New Mexico vs Florida: Which State Is Better to Open an LLC?
One of the advantages of limited liability companies is the ability to open a business in any state, regardless of where you live. That’s why there are many disputes between entrepreneurs about New Mexico and Florida LLCs.
No matter the advantages of this or that state, in most cases, it’s always easier and more profitable to start a business in your home state, even if it’s eCommerce. All because foreign agencies often require double registration, which implies twice as many state fees.
However, if you’re still wondering which state to choose for your LLC, we recommend that you read our short review below or find out more about the differences in registration in the states of New Mexico vs Florida LLC review at llc.services.
Common Features of LLCs in New Mexico and Florida
In this subsection, we’re going to focus on what New Mexico and Florida have in common. Namely, the advantages provided by the LLC structure itself.
An LLC allows the owner to experience first-hand all the benefits of limited liability, which helps protect personal assets from any possible debts of the company.
You can also notice some common things in the filing of Articles of Organization. The registration process is quite simple and straightforward, no matter which application method you choose: online or by mail. You can also notice quite a few similarities in the ability to choose the number of members of your LLC (single-member or multiple-member LLC), as well as those in the requirements regarding your registration documents.
Differences in New Mexico and Florida LLC Formation Process
By focusing your attention on the differences, you can better understand the reasons why New Mexico or Florida is a more suitable state for your LLC. And the first difference is associated with tax rates on gross receipts, which are 6% in Florida and 5.1%-8.6% in New Mexico (depending on the location).
In this table, you can find out more about taxes in each state:
|Self-employment tax on business profits||+||+|
|Federal tax on any profits||+||+|
|Corporate tax||For some types of LLCs||+|
|Sales tax||For some types of LLCs||For some types of LLCs|
|Income tax (employees)||+||+|
|State income tax (profits)||–||+|
New Mexico and Florida tax comparison in numbers:
- There’s no income tax in Florida, but in New Mexico, it will range from 1.7% to 4.9%;
- The employee payroll tax in the two cases would cost 15.3%;
- The federal self-employment tax requirements are the same at 15.3%;
- Franchise tax in New Mexico is $50 per year, and it’s 5.5% in Florida.
LLC in New Mexico: Advantages & Disadvantages
The state of New Mexico encourages entrepreneurs to start businesses with its low state fees. Thus, to file your Articles of Organization and other founding documents with the Secretary of State, you will have to pay the state filing fee of $50, which is quite cheap if compared to other states.
There are no special requirements regarding the filing of annual reports with basic information and facts about your company. Compared to many other states, including Florida, New Mexico is definitely a winner in this regard.
Moreover, there are also restrictions on public information in the state, which means that business owners don’t have to list their names and the names of their LLC managers in the Articles of Organization. Consequently, your contact information, your full name, will not become publicly available.
But you need to understand the other side of the coin, the essence of which can be an obstacle to business growth. Poverty and unemployment rates remain quite high in New Mexico, which plays a huge role for many businesses.
Also, when setting up an LLC in New Mexico, it’s important to understand that asset protection is not automatic. To secure it, you need to prepare an internal company document, an operating agreement (OA), which will be an additional tool to your Articles of Organization.
An operating agreement is a document that will help avoid any possible disputes between members of the LLC and usually includes financial and functional decisions (e.g. rules, regulations, and provisions to adhere to and follow in certain events).
LLC in Florida: Advantages & Disadvantages
Just like in New Mexico, your Articles of Organization must be sent to the Secretary of State upon payment of the obligatory state filing fee. In Florida, the fee is $125 ($100 registration fee + $25 registered agent fee), which is considerably higher when compared to New Mexico.
However, Florida has no problems with poverty and unemployment, which makes the state more attractive. In addition, tax rates for limited liability organizations here are also quite appealing.
There are some privacy issues with LLC ownership transfers. In Florida, they have to be public. You can report the changes in your LLC ownership by filing Articles of Amendment or submitting an Amended Annual Report to the Secretary of State. However, this issue can be easily resolved if you spell out all the necessary rules/regulations in your OA in advance.
Which State Is Best for My LLC?
To understand which of these two states is best for you, you should do your own research and assess your business capabilities. Once you learn all the necessary laws and regulations related to LLCs in both states, you will know which state best matches your business specifics and goals.
Note that before you choose a suitable state, you might want to consult an experienced lawyer or a professional attorney in this regard. Such a specialist will be able to tell you how to properly prepare an OA to protect your business and personal assets. Of course, this is an additional expense, but it’s totally worth it if you want to do everything right from the beginning.
How Can I Make Registration Easier?
You can simplify your LLC formation process and avoid a hassle with registration paperwork by hiring a business formation service online. The latter will help you with filing procedures and document preparation.
Thus, a professional LLC formation service will file the Articles of Organization for you, as well as allow you to avoid other mistakes during the registration stage. Such services will usually provide their own registered agents for your LLC and search for a suitable business name. They can also reserve it or file a DBA, and you can always count on getting legal advice and support in tax issues.
As for the pricing, each agency will offer a few price plans on the official website. Getting services in packages can be quite beneficial because certain services, often the most needful ones, will usually cost you a lot more if you buy them separately.
You can find dozens of appealing offers online these days, but make sure you only pay for those services that you really need for your business.