How to Dissolve a Business in New Mexico | Essential Steps

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Dissolve New Mexico LLC

Deciding to dissolve a Limited Liability Company can be difficult for business owners. Still, it is sometimes necessary due to changes in the business landscape, financial challenges, or personal reasons. Dissolving a business requires specific steps and regulations to complete the process correctly and legally. This comprehensive guide will teach you how to dissolve a business in New Mexico.

Webinarcare Editorial Team will help you easily dissolve your business. You must be guided by all the factors gathered in this article.

How to Dissolve a Business in New Mexico

If you are starting an LLC in New Mexico, having an operating agreement is one of the key requirements in dissolving a business. Before starting the legal paperwork, there are a few things to remember. Initially, confirm that all LLC members agree with closing the business. Once everyone is ready, voting should be used to document everyone’s assent. They must vote in favor of the dissolution before the legal procedure may begin. The procedures for the dissolution are listed below.

How to Dissolve a Business in New Mexico

Dissolving a business in New Mexico requires following specific steps to ensure a smooth and legally compliant process. The process usually includes the following steps:

Step 1: Make the Decision

Before dissolving your business, ensure this decision is right for your New Mexico business. Consider discussing the decision with your business partners, members, or legal counsel to weigh the pros and cons and determine if dissolving the business is best.

Step 2: Hold a Formal Vote

Once you’ve decided to dissolve your New Mexico business, you’ll need to hold a formal vote among the members to approve the dissolution. This step is important because it ensures that all members know and agree to the decision to dissolve the business.

To hold a formal vote:

  • Review your New Mexico Operating Agreement to determine the required voting procedures, such as the percentage of affirmative votes needed for approval.
  • Notify all New Mexico members of the upcoming vote and give them sufficient time to review the matter and make an informed decision.
  • Conduct the vote according to the procedures outlined in your operating agreement.
  • Record the vote results in your business meeting minutes or a written resolution.

If most members approve the dissolution, you can proceed with the dissolution process.

Get a Professional Service

It’s important to get legal assistance when dissolving an LLC. With that, you must have a Registered Agent. Ensure that the Registered Agent you choose is qualified and legal since they will file the Article of Dissolution for your LLC. We reviewed the Best Registered Agent Services in New Mexico for you to check out.

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Step 3: Settle the Outstanding Debts and Liabilities

You must settle all outstanding debts and liabilities before dissolving your New Mexico business. This includes paying off loans, settling pending lawsuits, paying owed taxes, and fulfilling any remaining contractual obligations. You can inform your New Mexico Business Attorney to ensure it is settled.

To settle your New Mexico business’ debts and liabilities:

  • Review your business’ financial records to identify all outstanding debts and liabilities.
  • Contact creditors, lenders, and other parties to whom your business owes money or obligations, and arrange for payment or settlement.
  • If your business does not have sufficient funds or assets to cover all outstanding debts and liabilities, consult with legal counsel to determine the best course of action for settling these obligations.

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Step 4: Distribute the Remaining Assets to Members

Once all debts and liabilities have been settled, you can distribute any remaining assets to the business members. Your operating agreement should do this or, if no such agreement exists, in proportion to each member’s ownership interest in the business.

To distribute assets:

  • Determine the fair market value of the remaining assets, such as real estate, equipment, or inventory. 
  • Calculate each member’s ownership interest in the business based on the operating agreement or their initial capital contribution.
  • Distribute the assets to each member according to their ownership interest.
  • Keep detailed records of all asset distributions for tax and legal purposes.

Step 5: File the Articles of Dissolution

After settling debts and distributing assets, you’ll need to file the Articles of Dissolution with the New Mexico Secretary of State to dissolve your New Mexico business officially. This document provides the state with notice that your business is ceasing operations and will no longer conduct business.

