Articles of Organization

The formation of a New Mexico LLC means that you have to file articles of organization (along with the $50 filing fee) with the state. The articles, which must be signed by at least two persons, must include:

• The LLC's name
• The street address of the LLC's registered office street
• The name of the registered agent there
• The registered agent's acceptance of appointment as such
• The street address of the LLC's principal place of business if different from the registered office
• The duration of the LLC and, if not perpetual, the date of its dissolution
• Whether the LLC will be member-managed or manager-managed
• Whether the LLC may operate as a single-member LLC

Your new LLC is officially deemed "organized" after the LLC's articles of organization and one copy are delivered to the Corporations Bureau of the Public Regulation Commission with the filing fee.

Unless otherwise specified, the articles must be signed in the name of the LLC by a manager (if the LLC is to be manager-managed), a member (if the LLC is to be member-managed), or a person forming the LLC if it has not yet been formed. The document must also state the name and title of each signer.

A certificate of organization will be issued and delivered by the state, along with the conformed copy, to the LLC's representative.

Registered Agent and Office

All New Mexico LLCs must maintain a registered agent in the state-the person or office designated to receive official state legal and administrative correspondence. An LLC registered agent may be an individual who resides in New Mexico or a business entity authorized to conduct business in the state. The registered agent's business office must be the same as the corporation's registered office.

The registered office may be (but is not required to be) a place of business for the LLC.

Operating Agreement

The LLC's next most critical document is its operating agreement. Having an operating agreement is not legally required by the state, but it's a very important internal document that sets forth how the LLC will run. The operating agreement should list the LLC's members, how much each one has invested, how any profits will be distributed, and how much relative weight each member has when voting.

The operating agreement can also include requirements for meetings (notice, quorum, voting rules, etc.) and similar functions, but it doesn't have to. Often, however, it does include operating constraints and allowances that are already contained in state law and regulations. It also may contain constraints on the members' authority to change or repeal the operating agreement or a provision thereof. If there is more than one member, the operating agreement must initially be unanimously approved in writing.

Membership in the LLC

An LLC must have at least one member. Members may acquire an interest in the LLC directly when it is being formed. After formation, prospective members can acquire an interest in accordance with the LLC's articles of organization or operating agreement (or, if the articles of organization or the operating agreement do not specify a procedure, on the written consent of all members).

The contributions of a member to the LLC may consist of cash, property, services rendered, or a promissory note or other binding obligation to contribute cash or property or to perform services.

A member always has the power-although not necessarily the right-to terminate his membership by resigning or retiring at any time. An LLC member may not resign except in accordance with the operating agreement or articles of organization. If a member does resign or withdraw in a manner that violates the rules set forth in those documents, the amount payable to the member from his or her contributions may be reduced by the amount of the damages to the LLC resulting from the violation, and the LLC may defer payment for as long as necessary to prevent unreasonable hardship to the organization.

Unless otherwise stated in the articles of organization or operating agreement, managers are elected or removed-and manager vacancies are filled-by members, using normal membership voting rules.

Ongoing Requirements

Each New Mexico LLC must keep the following types of records available for inspection at its office:

• The names and street addresses of all current and former members and managers
• A copy of the articles of organization and any amendments and related powers of attorney
• A copy of the current and all previous operating agreements
• A copy of the LLC's federal, state, and local income tax returns for the past three years
• A current statement of the capital contributions made by each member
• The amount of cash and a statement of the agreed-upon value of other contributions made or to be made by each member
• The time(s) or event(s) that would trigger any additional contributions by a member
• Any events that would trigger the LLC's dissolution
• Any documents required to be available to members by the articles of organization or operating agreements

It's also a good idea to keep copies of the minutes of the various proceedings and committees meetings of the owners or members.

Dissolution

A New Mexico LLC is dissolved when any one of the following events occurs:

• On the occurrence of an event or events specified in the articles of organization or operating agreement
• Agreement to dissolve by members with a majority share of the voting power
• Judicial decree ordering dissolution

Taxes

An LLC by its nature offers some particular tax advantages over a corporation's organizational structure, especially when it comes to taxes. This includes access to more deductions, since the LLC is not required to be a separate tax entity like a corporation. Instead, it is considered a "pass-through" entity for tax purposes, meaning that LLC owners report business profits and losses on their individual tax returns.

