New Mexico is one of the most affordable, flexible, and privacy-oriented states in the United States for forming a Limited Liability Company (LLC). New Mexico is one of the states with the most economic privacy and protective features, and asset protection laws. New Mexico does not require an annual report and has little ongoing maintenance that is perfect for non-U.S. residents and overseas entrepreneurs.
However, with an LLC comes responsibilities. To ensure the company stays active compliant and in good standing with state or federal authorities, one needs to report and fulfill their annual is tax report filing responsibilities.
That is what this guide is for. New Mexico LLC tax filing is comprehensive, covering all remaining state taxes, federal compliance, deadlines, forms, and penalties outlining the guide.
If you are a foreign entrepreneur working online or a U.S. resident, this article helps you to comply with the laws in peace.
How New Mexico LLCs Are Rank and Taxed
Before understanding the filing requirements, one needs to understand how LLCs are taxed.
A Limited Liability Company (LLC) is a “pass-through” entity. That means the company isn’t taxed on its income (unless it chooses to be). Instead, the profits and losses “pass through” to the company members, and they are taxed individually on their income tax returns.
Federal Default Tax Classification
Single-Member LLCs (SMLLCs):
By default, the IRS considers a single-member LLC a disregarded entity. This means that the income and expenses of the LLC are reported and taxed at the owner level on the personal tax return along with Schedule C of Form 1040 while the LLC is not required to file a tax return.
However, if the single member is a foreign individual, the rules are different (discussed later).
Multi-Member LLCs:
A multi-member LLC defaults to a partnership structure. It is required to file Form 1065 (U.S. Return of Partnership Income) and issue a Schedule K-1 to each member, which outlines the share of profits, losses, and tax credits of the LLC attributable to that owner.
Alternative Tax Elections
LLCs can also opt to be taxed as C Corporations or S Corporations by filing the IRS specified forms:
- Form 8832 – to elect C Corporation taxation.
- Form 2553 – To choose S Corporation taxation. (Only available to U.S. citizens and residents.)
These options allow certain tax planning opportunities to minimize self-employment tax, and reinvest profits in the business.
State-Level Taxes in New Mexico
Having a New Mexico LLC means no annual report, no franchise tax, and no LLC tax at the state level. This ease in ongoing compliance is considerably cheaper than states like Delaware, Nevada, and California.
Of course, depending on where and how your LLC does business, you may still owe New Mexico state income tax, and gross receipts tax.
a. Gross Receipts Tax (GRT)
GRT is the most common tax that applies to LLCs operating in New Mexico.
New Mexico is unique in that they charge a Gross Receipts Tax instead of a sales tax to the end consumer. Instead, the seller (business) pays the tax.
Important GRT facts:
- The GRT varies based on where the business is located, generally between 5% and 9%.
- New Mexico businesses need to register with the New Mexico Taxation and Revenue Department (TRD) to get a CRS (Combined Reporting System) identification number.
- GRT can be filed and paid online via New Mexico’s Taxpayer Access Point (TAP) system.
- How often you file will be contingent on the amount of your gross receipts, You will file either monthly, quarterly, or annually.
Your New Mexico LLC might be owned by non-residents and may be operating completely outside of the state. (This includes online businesses aimed at international consumers) and you may not owe any GRT.
However, if you are selling products or services in New Mexico or if your customers are located in New Mexico, you must comply with GRT regulations.
b. State Income Tax.
New Mexico state income tax applies to revenue generated and earned in New Mexico.
If your LLC generates revenue from New Mexico sources (for example, local sales or contracts), you may have to file a state income tax return even if you do not currently reside in New Mexico.
The applicable rates are 1.7% to 5.9% and are based on a taxpayer’s total taxable income.
You can file the return using:
- Form PIT-1 for individuals, or
- Form CIT-1 for corporations.
If your LLC does not generate any income in New Mexico, you normally do not need to file a New Mexico state income tax return.
Federal Tax Filing Requirements for New Mexico LLCs
Every U.S. entity must file with the IRS regardless of whether the LLC is operating within the U.S. borders.
a. U.S. Resident-Owned Single-Member LLC
- In the case of Single-Member LLCs, the owner will report the LLC activities on Schedule C of their personal Form 1040 if the owner is a U.S. citizen or a resident.
- Further, if the LLC does not earn income, the owner can file a zero-income report.
- If net earnings are greater than $400, self-employment taxes are due.
b. Multi-Member LLC
If on the other hand, you have a Multi-Member LLC, you are required to file Form 1065 (U.S. Return of Partnership Income) every year for that LLC and Schedule K-1 for each member, whereby each member receives their profit/loss share.
This is how the IRS gets to know how the income is allocated to each member, even though the LLC does not have to directly pay income taxes.
c. Foreign-Owned Single-Member LLC
This is one of the most critical categories for non-U.S. entrepreneurs.
If you have an LLC in New Mexico and it has only one owner and that owner is not a U.S. resident or citizen, you have to submit:
- Pro Forma Form 1120 (identify your LLC to the IRS)
- Form 5472 (report the LLC’s transactions with its foreign owner or other related parties)
The IRS utilizes Form 5472 to validate the transaction transparency of U.S. entities and foreign owners.
