Entrepreneurship is exciting—the thrill of developing a winning product or service, bringing that idea to life, and making life better for your clients—it’s fun. But unfortunately, it’s not free. Long story short: starting a business has a price tag. LLCs are no exception.
If you’re hoping to start an LLC in New Mexico, you’ll quickly learn that you’ll have a pretty long list of fees for forms, licenses, and applications that you’ll need to get started. Some of those are optional fees, and some are unavoidable. In this guide, we’ll walk you through all the costs you can expect when starting a New Mexico LLC. By the end, you’ll have a clear picture of how your new business will impact your wallet.
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What’s the least amount I have to pay to form an LLC in New Mexico?
If you’re crunching the numbers before diving right in, good on you! Planning ahead is a surefire way to start your business off on the right foot. But let’s make one thing clear: the phrase “cost to start an LLC” is a bit deceptive. That’s because you don’t want to get stuck focusing on the “day one” expenses of business.
That’s right—when budgeting for start-up costs, you need to account for the costs you’ll pay today and the costs you’ll pay a year or two down the road.
So let’s talk start-up costs and ongoing costs for your New Mexico LLC. But to keep things simple, here we’ll cover the non-negotiable costs. Later on, we’ll talk about services that are nice to have (but you can live without if you have to).
NM LLC Start-up costs
There are two primary start-up costs in New Mexico. The most important one is the Articles of Organization. The fee is just $50. But regardless of whether that seems like pocket change or an expense you’ll have to save some pennies for, you can’t avoid this cost. After all, the Articles of Organization is what officially forms your business in the state. Without it, you’re not a recognized business.
A lot of New Mexico LLCs will also need to get licenses in order to run a compliant business. For starters, there’s a good chance you’ll need to get a general business license. However, those aren’t offered on the state level. Instead, you’ll have to check if your city or county requires a general license.
After that, there are industry-specific licenses to consider. Unfortunately, you’ll have to do some research to learn if one applies to your business; there’s such a big variety that we can’t list them all here. The New Mexico Licensing and Regulation Department is a good place to start that search. No matter what license applies to you, you can reasonably expect to pay an application fee when you get one.
Ongoing costs for an LLC in NM
If your business lasts (and we’re confident it will), then you’ll have several ongoing costs. These include license renewals and taxes. Let’s dig into those prices and fees.
License renewals
Thankfully, you don’t have to worry about renewing a state general business license, but you will probably have to renew your professional and local permits. Each New Mexico licensing board has its own policies for renewals, though, so we can’t really list them here. This guide would be tedious if we did. When you obtain your licenses, we recommend taking note of the renewal requirements for your industry so none of the fees surprise you.
Annual taxes
In New Mexico (and any state, for that matter), one of the biggest annual costs you’ll have will be taxes. And one of the most substantial taxes is the state income tax. If you’re taxed as a corporation, you’ll pay rates between 4.8% and 5.9%; LLCs taxed as pass-through entities will pay somewhere between 1.7% and 4.9%. So in most cases, it’s cheaper to be taxed as a pass-through entity.
New Mexico doesn’t have a sales tax, so you won’t need to worry about collecting and paying that. However, the state has a franchise tax and a gross receipts tax that you’ll be responsible for. Plus, the state’s miscellaneous taxes might apply to you. Alcohol and motor fuel taxes are just a few examples. But we won’t dig into all the nitty-gritty details here. If you think a miscellaneous business tax might apply to your business, we recommend checking out the New Mexico Department of Taxation and Revenue.
What are the discretionary costs to form a New Mexico LLC?
When you’re starting your business, your budget is usually pretty tight. Prioritizing costs can get tricky. The costs we listed above are unavoidable. Well, technically, you can avoid them, but you’ll be heavily penalized if you do. And there’s not much point to spending all that money on starting a business only to knowingly let it be dissolved because you didn’t pay your ongoing costs.
But if you can help it, doing the “bare minimum” is probably not the best way to start your business. There are plenty of discretionary costs you can pay for certain services that make life easier. Here, we’ll dig into those costs—and why you might consider paying them.
1. Name reservation application
Naming things can be a bit tricky; after all, sometimes inspiration is a little lacking! And since New Mexico doesn’t allow you to use a name that someone else has already claimed, you have to work even harder to pick one that’s unique, memorable, and just right for your business.
It’s a multi-step process, really: you have to brainstorm name ideas, choose just the right words, meet state name requirements, and of course, ensure that the name isn’t already in use (you can check using an Entity Name/DBA Name Search).