The tax rate for New Mexico LLCs, therefore, varies, based on the amount of New Mexico taxable net income per reporting period and the rest of the LLC owner/member's financial situation.

Articles of Incorporation

Before they can start operations, New Mexico corporations must file articles of incorporation with the Corporations Bureau of the state Public Regulation Commission. The articles must be delivered by at least one incorporator, accompanied by the filing fee. The filing fee, based on the number of shares authorized in the articles, is $1 for each 1,000 shares authorized, with a minimum amount of $100.

The following information must be included in the articles of incorporation:

• The name and address of each incorporator
• A specific business purpose of the corporation (to which you may also add language stating that the corporation may engage in any lawful business for which corporations may be incorporated under the New Mexico Business Corporation Act)
• The names and addresses of the corporation's initial directors
• The number of shares that the corporation is authorized to issue
• If applicable, the articles must have a designation of each class and series of shares, as well as statements of their relative rights and the authority of the board to divide or change the designation of such shares
• The street address of the corporation's initial registered office
• The name of the new corporation's initial registered agent at that office
• The corporation's period of duration, if it is not to be perpetual
• Any shareholder preemptive rights

New Mexico law also allows (but does not require) optional items to be included in the articles of incorporation for those corporations who wish to formally specify additional information, such as:

• The minimum consideration for any authorized shares or class of shares
• The powers and constraints of the corporation, its board of directors, and shareholders
• Provisions regarding the liability of directors in certain situations

New Mexico does not require a new corporation to state a par value for shares. Most incorporators authorize one class of common shares with equal voting, dividend, and liquidation rights and no special restrictions. Most incorporators simply authorize 100,000 shares, which is the most you can authorize for the minimum filing fee of $100.

Registered Agent and Office

Every New Mexico corporation must have a registered agent in the state-the person or office designated to receive official state correspondence, both administrative and legal. The registered agent must be either a New Mexico resident whose business office is the same as the registered office, or a corporation with a business office identical to the registered office.

The registered office may be any of the corporation's places of business in New Mexico.

Bylaws

Bylaws lay out the corporation's basic managerial and legal operating principles that manage their internal affairs. New Mexico corporations must keep a copy of their bylaws at their principal executive office, but are not required to file them with the state. At its initial meeting, the board of directors should adopt corporate bylaws, and then keep them updated as time goes on.

The board of directors of a corporation may adopt, amend, or repeal bylaws, unless the articles reserve this right to the shareholders. Bylaws normally address:

• Shareholders and directors meetings
• The authority, number, and tenure of directors
• Voting procedures
• The duties, responsibilities, and tenure of officers
• How stock is issued
• How and when annual financial information is provided to shareholders

Directors and Officers

A corporation's board of directors consists of one or more individuals in accordance with the articles of incorporation or bylaws. The number of directors may be increased or decreased by amending the articles of incorporation or the bylaws, but no decrease in the number of directors can have the effect of shortening the term of any incumbent director

Officers are listed in the initial bylaws or elected by the board of directors, and may appoint other officers in accordance with the bylaws. One officer has the responsibility of preparing minutes of director and shareholder meetings, and for maintaining and authenticating corporate records.

It is permissible for an officer to hold more than one office in the corporation unless otherwise prohibited by law or by the corporation's bylaws. An officer may hold more than one office in the New Mexico incorporation.

Required Reports

Your new corporation must file a report with the Corporations Bureau of the Public Regulation Commission within 30 days after the date of incorporation. After that, the report must be filed by the 15th day of the third month following the end of the corporation's fiscal year. This report must include:

• The corporation's name
• The mailing and street addresses of the corporation's registered office
• The name of the corporation's registered agent there
• The names, addresses, and office term expirations of the corporation's directors and officers
• The address of the corporation's principal place of business
• A brief description of the nature of the corporation's business
• The date of the next annual shareholders' meeting for the election of directors
• The corporation's taxpayer identification number

The corporation must also send its shareholders an annual financial statement, including at least a year-end balance sheet and an income statement for that year.

Taxes

New Mexico's corporate tax structure is made up of three brackets. The top rate of 7.6 percent only takes effect at $1,000,000 of net income. They must also pay an annual franchise tax of $50. Among states that have corporate income taxes, New Mexico ranks 20th.