Starting a Corporation in New Mexico | What You Need to Know

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Start a Corporation in New Mexico

In New Mexico, starting a corporation can benefit entrepreneurs looking to establish a separate legal entity for their business. Incorporating your business provides liability protection for its owners and offers potential tax benefits and a professional image. This comprehensive guide will walk you through Starting a Corporation in New Mexico, from choosing a corporate name to fulfilling ongoing compliance requirements. Some people consider starting a corporation since it has advantages and benefits rather than Starting an LLC in New Mexico.

Webinarcare Editorial Team will help you gain knowledge in starting a corporation with thorough research and market study. It would be best to cross-check all the factors in this article before forming a corporation.

How to Start a Corporation in New Mexico

What is a Corporation in New Mexico?

A corporation in New Mexico is a business organization recognized as a separate legal entity from its owners, also known as shareholders. When a corporation is formed, shareholders invest capital by purchasing shares of stock and, in return, become partial company owners. The corporation is managed by a board of directors elected by the shareholders to oversee the company’s operations and make important decisions. Corporations in New Mexico are required to have at least Three directors. One of the main advantages of a corporation in New Mexico is that it provides limited liability protection to its shareholders, meaning their assets are not at risk if the corporation incurs debt or is legally sued.

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Common Types of Corporations

Before you start with a corporation, you should know what type of corporation you will form. There are several different forms of corporations you can take into consideration, depending on your corporation’s objectives and ownership structure.

C-Corporation

C-Corporation is the most known type of incorporation. They have almost all corporate distinguishing characteristics. Profits are distributed to corporate owners who are taxed at an individual level. The corporation is taxed similarly to a business unit.

S-Corporation

S-Corporation in New Mexico is set up similarly to a C-corporation but has different tax implications and owner limits. An S-Corporation has no more than 100 stockholders and is not taxed separately. These business units must also file paperwork with the Internal Revenue Service (IRS) to obtain their status.

Nonprofit Corporation

Religious, educational, and charity institutions frequently use nonprofit businesses to run their operations without making a profit. Thus, a nonprofit corporation is exempt from paying taxes. The nonprofit organization’s gifts, contributions, or cash are reinvested in the company to fund its growth, future endeavors, or operations.

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How to Start a Corporation in New Mexico

To start a corporation in New Mexico, you must follow the below steps that, include choosing a corporate name, hiring a Registered Agent, appointing directors, filing for Articles of Incorporation, creating corporate bylaws, holding the initial board of directors, issuing stock, obtaining required licenses and permits, registering with state tax agencies, and annual reporting and ongoing compliance. All these steps are basic ones. It can be changed depending on the type of corporation you form and the nature of your business.

Step 1: Choosing a Corporate Name

The first step in starting a corporation is choosing an available name that complies with New Mexico naming rules. Most states require that the name of a corporation be distinguishable from other registered business names and include a corporate designator such as “Corporation,” “Incorporated,” “Company,” or an abbreviation thereof.

Here are some guidelines you must follow while naming your corporation in New Mexico-

  • Your business name must contain entity identifiers, such as “Incorporated,” “Limited,” “Corporation,” or “Company,” or an abbreviation, such as “Inc.,” “Co.,” or “Ltd.”
  • Exclude any words in your business name, such as “Trust,” “Bank,” “Credit Union,” or “Trustee,” or words related to a government agency, such as “FBI,” “State Department,” or “Treasury.”

To check the availability of your desired corporate name, you can search the New Mexico Secretary of State‘s business name database and Business Name Search in New Mexico. If the name is available, you may choose to reserve it for a specific period of 120 days by filing a name reservation application and paying the online name reservation fee of $20 and mail name reservation fee of $20. If your corporation plans to operate under a name other than its legal name, you may also need to register a fictitious or “doing business as” (DBA) name.

The DBA filing can be done by DBA filing is not required, which costs around $0. In addition, the DBA’s validity in New Mexico is N/A, which you can file in New Mexico Secretary of State.

