Is it time to close your New Mexico corporation, but you’re not sure where to start the process?

Dissolving a corporation is a lengthy but manageable endeavor. And every state’s procedure looks a bit different. In this guide, we’ll cover the state-specific components of dissolving your New Mexico corporation. In no time, you’ll be on your way to whatever’s next.

The Basics of Dissolving a New Mexico Corporation

In general, every dissolution follows the same basic structure, with 5 basic steps. There are, of course, a lot more “nuts and bolts” to the process (read more about them here), but for now, let’s get a bird’s eye view:

  • Vote to dissolve the corporation: Corporations are not solo endeavors, and ending them isn’t one individual’s call. First, your board will need to convene and vote on a motion to dissolve the corporation. After that, some corporations will need to have their shareholders vote for the dissolution as well (depending on the corporation’s bylaws).
  • File the dissolution paperwork: Once your corporation’s members have decided to dissolve, you’ll reach out to the New Mexico Secretary of State and fill out the appropriate Articles of Dissolution.
  • Fulfill your tax obligations: Your corporation will need to pay any taxes due to the IRS and the New Mexico Taxation and Revenue Department. This can be a multi-step process as you liquidate assets and pay any creditors.
  • Cancel licenses and close accounts: If your corporation maintains any licenses or permits, this is the time to cancel them so you aren’t charged renewal fees. You should also close down accounts with vendors and your bank (once your financial affairs are settled).
  • Notify your stakeholders: A dissolving corporation must settle any financial debts, liquidate its assets, and distribute the appropriate funds to its shareholders. Stakeholders must be notified so they can lay claim to their share in a timely fashion.

That’s the gist of dissolving a New Mexico corporation. But before you can truly start the process, you’ll need to answer one important question.

Who’s Dissolving the New Mexico Corporation?

Two key groups can dissolve a corporation: the original incorporators or the board of directors with shareholder approval. The group initiating the dissolution affects how you file with the Secretary of State. So let’s talk about each.

Dissolving a New Mexico corporation by the incorporators or initial board of directors

In some cases, a New Mexico corporation might decide to dissolve before they really get things up and running. More specifically, if the corporation hasn’t issued stock or conducted any business yet, then the incorporators or initial directors will be the ones who vote to dissolve the corporation.

Once the dissolution vote passes, the corporation should submit an Application for Tax Clearance for Dissolution or Withdrawal. This application helps guarantee that you’re responsibly winding up your corporation’s financial affairs. If you hired any employees, you’ll need to get a Certificate of Compliance from the Department of Workforce Solutions (probably not necessary if you haven’t started business, but we’re mentioning it just in case).

Once you have the appropriate clearances, you can draft your Articles of Dissolution; the prepared form by the Secretary of State is for corporations that have started business and issued shares. Here’s the information you’ll need to include on the form:

  • Name of your corporation
  • Date your certificate of incorporation was filed
  • Confirmation that no shares have been issued
  • Whether business has or has not commenced
  • Confirmation that any assets have been appropriately distributed and any debts are paid
  • Confirmation that a majority of the incorporators approve the dissolution

You should file this form in duplicate with the Secretary of State. The form costs $50 to submit. New Mexico usually processes this paperwork within about 15 business days.

Dissolving a New Mexico corporation by the shareholders

In a corporation that has issued shares, the dissolution process looks a bit different. In most cases, the board votes for a motion to dissolve the corporation. Then that vote is brought before the shareholders for approval.

Once the approval is obtained, the corporation will have to file several forms, starting with the Statement of Intent to Dissolve. Here’s the information required for this form:

  • Name of the corporation
  • Any DBAs used
  • Business ID number of the corporation
  • Name and address of each officer of the corporation
  • Name and address of each director of the corporation
  • Signatures of shareholders
  • Executed date
  • Name, title, and signature of an authorized individual
  • Completed document delivery form

There’s a $50 fee for this filing. After it’s complete, you’ll need to file an Application for Tax Clearance for Dissolution or Withdrawal along with a Certificate of Compliance and a Letter of Clearance, which you can file in conjunction with your Articles of Dissolution. Here’s the information required for this document:

  • Name of the corporation
  • Any DBAs used
  • Business ID number of the corporation
  • Date the statement of intent to dissolve was filed
  • Confirmation that all debts, liabilities, assets, and other responsibilities have been appropriately dealt with
  • Confirmation that if the corporation served as a registered agent for any businesses, the appropriate resignation has been filed
  • Executed date
  • Name, signature, and title of an authorized individual
  • Completed document delivery form

There’s a $50 fee for this filing. The Secretary of State usually processes these forms within 15 business days. Between all the documents you have to file, you can expect the whole process to take a month or two.

What About Administrative Dissolutions?

Sometimes, the state of New Mexico may force a corporation to dissolve against its will. Usually, this happens because a corporation hasn’t filed its annual report, paid its taxes, maintained its registered agent, renewed appropriate licensure, or some other clerical error. A corporation may also be dissolved for any activities that are ruled fraudulent or otherwise harmful to the public.

In most cases, these corporations can be restored and resume business. The process can be quite a hassle, but it is manageable. First, a corporation must resolve whatever issue caused its dissolution. A corporation with defunct annual reports, for example, would need to submit the reports and pay any missing fees (plus late fees).

After that, you can file for reinstatement with the Secretary of State. The fee for this is at least $200, plus any delinquent taxes and fees. Please note that your name becomes available for other businesses to use after you’re dissolved, so you’ll need to check its availability before applying.

It’s far easier to avoid dissolution entirely; remain compliant with your corporation, and you can skip this step completely.

Frequently Asked Questions

What happens to my New Mexico business name?

After you dissolve your corporation, your business name immediately becomes available for others to use. That’s why we highly recommend being 100% sure you’re done conducting business before filing any dissolution paperwork.

Can I change my mind and go back into business?

Yes, but only if the Certificate of Dissolution hasn’t been filed. You have anytime from the moment you file your Statement of Intent and filing the Certificate to revoke the dissolution. To do so, you’ll need to get the approval of whichever group approved the dissolution. Then you can file your Revocation of Dissolution. Find the full state guidelines for this process here.

What if I want to become an LLC instead of closing my business?

New Mexico is one of a few states that doesn’t provide for statutory conversions (only statutory mergers). Because of that, if you want to operate as an LLC, you’ll have to dissolve your corporation and start over fresh as a brand-new LLC. For more information on starting and running an LLC, check out our guide to starting a New Mexico LLC.

Do I have to publish a notice that my corporation is dissolving?

You must notify your stakeholders that your corporation is dissolving. Some corporations use a newspaper publication to help dispose of unknown claims, but it’s not explicitly required by the state.

How can I avoid being dissolved because of a registered agent issue?

When you change your registered agent, you will actually need to file the information with multiple groups, including the Secretary of State, the taxation department, and more (find the full list on the New Mexico Business Portal. For more information on how to change your registered agent in New Mexico, look here.

As long as you avoid a lapse in your agent coverage, your corporation will stay compliant.

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