To file the Articles of Dissolution:

  1. Obtain the appropriate form from the New Mexico Secretary of State‘s website. Access the New Mexico Secretary of State’s website and navigate to the Corporations and Business Services section for the required forms and instructions.
  2. Fill out the Articles of Dissolution Form with the required information, including your New Mexico business name, the date of dissolution, and any other necessary details.
  3. Pay the filing fee of $50 in the New Mexico Secretary of State’s office.
  4. Submit the completed form and payment to the New Mexico Secretary of State’s office, either by mail or online, depending on your New Mexico’s filing options.

Once your Articles of Dissolution have been processed and approved, your New Mexico business will officially be dissolved.

Mail to: 
New Mexico Secretary of State
Business Services Division, 325 Don Gaspar, Suite 300 Santa Fe, NM 87501

Filling Fee:
$50

Step 6: Notify the IRS and Government Agencies

After dissolving your business with the New Mexico Secretary of State, you’ll need to notify the Internal Revenue Service (IRS) and other New Mexico government agencies of the dissolution. This is important to ensure your business complies with tax laws and other regulations.

To notify the IRS of the dissolution:

  1. File your final federal tax return using Form 1065 and check the box indicating that it is the final return for your business.
  2. Cancel your Employer Identification Number (EIN) in New Mexico by mailing a letter to the IRS at the address where you filed your tax return. Include your EIN, business name, and reason for cancellation in the letter.
  3. Update your New Mexico business status with any other relevant government agencies, such as the New Mexico Department of Revenue, Department of Labor, and local licensing and permitting offices.

Step 7: Cancel Licenses, Permits, and Insurance Policies

To fully dissolve your New Mexico business, you’ll need to cancel any business licenses, permits, and insurance policies associated with your business. This may include New Mexico Business Licenses, professional licenses, sales tax permits, and any other permits required for your industry.

You must contact the issuing agency to cancel your licenses and permits and follow their specific cancellation procedures. You should also contact your insurance provider to cancel any remaining business insurance policies. With the cancellation of the mentioned licenses, permits, and Business Insurances in New Mexico, you also need to remove a Registered Agent since he won’t be able to continue filing documents for your business unless you are the Registered Agent of your business. 

Step 8: Maintain Records of the Dissolution Process

For legal and tax purposes, it’s important to maintain detailed records of the steps taken to dissolve your New Mexico business. This includes documentation of the formal vote to dissolve the business, debt settlements, asset distribution records, and copies of filed state and federal tax returns.

Keep these records for at least seven years, as they may be needed in the event of an IRS audit or other legal issues arising from the dissolution.

Cost of Dissolving an LLC in New Mexico

The cost of dissolving an LLC in New Mexico can vary based upon various factors. The New Mexico Articles of the Dissolution filing fee cost $50. Other costs include any outstanding taxes or debts the business owes and potential costs for settling business contracts or selling business assets.

It’s also important to factor in professional fees, such as if you hire an attorney or accountant to assist with the dissolution process. After the LLC is dissolved, the remaining company assets are divided among the members. The exact breakdown of these costs can often be complex and will depend on the specific circumstances of the LLC, so consulting with a legal or financial advisor can be helpful.

Reasons Why an LLC in New Mexico Dissolves

There are numerous reasons why an LLC in New Mexico dissolves, and these reasons could impact other LLCs. It is best to understand the why’s and how to deal with it rather than knowing that your LLC may dissolve sooner or later. Here is the list of possible reasons why an LLC dissolves.

  1. Expired Duration: In New Mexico, an LLC will automatically dissolve if it reaches the end of its defined duration stated in the Articles of Organization.
  2. Member Vote: An LLC may dissolve in New Mexico if the members vote for dissolution. Usually, the LLC Operating Agreement outlines the percentage of member votes required to dissolve the LLC.
  3. Judicial Dissolution: A court in New Mexico may order the dissolution of an LLC if it is in the best interests of the members, especially in cases of fraud, illegal activities, or oppressive behavior.
  4. Bankruptcy: If the LLC becomes insolvent and cannot pay its debts, it may be forced into bankruptcy. This usually leads to the dissolution of the LLC.
  5. Non-compliance: If the LLC does not comply with state laws or fails to meet legal requirements, such as filing annual reports or paying taxes, the state may forcibly dissolve the LLC.
  6. Merger or Consolidation: If the LLC in New Mexico merges or consolidates with another company and the LLC is not the surviving entity, it will be dissolved.
  7. Death or Withdrawal of a Member: Unless specified otherwise in the Operating Agreement, the death, withdrawal, bankruptcy, or incompetence of a member may cause the LLC to dissolve.

