New Mexico Taxes

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New Mexico LLC Taxes

How to form an LLC in New Mexico
This Quick Start Guide is a brief overview of how to form an LLC in New Mexico.

Detailed Lessons:

5. EIN Number
6. No Annual Report
7. Business License
8. Taxes ← you are here

 

New Mexico LLC costs:
LLC formation: $50 (one-time fee)
Annual report: None

Need help?
Hire a company to form your New Mexico LLC:
Northwest ($39 + state fee) or LegalZoom ($149 + state fee)

(check out Northwest vs LegalZoom)

Note: Our tax lesson is not as step-by-step as our Forming an LLC in New Mexico lesson, due to the uniqueness and variation among businesses in the state. Taxes are usually not as straightforward as forming an LLC in New Mexico, and therefore, the information below is an overview, and not a comprehensive guide.

You will most likely need to hire a tax professional to make sure you meet all your New Mexico state and local tax obligations. We recommend using Thumbtack.

Do it yourself in New Mexico

New Mexico Tax FAQs
http://www.tax.newmexico.gov/frequently-asked-questions.aspx

Tax Help New Mexico
Tax Help is a free service for people whose household income is $54,000 every year or less or those who are 65 years or older: http://www.cnm.edu/depts/taxhelp

How to Register with the Taxation and Revenue Department
http://www.tax.newmexico.gov/Businesses/register-your-business.aspx

All New Mexico Taxes
http://www.tax.newmexico.gov/all-nm-taxes.aspx

Registering for NM Taxes Online
https://tap.state.nm.us/Tap/_/

New Mexico Taxation and Revenue Department Contact Page
http://www.tax.newmexico.gov/contact-us.aspx

Other Taxes
Depending on your industry, where your business is located, how you are taxed by the IRS, and whether or not you have employees, will determine which additional taxes and forms are due.

Some examples of other taxes and forms due are:

  • Sales and use tax
  • Property tax
  • Local taxes
  • Personal income tax
  • Excise tax
  • Pass-through entity tax
  • Gross receipts tax
  • Wage withholding tax
  • Compensating tax
  • Corporate income & franchise tax
  • Workers’ compensation
  • Alternative fuel tax
  • Boat excise tax
  • Oil, natural gas, and mineral extraction tax
  • Motor vehicle tax
  • Monthly alcohol beverage excise tax report
  • Monthly cigarette stamps distribution report
  • Monthly combined reporting system distribution matrix
  • And more

Federal Taxes with the IRS
By default, single-member LLCs are taxed as Sole Proprietorships by the IRS, and by default, multi-member LLCs are taxed as Partnerships by the IRS. The bulleted list above refers to state and local taxes, not federal taxes filed with the IRS. Remember, the income/losses from your LLC will “flow through” to your personal 1040 tax return on a Schedule C, as well as additional Schedules depending on how you derive your income.

Tip: The above language really confuses a lot of people. Notice that we said “taxed as”. This means, in the eyes of the law, your LLC is still a separate legal entity from you, but the IRS is treating your LLC differently (just for tax purposes). Technically, your LLC is still an “LLC legal entity” with the state and the law, but your LLC is a “tax entity” (either a Sole Proprietorship or Partnership) with the IRS.

Additionally, your tax professional may recommend that your LLC be taxed as a Corporation with the IRS. In that case, your LLC can be taxed as a C-Corp or your LLC can be taxed as an S-Corp. You’ll need to discuss this with your tax professional though, as this usually only works for certain types of businesses, and those businesses that are making close to (or over) $100,000 per year.

Our Recommendation

Calculating your tax obligations in New Mexico (and with the IRS) can be complicated and if done improperly can negatively impact your LLC.

We recommend that you get help from a tax professional once your LLC is formed. You can use Thumbtack or Yelp.

Hiring a tax professional will not only help you keep your New Mexico LLC in compliance, but it will also give you an advisor to go to for other business questions.

You’ll want someone who’s a good fit for your company, makes you feel comfortable, and is willing to answer all of your questions. It should be someone you like personally as well as professionally. We recommend talking with at least 2-3 people before making your final decision.

Matt Horwitz
Founder & Educator, LLC University®
Forming an LLC shouldn't be so complicated. Our step-by-step guide will make the process a breeze – and no complex legal jargon! LLC University® teaches people how to form an LLC for free in all 50 states. We hope you find our free guides and resources helpful in your business journey.
Disclaimer: Nothing on this page shall be interpreted as legal or tax advice. Rules and regulations vary by location. They also change over time and are specific to your situation. Furthermore, this comment section is provided so people can share their thoughts and experience. Please consult a licensed professional if you have legal or tax questions.

2 Comments

  1. Joshua Slater July 22, 2018

    Based on New Mexico having no annual filing fees and no annual report due (and the same privacy and pro-business stance as WY), this seems like the perfect state for a Roth IRA LLC. Am I correct in thinking that because I’m talking about a Roth IRA LLC, that no income or corporate taxes would need to be paid on any capital gains or dividends?
    Thank you for the info!

    reply
    • Matt Horwitz August 13, 2018

      Hi Joshua, not 100% sure on this as this an area we don’t go too deep with yet. I recommend running it by a few accountants. Feel free to follow back up though… curious as to what you find out.

      reply

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