One question business owners face is whether to incorporate or to operate as a sole-proprietorship. Some business owners believe the incorporation process is too complicated or they are too small to create a company. There is no such thing as too small to form an LLC in New Mexico.
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!
The three most popular ways of doing business in New Mexico are:
Sole-proprietorship (not recommended): It is the simplest and easiest to understand. You just set up shop and go to work with everything in your personal name. 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. They are prized for their simplicity compared to corporations, and offer much better protections that operating in your personal name. Learn about forming an LLC here.
Corporations: These are the most complex, with split share classes mandated meetings, shareholder votes and a board of directors. 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.
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. By setting up a separate entity than yourself you can structure the money so that you minimize the taxes you pay. Also if somebody decides to sue you, the company will be held liable rather than you. Remember that you are not your company.
Sole-proprietorships have the downside of unlimited liability. Any accidents or debts that are incurred YOU will be personally liable for. This puts you at constant threat of bankruptcy. Liability protections aside, The new tax laws make setting up an LLC an easy choice. Just a few thousand dollars in income often provide more than enough tax savings to cover our $199 incorporation cost. Additional savings are like found dollars. The combined tax savings and asset protection make forming an LLC the obvious choice.
Unlike, corporations, limited liability companies have reduced formalities. There is no board to staff, treasurer to appoint, nor quarterly meetings with minutes. This simplicity appeals to many. For these reasons, those living outside of New Mexico will prefer a majority 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 s-corp taxation.
Corporations are generally only advisable if there is a need for multiple share classes, or to have a board of directors overseeing officers. If you are the only owner these extra bureaucratic steps are really just a needless hassle.
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 lack of annual fees make New Mexico the cheapest anonymous 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. Find our guide for incorporating in New Mexico below.
Choosing one of our incorporation packages 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 New Mexico Secretary of State fees, your 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. We don't charge any "expedite" fees, because we believe in doing things quickly for everyone. There is no sense in making you wait two weeks for your company when you can have things done immediately. 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 $75. 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 48-72 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 depends upon your goals, though in our experience the simplicity and cost savings of New Mexico win out in the end. Learn more about choosing between incorporating in New Mexico, Nevada, Wyoming and Delaware here.
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.