Please note that the process for dissolution typically includes settling all business debts, distributing any remaining assets among the members, and filing a formal notice of dissolution with the New Mexico Secretary of State.

After the New Mexico LLC Dissolution

Once your New Mexico business has been dissolved, it typically cannot be reinstated or “taken back” after a few years. Instead, you would need to form a new LLC in New Mexico if you wish to operate a business under a limited liability company structure again.

To create a new New Mexico LLC, you would need to follow the standard formation process, which generally includes the following:

  • Choosing a Unique Business Name: Ensure that another business does not already use the name you choose in New Mexico and complies with state-specific naming requirements.
  • Appointing a Registered Agent: Designate a Registered Agent who will be responsible for receiving legal correspondence on behalf of your LLC.
  • Filing Articles of Organization: Submit the Articles of Organization with the New Mexico Secretary of State’s office, along with the required filing fee.
  • Creating an Operating Agreement: Draft an agreement outlining the rules and regulations governing your new LLC, including member roles, ownership percentages, and management structure.
  • Obtaining Necessary Licenses and Permits: Apply for any required business licenses, permits, and tax registrations with the appropriate state and local authorities.
  • Registering with the Internal Revenue Service (IRS): Obtain an Employer Identification Number (EIN) from the IRS, which will be necessary for tax purposes and other business activities.

Availability of the Business Name

When a business is in New Mexico was dissolved, the business name becomes available for other business owners to use after a certain period. However, the specific rules and regulations regarding the availability of a dissolved business name can vary. Keep in mind that even if the name becomes available, other factors, such as trademarks or potential confusion with existing businesses, may still impact the ability of another business owner to use the name.

