For businesses seeking identification 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, agree 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

A corporation enjoys advantages that unincorporated companies do not. Primarily, it cannot be held accountable for an amount of debt greater than the value of the assets that the owners have invested in it. Had the business instead remained a collection of the owners' personal assets, the personal property of the stakeholders could be liquidated to pay the liabilities of the business, if it runs into financial issues. A corporation might also find it easier to finance itself through loans, allowing creditors in the Santa Fe County area to evaluate their investment by assessing the corporation rather than the individual credit-worthiness of its owners. Lastly, ownership of a corporation is divided into equal portions or "shares" of stock, which may be bought and sold much more easily than the ownership of an unincorporated business.

Costs of Incorporation

Incorporation can be costly. First, a modest filing fee might be charged in New Mexico for any business that wants to incorporate. Also, a corporation is taxed as its own entity. In other words, the profits a corporation makes are now taxed separately, while any disbursements to shareholders are taxed as individual income. This is called double taxation. However, a business might avoid this disadvantage with proper planning and assistance from a local Santa Fe County lawyer.