New Mexico Sole Proprietorship vs LLC:
$50 Filing, $0 Annual (2026)
New Mexico has the cheapest LLC structure of any state: $50 to file, no annual report, no franchise tax, no public disclosure of members beyond the registered agent. This makes it popular with non-US founders, internet businesses seeking minimal public-record disclosure, and asset-protection-minded individuals. It also has a gross receipts tax (GRT) that surprises many newcomers.
New Mexico LLC Costs
$50
Articles of Organization
$0
Annual report fee
4.875%
Gross Receipts Tax (state portion)
5.9%
NM state income tax (top rate)
Filing is through the New Mexico Secretary of State (sos.state.nm.us). The Articles of Organization filing is straightforward: LLC name, registered agent, principal office, and duration. New Mexico does not require disclosure of members or managers in the public filing; only the registered agent appears in the public record. This privacy aspect is one of the principal reasons people consider New Mexico LLCs for situations where minimising public disclosure of ownership matters.
The Anonymous LLC Reality
New Mexico is one of a small group of states (along with Delaware, Wyoming, and Nevada) where LLC ownership is not part of the public state filing record. The registered agent appears, but members and managers do not. This privacy framework was meaningfully changed by the federal Corporate Transparency Act (CTA), which from 2024 required most LLCs to file beneficial ownership information (BOI) with the Financial Crimes Enforcement Network (FinCEN). The BOI filing is not public; it goes to FinCEN's secure database accessible only to authorised law enforcement and certain regulatory authorities. The CTA's status has been in flux through 2024-2026 with various court challenges and political pivots; as of mid-2026, BOI filing is generally required for US-domestic LLCs but exemptions and timing have been adjusted multiple times. Check FinCEN's current guidance at fincen.gov.
The practical implication: even with New Mexico's state-level privacy, the federal BOI filing creates a non-public record of beneficial ownership. State-level anonymous LLC structure no longer means anonymous from federal authorities, only anonymous from the public state-record system. For privacy-motivated formation, this changes the calculus. Some founders still prefer the state-level privacy because it limits ordinary public-record searches (skip tracers, journalists, competitors) even though federal authorities can access the BOI database. For founders whose primary concern is regulatory authority access, New Mexico's state-level privacy does not provide that.
For most ordinary US small business owners, the privacy framework is not a meaningful decision factor. Forming in your home state is simpler and cheaper than forming in New Mexico from elsewhere (which triggers foreign-LLC registration in your home state). The privacy framework matters for specific use cases: non-US founders without a US home state, asset-protection planning that wants to limit public-record exposure, or businesses with reasonable concerns about journalist or competitor research.
The Gross Receipts Tax (GRT) Trap
New Mexico's Gross Receipts Tax (GRT) is unusual: it applies to the gross receipts of most businesses operating in New Mexico, including most services (not just retail sales as in typical sales tax states). The state rate is 4.875% and local jurisdictions add their own rates, bringing combined GRT to 5.125%-8.9375% depending on location. Albuquerque is 7.625%, Santa Fe is 8.4375%, smaller towns vary.
What makes the GRT a trap for newcomers: many services that are exempt from sales tax in other states are taxable under New Mexico GRT. Professional services (legal, accounting, consulting), construction labour, repair services, advertising, and many other typically-untaxed services are subject to GRT. The tax is technically the seller's responsibility (unlike sales tax which is often legally the buyer's tax collected by the seller), so the seller must absorb or pass-on the GRT on every transaction.
For sole props and LLCs operating in New Mexico, the GRT registration and filing is required regardless of entity structure. The New Mexico Taxation and Revenue Department administers the tax through the Combined Reporting System (CRS); registration is free and filings are monthly, quarterly, or semi-annual depending on volume. For internet businesses based in New Mexico selling to customers in other states, the GRT generally does not apply (the receipts are sourced to the customer's location, not New Mexico, under New Mexico's apportionment rules). For New Mexico residents selling to other New Mexico customers, GRT applies. Check the NM Taxation and Revenue Department guidance for your specific business activity classification.
Foreign-LLC Obligations When Operating Outside New Mexico
Non-residents who form New Mexico LLCs and then operate from another US state run into the same foreign-LLC problem as Nevada and Wyoming formers. If you live and work in California, your New Mexico LLC must register as a foreign LLC in California ($70 filing + $800 annual minimum franchise tax). The New Mexico cost savings vanish once the home-state foreign-LLC fees are added.
New Mexico LLCs make sense for: (a) people who actually live and operate in New Mexico, (b) non-US founders without a US home state to anchor formation, (c) holding entities not transacting business in any state (eg holding intellectual property licensed to operating entities), and (d) specific asset-protection structures where the New Mexico privacy framework adds value. For most other use cases, forming in your actual home state is simpler and cheaper despite higher state filing fees. The "form in New Mexico for the privacy" pitch usually overweights the state-level privacy benefit relative to the federal BOI reality and the foreign-LLC cost.
State Income Tax
New Mexico has a progressive personal income tax with brackets from 1.7% (low income) to 5.9% (above $315,000 single / $630,000 joint, per the New Mexico Taxation and Revenue Department for 2026). For most sole prop or LLC income in the typical small-business range, the effective state rate is 4.7%-5.4%. The tax applies to pass-through business income for both structures equally.
New Mexico does not have a separate franchise tax or LLC entity tax. The state takes its share through the personal income tax on the member's pass-through income. Combined with the absence of an annual report fee, New Mexico's total cost of forming and maintaining a single-member LLC over five years (excluding any GRT and personal income tax) is $50: the original filing fee, with nothing further. This is the lowest in the country.
Recommendation
New Mexico residents
Stay sole prop below $30K net profit. Form a New Mexico LLC at $30K and above; the $50 one-time cost makes the threshold lower than higher-fee states. Register for GRT if your business activity is GRT-taxable. Consider S-Corp election above $60K. Set up your bookkeeping for the GRT obligations on day one.
Non-residents
Usually do not form in New Mexico unless you have a specific reason (privacy, asset protection, holding-entity structure). The foreign-LLC fees in your actual home state typically exceed any savings from New Mexico's low fees. Form in your home state by default; consult an asset-protection attorney if your specific use case warrants a multi-state structure.