 |
New Mexico LLC
|
Advantages of Limited Liability Company
- Limited Liability: Owners of a LLC have the limited liability protection of a corporation.
- Flexible Profit Distribution: Limited liability companies can select varying forms of distribution of profits. Unlike a common partnership where the split is 50-50, LLC have much more flexibility.
- No Minutes: Corporations are required to keep formal minutes, have meetings, and record resolutions. The LLC business structure requires no corporate minutes or resolutions and is easier to operate.
- Flow Through Taxation: All your business losses, profits, and expenses flow through the company to the individual members. You avoid the double taxation of paying corporate tax and individual tax. Usually, this will be a tax advantage, but circumstances can favor a corporate tax structure.
Disadvantages of Limited Liability Company
- Limited Life: Corporations can live forever, whereas a LLC is dissolved when a member dies or undergoes bankruptcy.
- Going Public: Business owners with plans to take their company public, or issuing employee shares in the future, may be best served by choosing a corporate business structure.
- Added Complexity: Running a sole-proprietorship or partnership will have less paperwork and complexity. A LLC may federally be classified as a sole-proprietorship, partnership, or corporation for tax purposes. Classification can be selected or a default may apply.
By New Mexico and other state law in order to proceed with forming a llc, you need to prepare a written abstract detailing your llc purpose, the names of your initial New Mexico LLC members, the name and address of your New Mexico registered agent, the details of which will be introduced into the body of your LLC operating agreement and related New Mexico LLC formation documents assembled for application to the state of New Mexico.
New Mexico’s Business Tax Climate Ranks 40th
New Mexico ranks 40th in the State Business Tax Climate Index, which measures the impact on business of five major elements of the tax system: the percentage of income taken by all taxes, the individual income tax rates, the corporate income taxes, the sales tax rate, and the complexity of the tax system. Neighboring states ranked as follows: Utah (26th), Arizona (19th), Texas (4th), Oklahoma (14th) and Colorado (8th).New Mexico’s State/Local Tax Burden Under National Average
In the early nineties, New Mexico’s tax burden was substantially above the national average. Since peaking at 11.6% in 1993, however, the state has seen its figure fall significantly. Individual incomes in the state have risen faster than state/local tax collections. Estimated in 2004 at 9.7% of income, New Mexico’s state/local tax burden percentage is ranked 29th nationally and just under the national average of 10.0%.
New Mexico’s Individual Income Tax System
New Mexico’s personal income tax system consists of seven brackets and a top rate of 8.2% kicking in at an income level of $65,000. New Mexico’s top rate of 8.2% is 7th highest among states levying personal income taxes. New Mexico's 2002 individual income tax collections were $531 per person (35th highest nationally).
New Mexico’s Corporate Income Tax Rate and Collections among the Nation’s Highest
New Mexico’s corporate tax structure consists of three brackets in which all income under $500,000 is taxed at 4.8%, income between $500,000 and $1 million is taxed at 6.4% and all income over $1 million is taxed at 7.6%. This upper tax rate ranks the New Mexico 20th highest among states levying corporate income taxes. In 2001, corporate tax collections reached $104 per capita ($159,338,000 total), good for 18th highest nationally.
Home | Site-Map