You can check out How to File a DBA in New Mexico for clearer understanding.

Step 2: Hire a Registered Agent

Hiring a Registered Agent is essential in starting a corporation. Registered Agent is a person or company responsible for receiving important legal documents, tax notices, and other correspondence on behalf of your corporation. They ensure that your corporation remains compliant with state regulations and requirements. There are New Mexico Registered Agent Services to check in forming New Mexico Corporation. We reviewed some of the best-registered agent services and provided features as an add-on with their packages.

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Step 3: Appointing Directors

Corporations in New Mexico are required to have at least Three directors, though some states may require more. Directors are responsible for overseeing the corporation’s management and making major decisions on behalf of the company. In New Mexico, directors must be at least 18 years old and do not need to be state residents.

When appointing directors, it is essential to consider individuals who are knowledgeable, trustworthy, and capable of making sound business decisions. Maintaining a record of appointed directors, including their names, addresses, and terms of service, is also a good idea.

Step 4: Preparing and Filing Articles of Incorporation

After you appoint the initial board of directors in your New Mexico corporation, the next step is to write and file a Articles of Incorporation. In writing, the New Mexico Articles of Incorporation, the corporation name, principal place of business, the purpose of business, Registered Agent contact information, and the names and addresses of incorporators and initial board members, should be written.

To officially form your New Mexico corporation, you must prepare and file Articles of Incorporation with the New Mexico Secretary of State. The Articles of Incorporation is a legal document that outlines essential information about your corporation, such as its name, address, purpose, and details about its stock.

The specific requirements for Articles of Incorporation vary by state, but generally, the document must include the following:

  • The corporate name
  • The purpose of the corporation
  • The name and address of the registered agent
  • The names and addresses of the initial directors
  • The number of authorized shares and their par value
  • The name and address of the incorporator(s)

Once the Articles of Incorporation are complete, please submit them to the New Mexico Secretary of State’s office, along with the required filing fee. Fees vary by state, but in New Mexico, the Articles of Incorporation filing fee costs around Minimum $100 to maximum $1000 for filing online or by mai. It depends on the amount of shares.. It is crucial to provide accurate and complete information on this document, as errors or omissions may result in delays or rejection of your filing.

  • Online Filing: Create an account/Log in to the SOS site, get the online form, fill it, and submit online
  • Offline filing: Send the form by mail to Business Services Division, 325 Don Gaspar, Suite 300 Santa Fe, NM 87501.

Step 5: Creating Corporate Bylaws

Now you are done filing Articles of Incorporation in New Mexico, the next step is to draft corporate bylaws. While not always required by law, creating corporate bylaws is essential in establishing New Mexico corporation. Bylaws are the internal rules and regulations that govern the corporation’s operations and management. They outline the rights and responsibilities of directors, officers, and shareholders and provide guidelines for holding meetings and making decisions.

Key provisions to include in your corporate bylaws may include:

  • The corporation’s purpose and principal place of business
  • The roles and responsibilities of directors, officers, and shareholders
  • The process for appointing and removing directors and officers
  • The procedures for holding annual and special meetings
  • The methods for amending the bylaws and Articles of Incorporation
  • The procedures for issuing stock and maintaining shareholder records

Once the bylaws are drafted, they must be adopted by the corporation’s board of directors. Keeping a copy of the bylaws with your corporate records and updating them to reflect changes in the corporation or applicable laws is essential.

Step 6: Holding the Initial Board of Directors Meeting

The initial board of directors meeting is a crucial milestone for your New Mexico corporation. During this meeting, the directors will adopt the corporate bylaws, elect officers, and make other key decisions to set the foundation for the corporation’s operations.

