Creating a S Corporation (S Corp) might be a suitable choice if you’re seeking for a flexible and tax-efficient business structure. The procedure for establishing a S Corp in New Mexico is pretty simple and entails numerous crucial procedures.
Choosing a name for your corporation that is not currently in use by another business entity in the state is the first step in establishing a S Corp in New Mexico. The online database of the New Mexico Secretary of State allows you to look up names that are currently available. Additionally, the name you choose must meet specific criteria, such having a corporate designator (like “Inc.” or “Corp.”).
2. Submit the articles of incorporation You must submit Articles of Incorporation to the New Mexico Secretary of State’s office in order to formally establish your S Corp. This document contains crucial details about your company, like its name, objectives, registration agent, and allowed share count. This stage carries a $100 filing charge.
3. Obtain licenses and permits for your business Various licenses and permits from state and municipal authorities may be required depending on the type of business you are running before you can lawfully operate. A New Mexico business license, a sales tax permit, and a zoning permission are a few instances. The New Mexico Economic Development Department can provide you with more details regarding these criteria.
4. Choose the S Corporation Status Once your corporation is established, you must submit Form 2553 to the Internal Revenue Service (IRS) to elect S Corporation status. This action enables your company to be treated as a pass-through corporation, whereby income and losses are reported on the shareholders’ personal tax returns as opposed to the corporate tax return. For your company, this might mean huge tax savings.
The $100 filing charge for articles of incorporation, any fees for licenses and permits, and the price of legal and accounting services, if you decide to hire experts to help you with the process are all included in the price of incorporating a S Corp in New Mexico.
S Corporations are not subject to corporate federal income tax in New Mexico since they are taxed as pass-through entities. Instead, profits and losses are passed through to the shareholder’s individual tax returns, who are then in charge of paying any necessary taxes. S Corps are further liable to state corporate income tax in New Mexico.
An S Corp may conduct business under a “doing business as” (DBA) name, but it must first file a DBA name registration with the New Mexico Secretary of State’s office. The $25 registration fee must be submitted along with a Certificate of Registration of Trade Name. All of the S Corp’s formal business filings and paperwork must also include the legal name of the company.