Not every limited liability company (LLC) lasts forever. In fact, many LLCs in New Mexico are only intended to operate for a designated time period. Whatever your reasoning for closing up shop, the state of New Mexico has a specific process that all LLCs must go through before they are considered to be officially dissolved.
Which steps are involved in the New Mexico LLC dissolution process? Are there different processes for businesses based in New Mexico and those expanded from other states? When do you need to dissolve your LLC? We’ll answer all of these questions and more in this article.
How Do You Dissolve a New Mexico LLC?
When closing a business registered as an LLC in the state of New Mexico, you’ll need to take care to dissolve your business exactly as the state outlines. The most important part of this process is filing the correct paperwork with the relevant legal entities, but this is far from the only vital step.
In addition to filing documentation of your New Mexico LLC dissolution, you will need to liquidate the assets of your business, notify all individuals and business entities that have an interest in your company, and resolve any outstanding liabilities with vendors, suppliers, or clients.
There are potentially severe penalties for failing to comply with the New Mexico LLC dissolution process, and you as a business owner could be personally responsible for your LLC’s liabilities and debts. Therefore, it’s extremely important that you complete each step outlined in this guide to ensure an effective and compliant dissolution.
As for the question of when you should dissolve your LLC, you should do this as soon as you’re certain you will no longer conduct business through this entity. This gives you an opportunity to close up shop with the knowledge that you’re not transacting any business after you start the dissolution process.
Dissolution for Domestic New Mexico LLCs
Is your LLC based in New Mexico, and registered as a domestic entity in this state? If so, you’ll start your dissolution process with a document known as the Articles of Dissolution. This form will include some crucial information about your business, so you should fill it out carefully and accurately.
Among the info you’ll need to complete this form is the official business name of your LLC, the date you originally registered your LLC, the dates you filed any amendments to your Articles of Organization, the reason for dissolving your business, the name and address of the person who has the authority to act on the LLC’s behalf, the effective date of your dissolution, and your signature.
Once you’ve filled out this form, you’ll need to fill out the Document Delivery Instruction Form, which is attached in the same file as the Articles of Dissolution. This form only asks for your contact information so the state can send you your completed Articles of Dissolution after filing.
You will then file both of these documents with the Secretary of State in person or via mail, along with your $25 filing fee. This state can take up to 15 business days to process a dissolution filing. Keep in mind that you may also have tax responsibilities to wind up as well. At a minimum, you’ll need to submit a Business Tax Registration form, and you may also be required to submit a tax clearance request. Contact the New Mexico Taxation and Revenue Department for more information in this regard.
But what does this process look like for a business that was formed outside the state and then expanded to New Mexico?
Dissolution for Foreign LLCs in New Mexico
If you operate a foreign LLC in the state of New Mexico, the dissolution process looks quite different than it does for domestic entities. In fact, it’s actually technically called a cancellation rather than a dissolution.
To dissolve a foreign LLC in this state, you’ll first complete the Application for Cancellation of Registration document. Much of the information for this form is the same as the info provided for the Articles of Dissolution, but there are some differences for the foreign version.
This form requires your LLC’s name and business ID number, the jurisdiction where your LLC was originally registered, contact information for potential future service of process deliveries, the date, and the name, signature, and title of your LLC’s authorized person. Like the Articles of Dissolution, the Application for Cancellation of Registration requires a Document Delivery Instruction Form.
This document has a $25 filing fee, it takes roughly 15 business days to process, and you can file it via mail or by hand with the Secretary of State. As with a domestic dissolution, you should check to ensure you don’t have any outstanding tax obligations.
Involuntary Dissolutions in New Mexico
We should also discuss the potential for an LLC to be involuntarily dissolved by the state. There are several reasons this could happen, and most of them revolve around significant mistakes made by the LLC’s ownership group.
For instance, New Mexico could involuntarily dissolve your LLC if there is no practical way for the LLC to continue operating in accordance with its operating agreement or Articles of Organization, you fail to maintain a registered agent, or if you fail to notify the state if you change or amend your LLC.
It’s obviously never advisable to operate your LLC in a way that leads to the state dissolving it against your will. However, the penalties in this state aren’t particularly harsh. In fact, the Application for Reinstatement document doesn’t even have a filing fee, although you will need to catch up on any delinquent fees, fines, or penalties that may apply to your business. It is important to note that you need to request your reinstatement within two years of the state dissolving your business, but the actual process isn’t difficult or complex.
Even though New Mexico doesn’t have the same harsh penalties you’ll find in some other states, if you keep operating your business after the state involuntarily dissolves it, you could open yourself up to all sorts of legal issues due to the continued operation of a non-compliant entity. In general, you should be as careful as possible when it comes to following the rules and regulations in this state.
It’s not that the process for dissolving or withdrawing your LLC in New Mexico is terribly difficult. However, it is a process that you need to take great care to complete in a compliant fashion, or you could expose your business to a wide variety of potential legal complications and financial penalties. Trust us when we say it’s much smarter and easier to simply follow the directions with care to avoid any issues.
Do you need more information about operating an LLC in New Mexico? Take a look at the following resources: