An operating agreement is a contract that governs the operation of a limited liability company (LLC). In New Mexico, you must file an operating agreement with the Secretary of State within 30 days of forming the LLC. This document sets forth the terms under which the LLC will operate.
The purpose of an operating agreement is to protect the members’ interests and clarify how the company will function. For example, it outlines the duties of managers, directors, officers, employees, shareholders, and members. It specifies how the company will handle conflicts among those people. And it describes the process for winding up the company.
A good operating agreement includes provisions dealing with such topics as:
• Managing Members’ Personal Assets
• Protecting Intellectual Property
• Setting Out Procedures for Terminating the Company
• Provisions for Dividends and Distributions
Table of Contents
An LLC has no legal personality so there is no need for an operating agreement.
A New Mexico LLC must have a written operating agreement if it wants the protections afforded by being incorporated under state law. If you don’t have one, you could potentially lose some of the legal protections that come along with being a limited liability company.
Here are four reasons why you should consider getting an operating agreement for your LLC.
1. Protect Your Business From Lawsuits & Creditors
2. Keep Records Straight
An operating agreement helps keep records straight. You’ll know exactly what each member owns, how much money you owe each person, and whether anyone owes you money.
3. Avoid Confusion Over Who Owns What
Here’s how to form an LLC in New Mexico (6 Basic Steps)
Choose a name that is distinctive. If you choose a name that sounds like it belongs to someone else, you could run into problems. You want something unique that won’t cause confusion among customers and employees.
Check if the name is available. Before you file your paperwork, make sure there aren’t already companies called what you’re thinking about. This isn’t always easy to do online, but you can use sites like Nameberry.com to check availability.
There are many ways to form a limited liability company in New Mexico. Here are six options:
1. Limited Liability Company (LLC): A type of corporation where profits are shared according to ownership percentages.
2. General Partnership: Two or more people join together to operate a business. Each partner owns a percentage of the company.
3. Sole Proprietorship: An individual operates his/her own business without forming a partnership or corporation.
4. Professional Corporation: Similar to a sole proprietorship, except professionals such as doctors, lawyers, accountants, etc., can incorporate.
Step 1 – Choose your Registered Agent
A registered agent is a person or entity designated by law to accept legal documents on behalf of a corporation. There are many reasons why you might want to designate a registered agent. For example, you may wish to avoid having to deal directly with people outside your organization, or you may prefer to keep certain information confidential. You may also choose to use a registered agent because it could help protect your personal assets.
There are several ways to select a registered agent. One way is to ask a lawyer or accountant to recommend one. Another option is to contact a state government agency such as the Secretary of State’s office or the local county clerk’s office. If you do not know where to find a registered agent, you can always check online. Many states provide a list of registered agents on their respective websites.
The Uniform Commercial Code requires that every domestic corporation appoint a registered agent within the state in which it does business. This requirement applies regardless of how small or large your business is. However, there are some exceptions. For instance, corporations formed under federal laws, including those pertaining to bankruptcy, are exempt from appointing a registered agent. In addition, foreign corporations must appoint a registered agent in each state in which they conduct business.
Step 2 – Which Type
There are three different LLC types you can form: Domestic, Foreign, and Hybrid. A hybrid LLC combines elements of both types.
Domestic vs. Foreign:
A domestic corporation is formed under state law. This means it must be registered with the secretary of state where it is incorporated.
Foreign corporations are formed under federal law. They do not have to register with the states.
A hybrid LLC combines elements of each type.
Step 3 – Registration Documents
The New Mexico Secretary of State’s Office offers online
Step registration for limited liability companies (LLCs), general partnerships, corporations, and foreign entities. Step You must complete the LLC filing forms before registering your entity. If you are filing electronically, you can do it yourself. Otherwise, you can hire a registered agent to prepare the documents, register your entity, and file the documents with the state.
Online registration is free if you use eFile NM. For paper filers, there is a fee of $35.00 per form. There is no charge for domestic entities, but foreign entities pay $100.00. Foreign entities include those formed outside of the United States.
If you plan to incorporate, you should consult a lawyer about the steps you need to take. A lawyer can help you determine whether you need to incorporate, how much paperwork you need to fill out, and where to file the paperwork.
Step 4 – Pay the Fee
The New Mexico Secretary of State’s Office announced today it will require applicants for a domestic limited liability corporation (LLC), foreign LLC, or online filer to provide a nonrefundable processing fee in order to receive the necessary documents and instructions to complete the form.
The fee is $50 for a domestic LLC and $100 for a foreign LLC. The fee applies to both paper and electronic filings. For those filing via Adobe PDF, the fee is included in the cost of the document package.
Those filing via mail are required to submit a check or money order payable to the “New Mexico Secretary of State.” All articles must be mailed directly to the office listed above.
Step 5 – Operating Agreement (optional)
An LLC operating agreement is an essential legal document for any business entity. In addition to setting out how the members are to conduct themselves within the organization, an operating agreement outlines the relationship between the members of the LLC.
The most common type of operating arrangement is called a “member-managed LLC.” This structure allows each member of the LLC to manage his or her individual affairs without having to go through the hassle of forming a separate company.
A member-managed LLC requires a written operating agreement before the LLC can function. Members must sign the operating agreement to join the LLC.
In some cases, a member-managed LLC will require additional documents such as a certificate of formation or articles of incorporation. These documents are required to form the LLC under state law.
Step 6 – Employer Identification Number (EIN)
The IRS requires every person doing business in the United States to register with the agency. You’ll need to apply for an employer identification number (EIN) if you plan to hire employees. This unique identifier allows employers to report information about their businesses on tax forms.
An EIN is needed if your business wants to pay payroll taxes or any other federal taxes. In addition, it helps ensure that you’re paying the correct amount of taxes. Without an EIN, you won’t be able to open a business bank account, credit card accounts, or even online banking accounts.
You must obtain an EIN for each employee you intend to hire. The process is easy and free. However, there are some exceptions. For example, if you work part-time for someone else, you don’t need an individual EIN. But if you run a sole proprietorship, you do need one.
You can use your Social Security number as your EIN if you’re self-employed. Once you’ve obtained an EIN, you’ll be eligible to receive a W9 form from the IRS. This is a document that confirms your identity and verifies your employment status.
Frequently Asked Questions
Can I write my own operating agreement?
While using an attorney is the safe option as they will customize it to fit the specific needs for your business, the free Operating Agreement templates from the providers above will work well. However, you may want to consider hiring an attorney to draft an operating agreement for your business.
Why do I need an LLC Operating Agreement in New Mexico?
An operating agreement is not required by law, but it’s a good idea to draft one anyway. This type of agreement establishes the rules of operation for your LLC and serves as evidence that the members of the company are indeed different people. In addition, it protects against personal liability for the debts of the company.
A New Mexico LLC Operating Agreement is not required to register your company with the secretary of state. However, it’s beneficial to have one even though it doesn’t require anything specific. Your operating agreement will help protect the liability status of the LLC. If the LLC is sued, having the name of each member listed in the document will prove that no one individual is responsible for the actions of the company.
James Rourke is a business and legal writer. He has written extensively on subjects such as contract law, company law, and intellectual property. His work has been featured in publications such as The Times, The Guardian, and Forbes. When he’s not writing, James enjoys spending time with his family and playing golf.