In New Mexico, creating a Limited Liability Company (LLC) can be a smart alternative for you if you’re thinking about starting a business. An LLC is a type of company form that combines tax advantages of a partnership or sole proprietorship with the liability protection of a corporation. But how much does it cost in New Mexico to set up an LLC?
In New Mexico, creating an LLC costs $50. This amount covers the cost of submitting your LLC’s Articles of Organization, which must be submitted to the New Mexico Secretary of State. You can file by mail or online, but online filing is quicker and simpler.
You might also have to pay for additional services like a registered agent or an operating agreement in addition to the filing charge. The registered agent service ensures that someone is ready to accept legal paperwork on behalf of your LLC and is needed by law in New Mexico. A legal document known as an operating agreement describes how your LLC will be managed and how earnings and losses will be distributed among members.
I’m an LLC; may I pay myself a salary?
Yes, as an LLC you may pay yourself a wage. You can elect to be taxed as a sole proprietorship, partnership, S corporation, or C corporation if you own an LLC. You will be required to pay self-employment taxes on your portion of the LLC’s earnings if you elect to be taxed as a sole proprietorship or partnership. You might be able to pay yourself a salary and lower your self-employment taxes if you decide to be taxed as a S corporation or C corporation. How Are LLC Owners Reimbursed?
LLC owners have a variety of payment options, including: Taking a draw: LLC owners have the option of withdrawing funds from the company in the form of a distribution of profits. This is a typical method of payment for LLC owners. Receiving a salary: If LLC owners elect to be taxed as a S corporation or C corporation, they may pay themselves a salary.
– Receiving distributions: If LLC owners opt to be taxed as a sole proprietorship or partnership, they may receive distributions of profits.
No, a single-member LLC and a sole proprietorship are not the same thing. Even though they are both owned by the same individual, a sole proprietorship lacks the liability protection that a single-member LLC affords. This means that any liabilities incurred by the firm do not affect the owner’s personal assets.
The disadvantage of an LLC is that it may cost more to establish and manage than a partnership or a single proprietorship. For LLCs, you may need to fill out more paperwork and pay for services like a registered agent and an operating agreement. State franchise taxes may also apply to LLCs, which can be a considerable expense for some companies.
In conclusion, $50 is required to create an LLC in New Mexico, plus any additional expenses for operating agreements or services like serving as the registered agent. LLC owners have three different payment options: salary, draw, and distributions of profits. A sole proprietorship does not provide the same level of liability protection as a single-member LLC. An LLC’s disadvantage is that it may cost more to create and maintain than other company formations.