The agenda for the initial board meeting may include the following:

  • Adopting the corporate bylaws
  • Ratifying any pre-incorporation actions taken by the incorporator(s)
  • Electing corporate officers (e.g., president, vice president, secretary, treasurer)
  • Designating a corporate bank account
  • Authorizing the issuance of stock
  • Approving necessary licenses, permits, and tax registrations

It is essential to keep detailed minutes of the initial board meeting, documenting the decisions made and actions taken. These minutes should be stored with your corporate records.

Step 7: Issuing Stock

Corporations in New Mexico are required to issue stock to their owners, also known as shareholders. When preparing to issue stock, you must determine the number of authorized shares and their par value, as outlined in your Articles of Incorporation. You may choose to issue different classes of stock, each with its rights and privileges, such as voting rights and dividend preferences.

The process for issuing stock typically involves the board of directors approving a stock issuance resolution, determining the price per share, and recording the issuance in the corporation’s stock ledger. Maintaining accurate and up-to-date records of all stock transactions, including transfers and cancellations, is crucial to ensure proper ownership tracking and compliance with securities laws.

Step 8: Obtaining Required Licenses and Permits

Depending on the nature of your corporation’s activities and location, you may need to obtain various licenses and permits to operate legally. These may include federal, state, and local requirements, such as:

  • A Federal Employer Identification Number (EIN) for tax reporting and employee withholding purposes.
  • State sales and use tax registration, if your corporation sells taxable goods or services
  • Professional or occupational licenses for specific industries (e.g., healthcare, construction, food service)
  • New Mexico Business Licenses, zoning permits, and health department approvals

Researching and obtaining all required New Mexico licenses and permits before commencing operations and maintaining compliance with any ongoing renewal or reporting requirements is essential.

Step 10: Registering with State Tax Agencies

In addition to obtaining licenses and permits, your New Mexico corporation may also need to register with various tax agencies. This may include registering for sales and use tax, obtaining an Employer Identification Number (EIN) in New Mexico for payroll tax purposes, and filing state income tax and franchise tax returns.

An EIN will serve as the tax ID for your New Mexico corporation. EIN can be obtained from the Internal Revenue Service (IRS). It is a 9-digit number similar to Social Security Number. EIN, however, is distinct from SSN. It is only used for business-related activities, particularly for submitting general taxes. The form must be completed and uploaded to the IRS website.

The application of an EIN in New Mexico can be through the following:

  • Apply Online- The online EIN application is the preferred method for customers to apply for and obtain an EIN.
  • Apply by Fax- Taxpayers can fax the completed Form SS-4 application to the appropriate fax number), after ensuring that Form SS-4 contains all of the required information.
  • Apply by Mail- The EIN application Form SS-4 can be filed via mail. The processing time frame to receive the mail is four weeks.
  • Apply by Telephone-International Applicants – International applicants may call 267-941-1099 (not a toll-free number) from 6 a.m. to 11 p.m. (Eastern Time) Monday through Friday to obtain their EIN.

Each state has tax requirements, so consult a tax professional or New Mexico Taxation and Revenue Department for guidance on your specific obligations.

Step 11: Annual Reporting and Ongoing Compliance

Once your New Mexico corporation is up and running, you must fulfill ongoing reporting and compliance requirements to maintain good standing. This may include filing Annual Report with the New Mexico Secretary of State, updating your corporate records to reflect changes in directors or officers, and staying current on any required licenses or permits.

In addition, it is essential to stay informed about changes in corporate laws and regulations that may impact your business and to seek professional advice when needed.

Paying Your Taxes in New Mexico

Even if you have established your corporation in New Mexico, pay your taxes and keep everything up to date so you won’t pay any penalty. Unlike an LLC, there is a corporate tax that every corporation in New Mexico has to pay. On the other hand, they must pay income taxes based on their business income. Some other types of taxes in New Mexico are sales tax, franchise tax (not applicable to all the states), and other state taxes.