FAQs

How can I dissolve my New Mexico LLC?
To dissolve your New Mexico LLC, you need to file Articles of Dissolution with the New Mexico Secretary of State.
Can I dissolve my New Mexico LLC online?
Yes, you can file your Articles of Dissolution online with the New Mexico Secretary of State.
What information do I need to provide when dissolving my New Mexico LLC?
You will need to provide the name of your LLC, the date of organization, the reason for dissolution, and the signature of an authorized person.
What is the fee for dissolving a New Mexico LLC?
The fee for filing Articles of Dissolution with the New Mexico Secretary of State is $25.
Is there a penalty if I do not dissolve my New Mexico LLC?
Yes, there is an annual report fee of $100 if you do not dissolve your New Mexico LLC.
How long does it take to dissolve a New Mexico LLC?
It usually takes about 5-7 business days for the New Mexico Secretary of State to process your Articles of Dissolution.
Can I dissolve my New Mexico LLC if it has outstanding debts?
Yes, you can still dissolve your New Mexico LLC even if it has outstanding debts.
Do I need to notify my business partners before dissolving my New Mexico LLC?
Yes, you should notify your business partners before dissolving your New Mexico LLC.
What happens to the assets of my New Mexico LLC after I dissolve it?
The assets of your New Mexico LLC will need to be distributed to its members based on the operating agreement.
Do I need to file a final tax return for my New Mexico LLC after I dissolve it?
Yes, you will need to file a final tax return for your New Mexico LLC.
What happens if I do not file a final tax return for my New Mexico LLC?
You may be subject to penalties and interest from the IRS.
How long do I have to file a final tax return for my New Mexico LLC?
You must file a final tax return for your New Mexico LLC by April 15th of the year following the year of dissolution.
Can I reinstate my New Mexico LLC if I change my mind about dissolving it?
Yes, you can reinstate your New Mexico LLC by filing the appropriate paperwork with the New Mexico Secretary of State and paying the appropriate fees.
What happens if I do not file Articles of Dissolution for my New Mexico LLC?
Your LLC will rack up annual report fees and face other penalties until it is eventually dissolved by the Secretary of State.
Can I dissolve my New Mexico LLC if I have not filed any tax returns?
Yes, you can dissolve your New Mexico LLC even if you have not filed any tax returns.
Will dissolving my New Mexico LLC cancel any trade names or trademarks?
No, dissolving your New Mexico LLC does not automatically cancel any trade names or trademarks it may have registered.
Do I need to cancel my state and local permits if I dissolve my New Mexico LLC?
Yes, you need to cancel any state or local permits if you dissolve your New Mexico LLC.
Can I dissolve my New Mexico LLC if it is in a legal dispute?
It is recommended that you work out any legal issues with your New Mexico LLC before dissolving it.
Can I dissolve my New Mexico LLC if it is currently being audited by the IRS?
Yes, you can dissolve your New Mexico LLC while still being audited by the IRS.
Will dissolving my New Mexico LLC cancel any contract obligations?
Dissolving your New Mexico LLC does not automatically cancel any contract obligations it may have.
Can I dissolve my New Mexico LLC if it has any outstanding legal judgments?
Yes, you can dissolve your New Mexico LLC even if it has outstanding legal judgments.
Do I need to cancel my New Mexico business license if I dissolve my LLC?
Yes, you should cancel your New Mexico business license if you dissolve your LLC.
Can I dissolve my New Mexico LLC if it is suspended?
No, your New Mexico LLC must be reinstated before it can be dissolved.
Can I dissolve my New Mexico LLC if it is an S Corporation?
Yes, you can dissolve your New Mexico LLC even if it is an S Corporation.
Will I need to file a tax return for my New Mexico LLC even if it never conducted any business?
Yes, you will still need to file a tax return for your New Mexico LLC if it was registered.
Can I sell my New Mexico LLC rather than dissolving it?
Yes, you can sell your New Mexico LLC rather than dissolving it.
Will I need to pay additional taxes if I make a profit from selling my New Mexico LLC?
Yes, you will likely need to pay taxes on any profits you make from selling your New Mexico LLC.
Do I need to notify the public of my New Mexico LLC’s dissolution?
Yes, you should provide notice of your New Mexico LLC’s dissolution in a local newspaper.
Can I dissolve my New Mexico LLC if it has never made a profit?
Yes, you can dissolve your New Mexico LLC even if it has never made a profit.
How do I dissolve my New Mexico LLC?
To dissolve a New Mexico LLC, you must file articles of dissolution with the New Mexico Secretary of State.
Will I be required to pay any fees to dissolve my New Mexico LLC?
Yes, a fee of $25 is required to file the articles of dissolution with the New Mexico Secretary of State.
Do I need to notify anyone else about the dissolution of my New Mexico LLC?
Yes, you should notify all creditors, customers and employees to properly dissolve your New Mexico LLC.
Can I dissolve my New Mexico LLC if it has pending lawsuits or creditors?
You can dissolve your New Mexico LLC, but you still need to settle all litigation, tax, and creditor claims to protect yourself and others financially.
What happens to the business’s assets when I dissolve my New Mexico LLC?
