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Forming a Corporation in New Mexico

Though the requirements for incorporating are similar in all states, the specific steps which must be taken to form a corporation in New Mexico are discussed below, if you have any additional questions be sure to speak with one of our New Mexico Business formation attorneys:

Choose a Name For Your New Mexico Corporation

New Mexico Corporation FormationIn New Mexico, the name of your business must include any of the following words, and can be abbreviated: “Corporation,” “Company,” “Limited” or “Incorporated.” The name of your corporation must also be easily distinguishable from other businesses which already exist in New Mexico, and are recognized by the New Mexico Corporations Bureau (part of the New Mexico Secretary of State). You can check whether the proposed name of your corporation is available by using the New Mexico Corporations Division’s corporation search database.

Once you select an available name, you can reserve that name for up to 120 days by submitting an Application for Reservation of Corporate NameLink to a PDF file of the actual form.  to the New Mexico Secretary of State Corporations Bureau, filed by mail for a $25 fee.

File Articles of Incorporation

A corporation is created once articles of incorporation are filed on its behalf, with the Corporations Bureau of the New Mexico Secretary of State. These articles need to include several things, including the name of the corporation, the address of its primary place of business, the duration of the corporation, its purpose, the name and address of a designated agent who can receive process on the corporation’s behalf (known as a registered agent), details regarding the stock to be issued by the corporation, and the names and addresses of the incorporators and individuals who will serve on the corporation’s initial board of directors (a New Mexico corporation must initially have at least one director). Additionally, a signed statement of acceptance of appointment by the designated initial registered agent must be submitted, and is included in the forms which make up the articles of incorporation that should be filed with the New Mexico Secretary of State Corporations Bureau.

Articles of incorporation can be filed in New Mexico mail; there is a filing fee which starts at $100, and may increase (to a maximum of $1,000) depending on the number of stock shares the corporation is authorizing. At this time we recommend clients expedite their filing (for an extra fee of between $100 – $150) to receive their filed articles in a timely manner.

Appointing a Registered Agent

All New Mexico corporations are required to appoint a registered agent whose function is to accept legal notices, papers, and documents on behalf of the corporation. The registered agent most often carries out his or her function by being served with process when the corporation is sued. The agent must either be a New Mexico resident, a domestic corporation with their place of business in New Mexico, or a foreign corporation which is authorized to engage in business within the state and has a place of business in the state. A registered agent needs to have a street address within New Mexico, and must agree to accept service of process on behalf of the corporation prior to being appointed.

Setting Up a Corporate Record Book

Before commencing operations, you should set up a corporate records book for your corporation, which will allow you to keep and organize all your business’s important documents, including the minutes of shareholder or director meetings, and stock documents. This records book should be kept at the principle location of business for the corporation. The book need not meet any formal requirements, and as such, a simple three ring binder can be used. Alternatively, you can order a special corporate records book from a commercial corporate supplier.

Drafting Corporate Bylaws

Corporate bylaws are the rules which internally govern a corporation, and do not need to be filed with the state. However, they should be officially adopted by the corporation’s board of directors at the corporation’s first director’s meeting (this meeting is usually evidenced by the corporation’s first set of meeting minutes). The bylaws can govern several important things, such as the voting rights of shareholders, where and when shareholder and director meetings will be held, and the rights of shareholders to things like stock dividends. Although a corporation is not legally required to have bylaws in effect, it is a good idea to adopt bylaws in order to establish your business’s rules of operation, and to prove to creditors, banks, and the IRS that your business is legitimate, well-run, and organized.

Appointing an Initial Board of Directors

The person who files and signs the articles of incorporation – also known as the “incorporator”- needs to appoint an initial board of corporate directors. These directors will serve on the board until the corporation’s first official board meeting, at which time shareholders can vote on who will serve on the next board of directors. A corporation’s bylaws can include a provision to state that these elections take place annually. The incorporator also needs to include an “incorporator’s statement” indicating the names and addresses of the initial board members. The statement must be signed, and a copy should be included in the corporate records book, but does not need to be filed with any state agency.

Holding the First Directors Meeting

An initial board of directors meeting should be promptly held, and the directors should address such topics as appointing corporate officers (such as a CEO and CFO, for example), the adoption of corporate bylaws, choosing a corporate bank, authorizing and issuing shares of corporate stock, planning the corporation’s fiscal year, and adopting a stock certificate form and official corporate seal for the business.

At the initial meeting, the director’s actions need to be documented in corporate minutes, prepared either by the incorporator or any one of the directors present at the meeting. Also, if the business is incorporated as an S corporation (a corporation who has elected to receive special tax treatment under subchapter S of the federal tax code), the board of directors should approve the corporation’s election of that special tax status. Usually, it is necessary to document the minutes over one or two weeks, and then send them out to each director for that director’s signature of approval.

Issuing Corporate Stock

Though issuing corporate stock is not legally required in all states, most small corporations issue stock certificates. Once the certificates are issued, each shareholder’s name should be entered in the business’s stock transfer ledger, along with each shareholder’s contact information. Any share of corporate stock issued is considered a security under both state and federal corporate securities laws, which regulate the sale of corporate stock.

However, most small corporations are exempt from these laws at the federal level. “Private offerings,” for example (which are non-advertised sales of limited numbers of shares), are exempt in most states. To determine what stock sales may be exempt from these laws, visit the New Mexico state securities website. A link to the site and all other state securities websites can be accessed at North American Securities Administration webpage, by using the “Contact Your Regulator” link (the department that handles this in New Mexico is the New Mexico Regulation & Licensing Division).

Complying with State Biennial Report Requirements

New Mexico state law requires that any business incorporated in New Mexico file Biennial Corporate Reports every other year with the Corporations Bureau of the state. These reports need to be filed within thirty days after issuance of a corporation’s articles. The reports are due on or before the 15th day of the 3rd month after the conclusion of a corporation’s taxable year, and can be filed by mail or online for a $25 fee.

Complying With Other Tax and Regulatory Requirements

There are other tax and regulatory requirements which are applicable to New Mexico corporations, including federal employer identification numbers submission of Form 2253 for S corporations. A federal employer identification number can be obtained via an electronic application at the IRS website, for free. If a corporation elects to be taxed as an S corporation, it must then submit a Form 2553, signed by all the corporation’s shareholders, within two months and two weeks after the start of the business’s first tax year.

Additionally, corporations authorized to do business within the state of New Mexico must register with the state’s Taxation and Revenue Department. Registration can be accomplished online, or by filing a paper application with a local taxation and revenue office. Once you have registered, you will be given a New Mexico tax ID number. Registration is free. Depending on what kind of business your corporation is engaged in and where it is located, it may be necessary to obtain additional state & local business licenses.

For Foreign Corporations Doing Business in New Mexico

Before doing business in New Mexico, all corporations not located within the state must register with the state’s Corporations Bureau, and must also appoint a registered agent located in New Mexico to receive service of process. Registration requires the filing of an Application for Certificate of Authority, which needs to be accompanied by an certificate of good standing which is no older than thirty days. This certificate comes from the Secretary of State of the corporation’s state of incorporation, and must be filed either by mail or electronically. In New Mexico, the minimum fee for such a filing is $200.

A foreign corporation must first determine whether its corporate name is available in New Mexico, by consulting the New Mexico business name online database (see the above link). If the name is already taken by a New Mexico business, the foreign corporation will need to adopt a fictitious name by which to transact business within the state. This is accomplished by resolution of the corporation’s board of directors, which must be signed and authorized by the board and submitted with the application.

If you need help forming or operating your business be sure to give our office a call for a free consultation with an expert formation business attorney.