Cost of Forming a Corporation in New Mexico

In forming a corporation in New Mexico, a filing and Annual fee must be paid. Without it, your corporation won’t operate. A corporation’s initial filing fee may vary from state to state. However, in New Mexico, it costs Minimum $100 to maximum $1000 for filing online or by mai. It depends on the amount of shares.. The corporation in New Mexico also has to file an Annual Report (though it might not be mandatory, it is recommended to file one). Ensure you comply with all the necessary fees and costs so your corporation will run successfully and smoothly.

FAQs

What is a corporation and how is it different from other business entities in New Mexico?
A corporation is a legal entity separate from its owners, which means it can own property and sue or be sued. It’s different from other business entities, such as sole proprietorships or partnerships, because owners are not personally responsible for its debts.
How do I register a corporation in New Mexico?
To register a corporation in New Mexico, you must file Articles of Incorporation with the New Mexico Secretary of State.
What information do I need to include in the Articles of Incorporation?
In the Articles of Incorporation, you’ll need to include basic information about the corporation, such as its name, purpose, and registered agent.
What is a registered agent and why do I need one to start a corporation in New Mexico?
A registered agent is an individual or company responsible for receiving legal documents on behalf of the corporation. You need one to start a corporation in New Mexico because they’ll receive all important documents, such as notices of lawsuits or government correspondence.
How do I choose a name for my corporation in New Mexico?
Your corporation’s name must be different from any business registered in New Mexico. You can check current corporation names on the New Mexico Secretary of State’s website.
Can I reserve a name for my corporation before registering it in New Mexico?
Yes, you can. The New Mexico Secretary of State allows you to reserve a name for up to 120 days by filing a Name Reservation Request.
How much does it cost to register a corporation in New Mexico?
It costs $100 to file Articles of Incorporation with the New Mexico Secretary of State.
Do I need to have a Board of Directors to start a corporation in New Mexico?
No, you’re not required to have a Board of Directors to start a corporation in New Mexico.
Can a corporation in New Mexico have just one shareholder?
Yes, New Mexico allows corporations to have just one shareholder.
Can a corporation in New Mexico have non-resident shareholders?
Yes, a corporation in New Mexico can have non-resident shareholders.
How many directors do I need to have on the Board of Directors of my New Mexico corporation?
You must have at least one director on the Board of Directors of your New Mexico corporation.
Can I appoint myself as the registered agent for my New Mexico corporation?
Yes, you can appoint yourself as the registered agent for your New Mexico corporation as long as you’re a resident of New Mexico.
Do I need to file an annual report for my corporation in New Mexico?
Yes, you’re required to file an annual report for your corporation in New Mexico with the Secretary of State.
What is the deadline for filing an annual report for my corporation in New Mexico?
The deadline for filing an annual report for your corporation in New Mexico is the 15th of the third month after the end of your corporation’s fiscal year.
Should I schedule an appointment to file my corporation’s paperwork with the New Mexico Secretary of State’s office?
No, the New Mexico Secretary of State’s office doesn’t require appointments for filings on corporations.
Can I file for expedited processing of my corporation’s paperwork in New Mexico?
Yes, for an additional fee attached to the normal fee.
How can I dissolve my corporation in New Mexico?
You can dissolve your corporation in New Mexico by filing Articles of Dissolution with the New Mexico Secretary of State.
Can I change the name or purpose of my New Mexico corporation after I’ve registered it?
Yes, you can change the name or purpose of your New Mexico corporation by filing Articles of Amendment with the New Mexico Secretary of State.
How long does it take to receive my certificate of incorporation after filing Articles in New Mexico?
There’s no exact timetable for delivery as it differs for cases circumstances but usually it take about 12-15 working days after your approved filings are received.
What taxes will my New Mexico corporation be subject to?
Your New Mexico corporation may be subject to state corporate income taxes and other local taxes.
Do I need to register for state taxes in New Mexico for my corporation?
Yes, you need to obtain a tax identification number and register for state taxes in New Mexico for your corporation.
What is the New Mexico franchise tax and does my corporation have to pay it?
The New Mexico franchise tax is a tax on a corporation’s income. And all corporations operating in New Mexico, must pay a franchise tax.
Can my New Mexico corporation elect to be taxed as an S Corporation?
Yes, your New Mexico corporation can elect to be taxed as an S Corporation with the IRS.
Do I need to comply with any specific New Mexico regulations to operate my corporation in the state?
Yes, your corporation will need to obtain any necessary licenses, what permit you need are unique depending upon the nature of your corporation, and also needs to adhere to any labor and employment laws that apply.
Can I operate my New Mexico corporation from another state or country?
Yes, you can operate your New Mexico corporation from another state or country. However, you daft to getting a registered agent to represent you in New Mexico and you also daft to adjusting certain rules dealing with transactions and associates of the corporation.
Should I hire an attorney to help me start my New Mexico corporation?
