For businesses seeking recognition as separate legal entities, New Mexico law allows them to undergo the process of incorporation. When an incorporated business acts, whether it is to buy and sell property, assent to contracts or exercise legal rights, the process is then attributable to the business itself and not its owners. In New Mexico, the process of incorporation is begun by filing with the Secretary of State in accordance with specific guidelines.

Benefits of Incorporation in New Mexico

An incorporated business enjoys certain benefits, the most important being a limit of liability for the shareholders. The most shareholders can lose is the amount they invest in the business. Had the business remained unincorporated, owners risk losing their personal property should the business become unable to pay its liabilities. Also, creditors in the Los Lunas area generally prefer to deal with corporations, since a loan is an investment more easily evaluated when the credit-worthiness of various owners is not an issue. Lastly, a corporations charter requires that ownership be divided into stakes or "shares" of stock, all of equal size. This makes the process of transferring control much more practical.

Costs of Incorporation

There are costs associated with incorporation, both short and long term. First, businesses in New Mexico may be charged a fee to incorporate. Also, a corporation is taxed as its own entity. The individual incomes of owners who are paid disbursements from the corporation's earnings are still taxed as well. This is called double taxation, but it can be avoided with proper planning and assistance from a local Los Lunas lawyer.