Deadlines and Penalties:
Due each year on April 15 (extended to October 15 with Form 7004).
You have a $25,000 penalty each year for not filing Form 5472 on time, even if your LLC is inactive.
Every foreign entrepreneur has to treat this ruling with the highest priority.
Employer and Payroll Tax Obligations
If your New Mexico LLC has employees, including remote employees, it must have a New Mexico Payroll Tax Account in addition to other state and federal employment and payroll tax obligations.
Federal Employer Obligations
- Obtain an EIN (Employer Identification Number) from the IRS.
- Withhold and pay FICA taxes (Social Security and Medicare).
- Report payroll taxes using Form 941 (quarterly) and Form 940 (annually).
- Provide employees with Form W-2 at the year’s end.
Employer Requirements by State
In New Mexico:
- You have to obtain a Withholding Tax Account from the Tax & Revenue Department (TRD).
- You have to file and pay withholding taxes on employees on a consistent basis (monthly or quarterly).
- Register with the Department of Workforce Solutions (DWS) for unemployment insurance taxes.
- You must file quarterly reports regarding employee wages.
You must give a Form 1099-NEC to report payments of $600 or more for the year, even if your LLC only contracts out to people and does not have any full-time employees.
Annual Maintenance & Compliance Requirements
New Mexico is unique in that there’s no need for an annual report or franchise tax assessment when it comes to LLCs. This significantly lowers your annual upkeep costs and saves you some management duties.
That said, there are some minimum compliance steps you need to complete for every LLC.
- Maintain a Registered Agent – Every LLC in New Mexico requires an Agent. There must be a physical location in New Mexico. This Agent receives all the governmental and legally required notices on behalf of your company.
- Renew Your Registered Agent Service – If you have a 3rd party Registered Agent like Bizstartz, be sure to renew it every year.
- File Federal Tax Forms Every Year – There are no state report obligations but the IRS requires it.
- Keep Financial Records – You have to keep complete and accurate records of your LLC including income and expenses, invoices, and all transactions.
If these minimum expectations are not met, your LLC may face administrative penalties including dissolution, or you may be subject to IRS penalties.
Common Mistakes to Avoid
For a non-resident owner, the U.S. LLC can be a little tricky, and minor infractions can result in steep penalties.
For New Mexico LLC owners, the compliance mistakes New Mexico LLC owners routinely overlook are most often the IRS-required filings.
- Ignoring IRS obligations of filings of Form 5472, 1065, or 1040 Schedule C.
- Thinking No Taxes Are Due Because the LLC is Based Overseas.
Yet, even foreign-owned LLCs are required to file Informational returns annually. - Failing to Maintain an Active Registered Agent in New Mexico.
Your LLC can be revoked if an agent resigns or if the LLC office address changes. - Missing Federal Filing Deadlines (particularly April 15)
- Failing to Maintain Proper Books, Records, or Accounting
Accurate books with the assistance of a trusted adviser can ensure full compliance during active status maintenance and compliance protects the legal standing of your company.
How Bizstartz Assists New Mexico LLC Owners in Compliance
We assist U.S. and non-U.S. entrepreneurs in New Mexico LLC compliance.
We will control the Bizstartz compliance process and manage compliance to ensure you never miss a deadline or avoid a tax misunderstanding.
Our Compliance Practice Includes:
- Annual IRS tax return filing (Form 5472, 1065, 1040)
- EIN application for new LLCs
- Registered Agent service renewal and compliance reminders
- Beneficial Ownership Information (BOI) report filing with FinCEN
- Construction of bookkeeping and accounting for the purposeful maintenance of records
- Business bank account assistance for your US company
- Consultation for tax optimization for non-resident entrepreneurs
We will maintain your New Mexico LLC compliance in an active status, without penalties, regardless of the location of your business operations.
Summary of Filing Deadlines and Forms
| Filing Type | Form | Due Date | Applies To |
| Federal Tax (Single-Member, U.S. Owner) | Schedule C (Form 1040) | April 15 | U.S. residents |
| Federal Partnership Return | Form 1065 + Schedule K-1 | March 15 | Multi-member LLCs |
| Foreign-Owned LLC Filing | Form 5472 + Pro Forma 1120 | April 15 | Non-U.S. residents |
| State Income Tax | PIT-1 / CIT-1 | April 15 | NM-sourced income |
| Gross Receipts Tax | Online (TAP System) | Monthly / Quarterly | Businesses operating in NM |
| Payroll Tax Filings | Form 941 / 940 | Quarterly / Annually | LLCs with employees |
Final Thoughts
For entrepreneurs both domestically and abroad, forming an LLC in New Mexico offers great benefits when also considering affordability, compliance, privacy, and minimal.
The absence of an annual report and franchise tax makes New Mexico a low-maintenance, long-term option, but that does not mean your LLC is exempt from all filings.
To keep your company in good standing, federal tax requirements must be met, reports are filed timely, and your financial records must be maintained.
Trust is also earned with banks, partners, and government agencies, but more importantly, a properly managed LLC avoids penalties.
At Bizstartz, hundreds of entrepreneurs manage New Mexico LLC filings, EINs, tax returns, BOI reports, and bookkeeping, allowing them to concentrate on expanding their businesses while we handle compliance in the background.