While is it beneficial consult with attorney when forming a corporation for any legal advise, for filings you’re not required join to with an attorney.
Can I convert my sole proprietorship into a New Mexico corporation?
Yes, you can convert your sole proprietorship into a New Mexico corporation by filing Articles of Incorporation.
Can I convert my New Mexico corporation into a different business entity, such as an LLC?
Yes, you can convert your New Mexico corporation into a different business entity through a process know as “statutory entity conversion” which changes the type of the entity to an LLC.
If I have questions about starting a corporation in New Mexico, who can I contact?
You can contact the New Mexico Secretary of State’s office or a qualified business attorney for answers about starting a corporation in New Mexico.
What is the process for starting a corporation in New Mexico?
To start a corporation in New Mexico, you must file Articles of Incorporation with the New Mexico Secretary of State.
What is the fee for filing Articles of Incorporation in New Mexico?
The filing fee for Articles of Incorporation in New Mexico is $100.
Can I file Articles of Incorporation online in New Mexico?
Yes, you can file Articles of Incorporation online in New Mexico on the Secretary of State’s website.
What information is required on the Articles of Incorporation in New Mexico?
The Articles of Incorporation in New Mexico must include the name of the corporation, the purpose of the corporation, the duration of the corporation, the address of the initial registered office, and the name and address of the incorporator.
Do I need to appoint a registered agent for my corporation in New Mexico?
Yes, a registered agent is required for a corporation in New Mexico, and their address must be included on the Articles of Incorporation.
Can I be my own registered agent in New Mexico?
Yes, you can be your corporation’s registered agent in New Mexico, as long as you have a physical address in the state.
How do I obtain a business license in New Mexico?
Business licenses are issued by the city or county in which the business is located. Contact your local government offices for specific instructions.
What taxes does my corporation need to pay in New Mexico?
Corporations in New Mexico are responsible for paying state and federal income tax, as well as any applicable local taxes.
What is the New Mexico corporate income tax rate?
The corporate income tax rate in New Mexico is 5.9 percent.
Does New Mexico require corporations to file an annual report?
Yes, corporations in New Mexico are required to file an annual report with the Secretary of State.
Is there a deadline for filing the annual report in New Mexico?
Yes, the annual report in New Mexico is due on the 15th day of the third month after the corporation’s fiscal year end.
What happens if I miss the deadline for filing my corporation’s annual report in New Mexico?
If you miss the deadline for filing the annual report in New Mexico, you will be charged a late fee and may risk losing your corporation’s good standing status.
Can I file the annual report online in New Mexico?
Yes, you can file the annual report online in New Mexico on the Secretary of State’s website.
What is the penalty for not having a registered agent in New Mexico?
If a corporation does not have a registered agent in New Mexico, they will lose their good standing status and may risk administrative dissolution.
How long does the process of incorporating a business take in New Mexico?
The process of incorporating a business in New Mexico typically takes around 5-7 days.
Can I form a corporation in New Mexico if I live outside the state?
Yes, you can form a corporation in New Mexico even if you do not reside in the state.
Do I need to have a physical presence in New Mexico to incorporate a business there?
No, you do not need to have a physical presence in New Mexico to incorporate a business there.
Can I change my corporation’s name in New Mexico?
Yes, you can change your corporation’s name in New Mexico by filing a Certificate of Amendment with the Secretary of State.
How do I dissolve my corporation in New Mexico?
You can dissolve your corporation in New Mexico by filing a Certificate of Dissolution with the Secretary of State.
What happens to my corporation if I do not file the annual report in New Mexico?
If you do not file the annual report in New Mexico, your corporation may lose its good standing status and may risk administrative dissolution.
Can I convert my corporation to an LLC in New Mexico?
Yes, you can convert your corporation to an LLC in New Mexico by filing a Certificate of Conversion with the Secretary of State.
Do I need to file for a federal tax ID number in New Mexico?
Yes, you need to file for a federal tax ID number in New Mexico in order to conduct business legally.
How do I obtain a federal tax ID number in New Mexico?
You can obtain a federal tax ID number in New Mexico by applying online with the IRS.
Can I operate multiple businesses under one corporation in New Mexico?
Yes, you can operate multiple businesses under one corporation in New Mexico as long as they share similar purposes and activities.
Can I register a trade name for my corporation in New Mexico?
Yes, you can register a trade name for your corporation in New Mexico by filing a Certificate of Registration of Trademark or Service Mark.
Are there any annual fees or expenses associated with maintaining a corporation in New Mexico?
Yes, there are annual fees associated with maintaining a corporation in New Mexico, including the annual report fee and ongoing filing fees for any changes to the corporation.
Can a corporation in New Mexico be owned by individuals who are not US citizens?
Yes, a corporation in New Mexico can be owned by individuals who are not US citizens, as long as they meet other requirements for forming a corporation.
Can I withdraw money from my corporation in New Mexico?
Yes, you can withdraw money from your corporation in New Mexico as long as you follow proper financial procedures and maintain accurate accounting records.