Upon dissolution, the assets of the LLC are liquidated and any proceeds go to satisfy outstanding debts and obligations.
Is there a specific time frame to dissolve my New Mexico LLC?
It’s important to dissolve a New Mexico LLC as soon as possible if the business has ceased to operate. Quarterly tax returns and annual reports still require filing until the dissolution procedure is completed.
Can I dissolve my New Mexico LLC if I still have a current business license?
Yes. Whether the license is a state professional license or a local government license, the first step is to notify the agency that your business is dissolved.
Can I expedite my LLC dissolution process in New Mexico?
There is no accelerated process for LLC dissolutions in New Mexico because the procedure is simple and quick.
Do I need to inform the Internal Revenue Service (IRS) when dissolving an LLC in New Mexico?
It’s essential to inform the IRS and the Department of Revenue that the New Mexico LLC has been dissolved, there are forms that need to be completed and filed for tax purposes.
Can I maintain any legal barriers to future lawsuits if I dissolve my New Mexico LLC?
It’s a wise choice upon the dissolution of the LLC to keep all documentation properly filed and recorded for future reference.
Will I need to officially provide the name of the point of contact for receiving end-of-year tax documents in the Articles of Dissolution?
No.
Can I dissolve my New Mexico LLC if a member dies without heirs or beneficiaries?
Yes. In such an instance, one can dissolve the LLC and distribute its assets according to state probate regulations.
What are the consequences of failing to dissolve a New Mexico LLC?
The state will keep the LLC active and tax collection continued until it’s fully dissolved. You will be liable for annual fees irrespective of having closed the business if the LLC is current, and the department of revenue would still collect the fines and penalties.
How can I pay the $25 fee to dissolve my New Mexico LLC?
You can pay online, mail a check You have to ensure adding in a cover letter when mailing a check meant for service fees to avoid delays during processing.
Will the dissolution of New Mexico LLC affect all members equally?
Yes, upon dissolution, members lose rights and liabilities associated with membership to that New Mexico LLC business.
Is majority consent of members necessary to dissolve an LLC in New Mexico?
It entirely depends on the defined guidelines for the LLC bylaws; and here it may require a majority vote, unanimity, or written written return authorization to proceed to dissolution.
Can I dissolve my LLC through an agent?
Yes, you may appoint an attorney or agent to initiate and represent your New Mexico LLC dissolution filing.
Will the New Mexico Secretary of State issue any documents affirming the filing of dissolution of LLC business?
Yes, your submitted articles of dissolution relating to your New Mexico LLC will required to be approved by the Secretary of State of New Mexico.
What must I include when filing for the LLC dissolution?
Must be containing the State Formation Number or the tax identification number otherwise known as the Federal Employment Identification Number (EIN).
Where must I file the document to dissolve New Mexico LLC?
You must file with the Secretary of State.Document mailing is to their North or Santa Fe office.
Is warning necessary regarding my dissolution?
In certain incorporations new Mexico requires the sending of bulletins of death and notices to all customers and other corporate officers and legal representatives.
Is the dissolved New Mexico LLC is still sole Property?
No, Since it’s dissolved the LLC becomes legally inactive in the state record.
Can I re-open a New Mexico LLC after the dissolution?
Yes. But you will need to generale file a new Application of Organization with New Mexico according to their stipulated business processing steps.
Am I suppose to mail an exhaustive document when submitting for dissolution of LLC in New Mexico?
No, beside articles of affirmation to submit in simple sentence the LLC of filing’s reason for dissolution you do not need to provide additional scripts unlike other state jurisdictions.
Do I need additional approvals or clearances when dissolving an out-of-state LLC in New Mexico?
If it is registered as a foreign LLC in new Mexico, initially similar registration documentation would be essential to completely prosecute binding-related operational activities.
Is it possible to change one’s mind when dissolving an.lLC?
As soon as the secretary of state accepted and processed second office recording articles of dissolution, it could not easily be amended.
Am I constrained in terms of legal charges coverage Upon Dissolving New Mexico llc?
No, but legal counsel and representation should always lead the dissolution filing maneuver because attempting the body process alone will lead to errors that result in huge penalties and additional taxes obligation to bankrupt budget financially.

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Conclusion

Dissolving New Mexico business can be complex and time-consuming, but following the steps outlined in this guide will help ensure a smooth and successful dissolution. By conducting a formal vote, settling debts and liabilities, distributing assets, filing the Articles of Dissolution, notifying government agencies, and canceling business licenses and permits, you can legally dissolve your New Mexico business and move forward with the next chapter of your professional life.

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