If you’re like a lot of people, you probably want to ensure that your hard work doesn’t go to waste once you’ve created the perfect name. So you have to lay claim to your new business name. You can do so either by filing your Articles of Organization, or by filing an Application for Reservation of a Domestic Limited Liability Company Name. You should only file this form if you’re not yet ready to file your Articles. Otherwise, you’d be wasting your hard-earned cash. New Mexico requires a $20 fee for this application, but it protects your name for 120 days.
2. LLC formation services
Paperwork is a massive hassle. And unless you’re starting an LLC to help other New Mexicans with their paperwork, odds are you don’t want to deal with much paperwork yourself.
The bad news? Paperwork is an unavoidable part of starting a New Mexico LLC: the Articles of Organization, local licenses, professional licenses—the list goes on and on. The good news? You can hire an LLC formation service to do the pesky paperwork for you.
Of course, there’s some cost involved. And while there are a lot of great LLC formation services, they aren’t all created equal. And they all have different price points.
Many LLC formation services offer a wide variety of packages, with basic options starting at low prices like $39 from Zen Business (one company, Incfile, even offers a starter package for $0). But if you’re willing to shell out some serious cash for comprehensive assistance, you’ll find package prices going as high as $799.
These services are completely optional; you can DIY your New Mexico LLC formation. But many entrepreneurs find the time saved is worth the money. If you do opt to hire a service, please make sure you take the time to understand what you’re buying. Some services charge one-time fees, and others tack on “free services” that will cost you next year. If you don’t read the fine print, you can get slapped with unexpected service fees. And surprise bills are never fun.
3. NM Registered agent services
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New Mexico law clearly states that every LLC must designate a registered agent to act as a middleman between your business and the state. Long story short, the registered agent accepts service of process (and any other official communication from the state) on your behalf.
Technically, this is another thing you can DIY; New Mexico allows you to serve as your own registered agent. However, in our opinion, it’s worth the expense to hire a registered agent.
Why? For starters, a registered agent’s address becomes part of the public record; anyone in the state can find that address. That leads to spam mail (sometimes worse). Plus, a registered agent must be present at the registered address during all standard business hours. If you serve as your own, you’d be tied down to your location constantly. A registered agent service prevents those annoyances. A service will also help you keep track of annual filing requirements, license renewals, and more.
These services typically charge an annual fee. For example, annual fees for our top 4 New Mexico registered agent services range from $99 to $299 per year depending on the service you choose. That said, some offer the first year free if you use them as an LLC formation service.
Quick Note: If you need to later down the line, you can always change your registered agent.
4. Expedited filing fees
In New Mexico, it can take as long as 3 months for the state to process your paperwork. If that sounds like too long to wait (and if you’re like most people, it probably does), New Mexico does allow you to expedite your paperwork…for a fee. A fee of $100 will cut down your processing to 2 business days. For processing within just 1 business day, you’ll need to pay $150. That’s not the cheapest expediting option available, but it may be worth the extra expense. You can let your budget and your timetable be the deciding factors.
5. Business attorneys
Starting a business is a complicated process. And it’s a legal one. We do our best to make the process seem less daunting with guides like this one. But at the end of the day, we can’t write a guide that would cover every single question every business will ever face. That’s because your business is unique.
Business attorneys, however, can talk you through all the nuances of forming and running your business. In many cases, the advice of an attorney can save you thousands by helping you avoid expensive legal mistakes.
However, the upfront costs of hiring a business attorney can be pretty pricey. For example, many attorneys charge per hour, with rates ranging between $150-$350. Others offer “LLC formation packages” for flat rates that fall between $500-$2000. And of course, those fees vary based on the attorney’s experience, location, and so on.
If you’d like to hire one, we recommend checking out sites like Avvo.com. Their database is nearly comprehensive, so it’s a great way to search New Mexico business lawyers. You can also narrow results by location, cost, overall satisfaction rating, and more. It’s the best place to look to find the right legal consultation for your business.
Conclusion
Long story short: starting a New Mexico LLC can be a pretty pricey endeavor. If you look at each cost separately, it doesn’t seem too bad (even the Articles of Organization is pretty manageable). But when you add them all up or tack on some additional services, the total price tag grows pretty quickly.
Thankfully, since you’ve read this guide, you know what you’re up against. And sometimes, knowing is half the battle—and now you’re armed with all the information you need to budget the start-up costs so you can start your New Mexico LLC off on the right foot. We wish you and your new business the best!