New Mexico LLC Advantages: Everything You Need to Know
New Mexico LLC advantages are spelled out in the rules governed by code: Chapter 53, Article 19 Limited Liability Companies. 3 min read
With strong asset protection laws, a New Mexico LLC protects members sufficiently, meaning an LLC is a great option for those starting a business who have only considered a partnership or S Corporation as a business structure up until now. An LLC is set up like a traditional corporation (with the same limited liability protection), but have the advantage of providing more flexibility.
In terms of profits, those would be detailed in the articles of organization (more details later), but the best advantage of a New Mexico LLC over a partnership is that you don't need to split the profits 50/50.
In terms of day-to-day operations, an LLC doesn't require formal minutes to be kept, meetings held, or resolutions recorded, making operations easier than those of a corporation.
LLC members avoid double taxation (corporate and individual tax) as businesses losses, profits, and expenses flow through the company, usually to your advantage. However, there are times a corporate tax structure can be better.
What Articles Of Organization Are Required
With minimal information required on LLC's articles of organization, a New Mexico LLC is easy to create.
What you need to form an LLC in New Mexico:
- A business name with an LLC ending
- An organizer
- A registered agent in New Mexico (name and local address)
- A principal office
- LLC duration
By forming the LLC in New Mexico, you won't need anything else, such as licenses or maintenance. With the one time fee of $50 to create the New Mexico LLC and no ongoing annual fees, the start-up and maintenance costs are low.
To proceed with the LLC, there are some other state rules you need to follow:
- Describe your LLC purpose in a written abstract.
- List the names of the LLC members.
LLC members must file all documentation with the secretary of state before they can officially start the business. Note: Anyone can file the articles of organization with the New Mexico Public Regulation Commission.
Once you've completed the initial articles, there is no requirement to compile annual or biennial reports for the state.
FAQs About Funding An LLC In New Mexico
When forming an LLC, the business is usually funded with assets, property, and or cash. One of the codes under Section 53-19-29 of New Mexico Statues relevant to many businesses says, “Property may be owned by a limited liability company, even though the property is not acquired or held in its name.”
The best way to fund an LLC is with your assets or cash, then purchase future assets with money from the LLC. You can make personal contributions to the LLC if there's the need for more funding. If additional funding is put into the business, this is usually going to influence the membership interest for all. Therefore, it's important to use the operating agreement to document everything contributed to the company from the outset.
If there is no business checking account to start with, you can make a contribution legally binding by using a written note about the operating agreement. It is easier to get a separate checking account from the start.
If you have physical assets formally titled and deeded, to record them under the LLC, there are formal processes to go through. If assets are not detailed anywhere, you can make a written note on the operating agreement by assigning the value of the assets in dollars as your initial contribution. Going forward, assets can be added to a New Mexico LLC at any time.
It is important to keep your personal and business assets separate to protect them. If your LLC owns your home and its belongings, that's fine as long as you're renting/leasing these from the LLC itself.
Do New Mexico LLC's Require An EIN?
You don't need an EIN if you want to hold assets in the LLC without making profits from them. But as soon as you begin making money with a New Mexico LLC, you'll need a tax number. The same goes when you start hiring employees or if you have multiple owners/members
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