Incorporator The Journal of U.S. Formation
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Editorial 7 MIN READ

New Mexico in January 2017: the quietest LLC in the country

A $50 filing, no annual report, no member disclosure, and a gross receipts tax that quietly collects everything the formation didn't

The Editors
Staff, Incorporator.org
7 min read Updated
Contents 6 sections
  1. The mechanics
  2. The registered agent requirement
  3. Maintenance is the part that isn't there
  4. The gross receipts tax is the real tax
  5. Who this state actually makes sense for
  6. Sources

New Mexico LLC costs $50 to form and nothing to maintain. The state does not ask for an annual report. It does not ask who the members are. It does not ask again after the Articles of Organization are filed. That silence is the product the state sells, and it is real — up to the point where the LLC actually does business inside New Mexico, at which point the gross receipts tax collects everything the formation did not.

This is a guide for someone forming in January 2017. It assumes you have already looked at Wyoming and Delaware and are here because the math on privacy and carrying cost brought you.

The mechanics

You file Articles of Organization with the Secretary of State's Business Services Division. Since July 1, 2013, the Secretary of State has handled corporate and LLC filings; responsibility moved over from the Public Regulation Commission's Corporations Bureau that year, and the older URLs still in circulation redirect. The form is short. Under NMSA 1978 § 53-19-8, the articles must contain the LLC's name (which must satisfy the distinguishability test in § 53-19-3), the street address of the initial registered office, the name and address of the initial registered agent at that office, the current principal place of business if different, the period of duration if other than perpetual, and — if relevant — a statement that management is vested in a manager and/or that the company is a single-member LLC. Nothing in § 53-19-8 requires the names or addresses of the members.

That is the privacy pitch, and it is structural rather than promotional. The statute does not ask for member information, so the state does not have it, so there is no public record to subpoena or index. The registered agent's name is public; the owner's name need not be.

The filing fee is $50, set under NMSA 1978 § 53-19-63, the schedule of filing, service, and copying fees under the LLC Act. Articles of Dissolution are $25. The state offers no tiered expedite menu of the sort Delaware built its express lane on; standard processing runs a few business days, and expedited handling is available at a small premium by arrangement.

You will still need an EIN from the IRS (Form SS-4, done online in the time it takes to get a coffee). You will want an operating agreement, which New Mexico does not require you to file and no one will see unless your LLC ends up in litigation. You will then decide — for federal tax purposes — whether to let your LLC default to disregarded (single-member) or partnership (multi-member) status, or to elect S-corp or C-corp treatment. Nothing about the New Mexico filing constrains that choice.

The registered agent requirement

Under NMSA 1978 § 53-19-5, every New Mexico LLC must continuously maintain a registered office and a registered agent in New Mexico. The agent can be a New Mexico resident individual or a domestic or qualified foreign entity authorized to do business in the state. The address must be a physical New Mexico street address; a post office box does not satisfy § 53-19-5.

Commercial registered-agent pricing in New Mexico runs from the low $30s on the commodity end to roughly $150 to $200 on the full-service end. The low end of that range is noticeably cheaper than the equivalent in Delaware or Wyoming, because New Mexico's formation volume supports smaller operators who undercut the national brands. A cheap agent is fine here for the same reason the annual tax calendar is forgiving: there is no June 1 deadline to miss and no notice to throw away, so the agent's main job is service of process. If you expect to be sued, buy the better agent. Otherwise, the commodity tier is genuinely adequate.

Maintenance is the part that isn't there

New Mexico is the state with no LLC annual report. Chapter 53, Article 19 of the NMSA 1978 — the Limited Liability Company Act, §§ 53-19-1 through 53-19-74 — contains no periodic report provision for LLCs analogous to the corporate annual report in Article 5. There is no annual filing, no report fee, no late penalty, no administrative dissolution calendar keyed to a missed report. Once the Articles of Organization are accepted, the state's recurring ask of the entity is: nothing.

This is the piece that makes New Mexico attractive as a passive holding vehicle. A Delaware LLC owes $300 a year whether it transacts or not. A California LLC owes $800 a year and a Statement of Information every two years. A New Mexico LLC, dormant or active, owes the Secretary of State zero dollars after day one. If your use case is holding intellectual property, holding a brokerage account, or warehousing a rental property whose operations live in another state, the carrying cost is as close to zero as the fifty states offer.

The caveat is that "no state filing" is not "no state tax." A New Mexico LLC that actually operates in New Mexico meets the state again immediately, through the tax system rather than the corporate-registry system.

The gross receipts tax is the real tax

New Mexico does not have a conventional retail sales tax. It has a gross receipts tax (GRT), administered by the Taxation and Revenue Department, imposed on the seller rather than the buyer, and applied to services as well as tangible goods. The state portion is 5.125 percent. Counties and municipalities add local options on top, so the combined rate across the state in 2017 ranges from the 5.125 percent floor to roughly 8.6875 percent at the highest-rate locations. The tax is reported and paid monthly, quarterly, or semiannually depending on your receipts, after you register with the department for a Combined Reporting System (CRS) identification number.

The trap for out-of-state operators is that the GRT reaches services. A consultant based in Albuquerque billing California clients still owes GRT on those services unless a specific deduction applies; the law taxes the seller's in-state activity, not the buyer's location. For operators genuinely running a business from New Mexico, the GRT is the meaningful tax burden — it dwarfs anything at the corporate- registry layer and is the line item that matters for pricing decisions.

Layered on top: a personal income tax with four brackets topping out at 4.9 percent (single filers over $16,000; married-filing-jointly over $24,000 — rates and bracket widths unchanged since 2009), and a corporate income tax that was restructured in 2017 to a two-bracket schedule of 4.8 percent on the first $500,000 of New Mexico taxable income and 6.2 percent above that, with a further reduction to 5.9 percent already scheduled for 2018. A pass-through LLC pushes its income onto its members' personal returns; a C-corp election keeps it at the corporate level.

Who this state actually makes sense for

Three kinds of entity belong in New Mexico in 2017.

The first is a pure holding company with no operations anywhere. The zero-maintenance, no-disclosure formation is exactly the product, and the state does not tax income an entity does not earn in New Mexico. For passive ownership of IP, domains, investment accounts, or single- asset subsidiaries, New Mexico undercuts Wyoming's $60 formation and $60 annual report at both ends.

The second is a privacy-sensitive ownership structure where the operating entity will be formed and qualified elsewhere but the top-level holder wants to stay off public rolls. New Mexico's refusal to collect member information at formation is the cleanest version of that product among U.S. states.

The third is an actual New Mexico business whose owners would have formed in-state anyway. For them, the GRT is the decision, not the Articles of Organization.

Everything else — the consultant working from Santa Fe who liked the privacy language but bills clients on the coasts, the real-estate operator whose rentals sit in Arizona — should think in two entities rather than one. Form the New Mexico LLC for the privacy and the no-maintenance parent; form or qualify separately wherever the operations actually sit. The mistake is treating a New Mexico LLC as a tax shelter for activity that happens elsewhere. It is not that. It is a registry with its hands off, which is a different and more useful thing.

If you are forming this quarter and the entity is passive, file the Articles this week, pay an agent for the year, and move on. If the entity will operate inside the state, register for a CRS number the same week and start tracking gross receipts from day one. The quiet part of New Mexico is on the formation side. The tax side is not quiet at all.

Sources

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