How to Dissolve an LLC in New Mexico? (Full Guide)
If you are the business owner of an LLC that is no longer active or economically viable, you may be wondering how to dissolve it. New Mexico LLC dissolution involves specific steps to complete and finalize the process.
As an expert in the business industry, I am in a professional position to provide you with my insights regarding the dissolution process for your New Mexico LLC.
The article is also backed by legal representation from our panel of esteemed attorneys to ensure compliance with the law.
- To dissolve an LLC, consult the operating agreement, close all tax accounts, and file the Articles of Dissolution with the Secretary of State.
- Before proceeding with the dissolution, notify all entities that have an interest in the company, including clients and creditors.
- In 2023, per the U.S. Small Business Economic Profile, small businesses accounted for 5,469 closings, underscoring the significance of adhering to proper dissolution procedures.
- Properly dissolving an LLC is crucial for maintaining the business ecosystem's integrity and supporting a healthy economic environment, in my opinion.
6 Steps to Dissolving an LLC in New Mexico
To dissolve an LLC in New Mexico, notify all creditors about the company's dissolution and settle outstanding obligations.
With New Mexico ranking among the top states in terms of percentage increase in business applications and experiencing a growth of more than 35% over the past year, following the U.S. Census Bureau statistics, understanding the dissolution process becomes even more crucial for navigating this dynamic business landscape .
Here are the correct steps to follow.
Step 1: Vote to Dissolve the LLC
Before starting the dissolution process, review the LLC’s operating agreement, which outlines the specific provisions for dissolution, including voting requirements.
Convene a meeting with all LLC members to vote on the dissolution. The operating agreement will determine the number of votes required for approval, which can be either a simple majority or a supermajority.
In the absence of an operating agreement, New Mexico state laws apply.
If you are unsure where to find your operating agreement, you can typically request a copy from your New Mexico registered agent.
Step 2: Notify Creditors About Your LLC's Dissolution
New Mexico law requires LLCs to notify creditors as part of the dissolution process.
This ensures that the company fulfills its legal obligations and avoids potential legal repercussions, such as lawsuits from creditors who were not properly informed.
In 2023, according to the U.S. Small Business Administration, small businesses accounted for 5,469 closings, highlighting the importance of properly concluding all business activities to avoid contributing to this statistic .
The notification allows creditors to present their claims against the LLC.
Step 3: File Final Tax Returns and Obtain Tax Clearance
Submit a final return and close all tax accounts, including unemployment insurance tax, employee withholding tax, and gross receipts tax.
This will qualify you to avail of tax clearance from the New Mexico Taxation and Revenue Department.
"Processing times for certificates of termination usually range from 3-5 days, carried out by the New Mexico Comptroller’s office. For obtaining tax clearance, submitting Form 05-359, Request for Certificate of Account Status, is necessary, which typically takes 4-6 weeks to process."
-Jon Morgan, Co-Founder & Chief Editor of Venture Smarter
If you want to be certain that all of your New Mexico LLC's tax accounts are properly closed, you may need to seek a professional to deal with the process on your behalf.
Step 4: File Articles or Certificate of Dissolution
File Articles of Dissolution with the New Mexico Secretary of State to officially dissolve your LLC.
The form can be found on New Mexico's official website and must be completed in full before submission.
A filing fee of $25 must be paid to have the Articles of Dissolution processed. It takes 15 days to process the document, after which your company will be officially dissolved .
Step 5: Distribute Assets
The distribution of assets should be in line with the provisions outlined in the LLC's operating agreement. This document typically specifies how assets should be allocated among members.
Following these guidelines ensures a fair and agreed-upon distribution, minimizing disputes.
Proper distribution of assets ensures that all members receive their fair share based on their investment or ownership stake in the LLC.
This equitable treatment is crucial for maintaining trust and goodwill among members, especially in a dissolution scenario.
Step 6: Close All Accounts and Cancel Licenses and Permits
Closing all business accounts, including bank accounts, credit lines, and merchant services, is essential to finalizing the financial affairs of the LLC. This step prevents any further financial activity or transactions that could complicate the dissolution process.
By closing these accounts, the LLC ensures that there are no unauthorized uses of its accounts post-dissolution.
Canceling any licenses, permits, or registrations held by the LLC is a legal requirement. This step is necessary to inform regulatory bodies that the LLC is no longer in operation and to ensure compliance with state and local laws.
How Much Does It Cost to Dissolve an LLC in New Mexico?
It costs $25 to dissolve an LLC in New Mexico, payable to the Secretary of State.
How Long Does It Take to Dissolve an LLC in New Mexico?
It takes 3-5 business days to dissolve an LLC in New Mexico if you submit the dissolution documents by mail or in person.
What Are the Effects of a New Mexico LLC Dissolution?
Once your New Mexico LLC is dissolved, it is no longer a legal entity. This means that it can no longer enter into contracts, own property, or conduct business in New Mexico.