By The Wyoming LLC Attorney Team
Jun 14, 2022Forming a New Mexico LLC provides limited liability protection, shielding personal assets from business debts. To enhance asset protection, consider electing corporate status, maintaining financial separation, using trusts to safeguard assets, and establishing business credit. Consulting a business lawyer familiar with New Mexico's laws can simplify the process and ensure compliance.
Forming an LLC in New Mexico is very attractive because of the state’s flexible business laws which allow both single member LLC and anonymous LLCs. LLCs provide many benefits including limited liability protection which shields personal assets from business debts and enhances asset protection. However, asset protection is never guaranteed. That’s why it’s very important to do whatever is in your power to enhance your asset protection, especially if your business is in a risky industry. Strategies for enhancing asset protection include maintaining financial separation, using trusts to safeguard assets, having a signed operating agreement, and establishing business credit. Consulting a business lawyer familiar with New Mexico's laws can simplify the process, ensuring compliance with state requirements, helping you understanding costs, managing taxes, and filing the annual report.
When you form an LLC, it is a new business. It is formed completely separate from the owners and will offer limited liability protection. Because of this, owners are not liable for the debts of the company. Rather, if the LLC is sued, the LLC’s creditors can only go after the LLC’s bank account or other assets.
It is good to note, that when it comes to personal liability, such as negligence or malpractice, an LLC will not protect you. This is why it is essential that you hold liability insurance to cover yourself and protect your personal assets.
Curious about enhancing your LLC's asset protection to minimize personal liability? Consider these 4 tips to enhance your LLC’s asset protection.
Having liability insurance is essential if you wish to avoid being financially ruined if you are sued for negligence. Should you make a personal mistake, having insurance should cover everything that an LLC does not.
One benefit of an LLC is that it can elect the tax status of its choosing. These options include a corporation, a partnership, or a sole proprietorship.
Corporations and LLCs share a similarity in that when shareholders or owners commingle personal and business assets, they expose themselves to potential liability. By keeping finances separate between yourself and an LLC, it will keep the assets separate as well. For example, an LLC should have its own bank account, credit cards, and sign its own contracts and invoices.
When an LLC is sued, any money within the business can be taken by the creditor. One of the purposes of an LLC is to prevent this from happening to your personal assets. In order to do this, you should keep as little money as possible in your business. You can pay out profit to the owners, or another option is to use a trust.
One thing you need to be aware of is that if you owe a creditor and transfer money out of the company, the transaction could be seen as fraud. This is why you must keep enough money in the company in order to pay the expenses.
It is important that you do not personally guarantee any of the debts for your LLC. This is one way that you can become liable for company debts. For example, if you sign a loan for your LLC, you may be liable to pay this back should the LLC dissolve or go into default on the loan. By building business credit, you can obtain loans for your business on its own. This can be done by paying bills on time as well as showing revenue and profit.
When forming an LLC there is a process you must go through. Working with a lawyer can help ensure this process runs smoothly. Specifically, in the state of New Mexico, there are various fees and requirements when forming an LLC:
Hiring a business lawyer is a good idea if you wish the process of forming an LLC to go smoothly. It will ensure that you stay in compliance. Working with a business lawyer who is well-versed in the laws of New Mexico is your best choice for forming an LLC. If you're prepared to establish your New Mexico LLC and require guidance, please reach out to us. A member of our paralegal team can assist you. You can either fill out the contact form or dial +1 (307) 683-0983 to connect with us.