Do you own a limited liability company (LLC) created in a state other than New Mexico, but you want to expand your business to the Land of Enchantment? If so, you’ll need to qualify your foreign LLC in order to transact business in New Mexico.
What is a foreign qualification and how do foreign LLCs function within the state of New Mexico? In this guide, we’ll answer these questions and more.
Rocket Tip: If you’d rather hire an online service to handle this process for you, many of the best LLC services can handle it for you.
What Is a Foreign Qualification?
A foreign qualification enables your limited liability company to do business in the state of New Mexico. It doesn’t matter which state you originally formed your business in ― or in other words, the state your domestic LLC is located in ― as the qualification process to register a foreign LLC in New Mexico is the same regardless of where your domestic LLC is based.
The confusion surrounding foreign qualification usually centers on what it means to “do business” in a state outside of your primary state. This gets especially problematic considering some states don’t strictly define what it means to transact business in that state. New Mexico state law does not define the term “doing business” in the state.
What Qualifies as ‘Doing Business’ in New Mexico
Even though there is no set definition of “doing business,” you will generally need to form a foreign LLC in New Mexico if your business pursues any of the following activities:
What Does NOT Qualify as ‘Doing Business’ in New Mexico
Meanwhile, New Mexico has adopted the provisions of the Revised Model Act, which outline certain exempt activities. The following activities are not considered to be “doing business” in New Mexico, and you do not need to qualify a foreign LLC to pursue them:
Additionally, New Mexico has added the following provision to this list:
How to Get Foreign Qualification in New Mexico
If you want to foreign qualify your LLC in New Mexico, you must file an Application for Registration of a Foreign Limited Liability Company. You will need to provide the following information and documents before filing the paperwork with the Secretary of State:
Filing Fee: $100, with the check made payable to the “New Mexico Secretary of State.”
What Is the Penalty for Not Getting Foreign Qualification in New Mexico?
There are two major penalties for failing to qualify a foreign LLC in New Mexico. First, your business will be liable for various fees and penalties, including a $200 fine for every year that the business has operated without a Certificate of Authority. Potentially more damaging is the second penalty, which is that your business will not be allowed to maintain a proceeding in the New Mexico court system until it files the necessary paperwork. This means that individuals and businesses could fail to honor contracts with your business, and you wouldn’t be able to do anything about it legally.
Should I Hire a Business Service Provider to File My New Mexico Foreign Qualification?
If you don’t want to handle your foreign qualification on your own, you have options. Some entrepreneurs choose to hire a lawyer to prepare and file their Certificate of Authority, which can be a good option if you’re concerned about getting the job done right. However, attorney’s fees can be quite expensive.
The other option is to hire a business service provider like Incfile or ZenBusiness to register your foreign LLC with the state of New Mexico.
These companies can typically get your foreign qualification done for a fraction of the price of an attorney. This is our preferred route if you don’t want to go with the DIY option.
The process for getting a foreign qualification in the state of New Mexico isn’t particularly complicated compared to some other states. However, you will need to provide a Certificate of Good Standing, which can only be obtained from the state in which your business was formed. Forms and fees will vary by state. New Mexico’s rules and regulations regarding which LLCs need to foreign qualify are considerably looser than many states. Still, this isn’t a process that can be taken lightly, because the penalties for not qualifying a foreign LLC in New Mexico can be severe.
We hope this article managed to answer your questions about obtaining a New Mexico foreign qualification, and we wish you a prosperous business future!