Form a General Partnership in New Mexico

A general partnership in New Mexico allows two or more people to own a business together. Want to know how to form a general partnership in New Mexico? Below, we’ll go over the steps involved in forming a partnership in New Mexico and who should consider it.

Step 1: Determine if you should start a general partnership

General partnerships are simple, which appeals to some business owners. However, others prefer other types of organizations, such as limited liability companies. Let’s see if you could benefit from a New Mexico general partnership.

Pros

Some of the benefits of forming a New Mexico general partnership include:

• It is easy to form a general partnership in New Mexico.
• Compared to an LLC or corporation, a general partnership requires less paperwork and incurs fewer legal fees.
• In New Mexico, taxes are easy to pay for general partnerships. Tax-wise, your share of business profits will go directly to you and your partners. Consequently, there will be no additional federal corporate income tax.

Cons

There are some possible disadvantages to a New Mexico general partnership. These include:

• Each partner is legally responsible for any debts and liabilities of the partnership.
• Partners are liable for each other’s misconduct and wrongful acts committed in the name of the partnership.
• General partnerships may be limited in terms of raising capital when compared to corporations.

If you want to start a business, a general partnership is a good place to start. However, if you want to start a long-term business, a corporation or LLC may be a better fit.

Step 2: Choose a Business Name

Partnerships do not subject to many legal formalities insofar as naming is concerned. A partnership is usually named after the last names of the partners. You may want to consider registering a “doing business as” (DBA) name if you wish to create a separate name for your partnership. If you already have a name in mind, check to see if your business name is available.

Step 3: File a DBA Name (if needed)

The State of New Mexico calls DBAs “alternate business names” and has more information about them on their Secretary of State’s website. You can also call the Secretary of State’s office for assistance on how to file an alternate business name online.  You will want to avoid choosing a name that is too similar to an existing business or one that might imply illegal activity.

Step 4: Draft and sign partnership agreement

The partnership agreement is like the handbook for your partnership. This document describes how the partnership should operate. You can avoid problems later on, even if you don’t anticipate any now. Disputes will be resolved according to the New Mexico Uniform Partnership Act if you do not have a partnership agreement.

Step 5: Obtain licenses, permits, clearances

In New Mexico, general partnerships are not required to have a statewide business license unless they are engaged in certain professions. Some of the business licenses in New Mexico include:

• Medical providers
• Financial advisors
• Construction companies

It may be worth checking with your local city or county to see if additional licenses are required. Learn more about New Mexico licensing requirements.

Step 6: Get an Employer Identification Number (EIN)

The federal government issues EINs to businesses. If you plan on opening a bank account for your business, hiring employees, or borrowing money, then you will need a federal employer identification number. For many businesses, this is necessary. Fortunately, we can help you obtain your EIN.

Step 7: Get New Mexico State Tax Identification Numbers 

You will need to file for a tax ID specific to New Mexico if you do business in the state. A New Mexico general partnership does not need to file corporate income tax in New Mexico. It may, however, need to pay certain sales and use taxes. 

Forming a Business Partnership in New Mexico: Next Steps

After starting your New Mexico general partnership, you may want to think about other things. For example, you can set up a bank account for your business to handle its money. Or lease office space. You can also take out an insurance policy if your business is exposed to risk or liability. You may want to consider financing options if you need to leverage your projects. This could mean borrowing some money from a bank or another institution to help pay for your project. You will also want to keep up with your taxes.

How we can help 

A general partnership can often be a good idea for short-term business endeavors. For longer-term businesses ideas, you may want to consider an LLC or corporation. We Can help you form these entities. We also offer additional services, including Worry-Free compliance. We hope this guide has been helpful. Contact us if you want to know more about forming a New Mexico general partnership or another type of entity. 

If you want to have more liability protection for your business than what is given by a general partnership, we offer services to help you form a New Mexico LLC or a New Mexico corporation quickly and easily.