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UNDERSTAND THE BASICS OF AN LLC
An LLC is a hybrid business entity that combines the features of a corporation and a partnership. Like a corporation, an LLC offers its owners limited liability protection from business debts and liabilities. And like a partnership, an LLC is relatively easy to set up and maintain.
There are two types of LLCs in New Mexico: MEMBER-MANAGED LLCS AND MANAGER-MANAGED LLCS.
In a member-managed LLC, all of the members (i.e., the owners) take an active role in running the business.
In a manager-managed LLC, on the other hand, one or more members appoint a manager (or group of managers) to handle day-to-day operations.
ADVANTAGES OF AN LLC
There are several advantages to setting up an LLC in New Mexico, including:
PERSONAL LIABILITY PROTECTION
LLC owners are not personally liable for the debts and liabilities of the business. This means that your personal assets—such as your home, car, and savings—are protected in the event that the business is sued or can’t pay its debts.
PASS-THROUGH TAXATION
LLCs are “pass-through” entities, which means that the business itself is not taxed on its profits. Instead, the profits “pass-through” to the owners, who report them on their personal tax returns. This can save you money on taxes because you only have to pay taxes on your share of the profits, rather than on the profits of the entire business.
FLEXIBLE MANAGEMENT STRUCTURE
LLCs can be managed by one or more members (owners), and there’s no requirement that members be US citizens or residents. This makes LLCs a good choice for businesses with foreign ownership or management structures.