and provides the same limited liability as other jurisdictions. What they don't require are high fees or annual reports. In other states, periodic reporting is really just an excuse to collect fees on businesses. New Mexico skips this step, saving you time and money.
Delaware: DE offers hundreds of years of well defined corporate case law to act as precedent. For large corporations such formalities are important. Small businesses do not benefit from these corporate laws however. The only difference most owners will notice are the significantly higher fees that Delaware levies on its companies.
Wyoming: WY is a haven for asset protection. There are a number of debtor friendly laws for those seeking protection from creditors. These protections come with increased cost, however. Wyoming's filing fee is twice that of New Mexico's, plus there is a $50 annual report every year which must be signed by someone. This means if you want true anonymity, then you are stuck paying for an additional nominee service each year.
Nevada: NV is similar to Wyoming in being a haven for asset protection. They have a well developed brand and their Secretary spends considerable sums on advertising the benefits of moving your company to Nevada. They have levered this brand value by increasing fees for eight straight years. This makes Nevada's LLC one of the nation's most expensive to start and maintain.
Which of the above states appeals to you will depend on your situation. You may even select different states for different companies and operations. Large corporations will enjoy the familiarity of Delaware, asset protection specialists will utilize Wyoming, and those wanting a simple and inexpensive solution should choose New Mexico. Learn more about choosing between New Mexico, Nevada, Delaware and Wyoming companies.