Also Read

How to Save Money While Forming Your New Mexico Corporation

One way to save money while forming your New Mexico corporation is to do as much of the work yourself as possible. Rather than hiring expensive lawyers or consultants to handle the paperwork and legal aspects of setting up your corporation, consider doing some of the legwork on your own. There are many resources available online that can help guide you through the process, from filling out the necessary forms to understanding the legal requirements for forming a corporation in New Mexico.

Another way to save money is to shop around for the best rates on the services you do need to outsource. Look for affordable legal services or consultants who specialize in setting up corporations. By taking the time to compare prices and services, you can potentially save a significant amount of money in the long run.

Additionally, consider forming a partnership or seeking out investors to help cover the costs associated with starting your corporation. By pooling resources with others who share your vision for the business, you can spread out the financial burden and save money on start-up costs.

It’s also important to carefully consider the structure of your corporation to ensure that you are minimizing costs. For example, choosing a simpler corporate structure, such as an LLC, may help reduce administrative and legal expenses. Additionally, consider the tax implications of your chosen corporate structure and aim to minimize your tax liability from the outset.

When it comes to securing capital for your new corporation, explore different financing options that can help save you money in the long run. Consider crowdfunding, small business loans, or venture capital as potential sources of funding that can help you get your business off the ground without breaking the bank.

Finally, be sure to create a detailed budget and stick to it as closely as possible. By carefully managing your finances from the outset, you can avoid overspending and ensure that your new corporation remains financially stable.

In conclusion, forming a new corporation in New Mexico can be a costly endeavor, but by taking a strategic approach and considering the various ways to save money, you can minimize your expenses and set your business up for success. With careful planning and creative thinking, you can create a corporation that is financially sound and well-positioned for growth in the long term.

Conclusion

Starting a corporation in New Mexico involves several critical steps, from choosing a corporate name to fulfilling ongoing compliance requirements. Following the steps outlined in this guide and seeking professional advice when needed, you can successfully establish your New Mexico corporation and enjoy the benefits of limited liability, potential tax savings, and a professional business image.

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