Benefits of a Corporation
A corporation’s shareholders have limited liability for the corporation’s financial obligations because the corporation is a legal entity separate from its owners. This means that when shareholders invest in a corporation, they are only risking the amount of their investment. They are not responsible for the full amount of any court judgment or debt owed by the corporation. There may also be other advantages, such as tax savings and investor appeal, to incorporating your business.
Requirements for Incorporating in New Mexico
Preparing Your Articles of Incorporation
To form a corporation in New Mexico, you must file articles of incorporation and a signed registered agent form with the Secretary of State and pay a filing fee. The corporate existence begins when you file the articles, unless the articles specify a later date. The articles of incorporation must contain the following information:
- Name of the corporation
- Names and addresses of incorporators
- Names and addresses of initial directors
- Registered agent and registered office
- Period of duration, if not perpetual
- Corporate purpose
- Stock structure
A corporation can offer different types of stock, called classes or series. These classes can offer different rights to their shareholders, for example some classes of stock may offer voting rights while others do not. Regarding stock structure, the follow applies:Regarding stock structure, the articles of incorporation must also state the following:
- The articles of incorporation must list the total number of shares the corporation is authorized to issue.
- If there will be more than one class or series of shares, the articles must provide a designation for each class or series, state the number of shares in each class or series, and state the preferences, limitations and relative rights applicable to each class or series of shares.
Naming Your Corporation
Before filing articles of incorporation, you should check the availability of your preferred corporation name, which can be done by searching the Secretary of State’s records online or through an online entity name check service.
A corporate name can be reserved for 120 days by filing an application with the Secretary of State’s office or through an online entity name reservation service.
Your corporation’s name must meet the following requirements:
- It must contain the words “corporation,” “incorporated,” “company” or “limited,” or an abbreviation of one of those words.
- It cannot be the same as or confusingly similar to the name of any corporation incorporated or authorized to do business in New Mexico or to a name that a corporation has reserved or registered.
An incorporator is responsible for signing the articles of incorporation and filing them with the Secretary of State. The incorporators’ responsibilities end when the articles of incorporation are filed.
The following requirements apply when specifying incorporators in your articles:
- Incorporators’ names and addresses must be listed in the articles of incorporation.
- Your corporation must have at least one incorporator.
- An incorporator may be a person or a corporation. An incorporator does not need to be an officer, director or shareholder of the corporation being formed.
The board of directors determines a corporation’s overall strategy, policies and business goals. Directors must be diligent and prudent in managing the corporation’s affairs, and their actions must be in the best interests of the corporation.
The following requirements apply when specifying directors for your corporation:
- A corporation may have one or more directors.
- The number of directors should be fixed in the articles of incorporation or bylaws.
- Corporate directors do not need to meet any particular qualifications under state law.
Specifying a Registered Agent and Registered Office
Every corporation must have a registered office and a registered agent at that office who is responsible for receiving lawsuits, notices and demands that are addressed to the corporation. When specifying your registered agent in the articles of incorporation, you must adhere to the following requirements:
- The articles of incorporation must include the complete street address in New Mexico of the registered office and the name of the registered agent, who must be located at that office.
- A registered agent must be either an individual who resides in New Mexico or a corporation formed or authorized to do business in New Mexico that has a place of business in the state. Although a corporation cannot act as its own registered agent, the registered office can be the corporation’s place of business.
- The registered agent must sign a form stating consent to act on behalf of the corporation. This form is submitted along with the articles of incorporation.
Stating a Corporate Purpose
You can state your corporation’s purpose in general terms to allow flexibility in case your business changes in the future. For example, New Mexico allows you to state that your corporation’s purpose is “the transaction of any lawful business for which corporations may be incorporated under the Business Corporation Act.”
Determining Incorporation Bylaws
Corporate bylaws describe the rules and procedures that will govern the corporation. They are not filed with the Secretary of State. The following requirements pertain to bylaws for New Mexico corporations:
- The directors are required to adopt initial bylaws.
- Bylaws may contain any provision for managing and regulating the corporation’s affairs.
- Bylaws cannot include anything that is inconsistent with the law or the articles of incorporation.
Costs of Incorporating in New Mexico
The New Mexico Secretary of State requires a fee when filing articles of incorporation or reserving a corporation name. Corporations are also required to pay state and federal income taxes.
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