How to Start a Nonprofit in New Mexico

1. Name Your Organization

   Your organization’s name establishes its brand and is also important for incorporating with the state. The legal name of your nonprofit corporation may not conflict with any other organization registered in the state. Make sure the name is available and meets state requirements.

   Name Search:	New Mexico Secretary of State - Business Services Division Name search
   Suffix:	Not required.  NMSA §53-8-7

2. Recruit Incorporators and Initial Directors

   The incorporator is the person who signs the Articles of Incorporation for your nonprofit. You will need at least one, but can have more than one. Directors make up the governing body of your nonprofit corporation and are stakeholders in your organization’s purpose and success. You’ll want to identify three, unrelated individuals to meet IRS requirements. You will also want to be aware of any age or residency requirements.

   New Mexico director requirements:	Number: minimum 3 Qualifications: None. No residency requirement. No membership requirement. Term: until successor elected and qualified Quorum: majority Committee: minimum 2 directors
   New Mexico officer requirements:	Defined in bylaws or board resolution. One officer prepares minutes of the directors' and members' meetings and authenticates records of the corporation and keeps a record book. Two or more offices may be held by the same individual, if the bylaws so provide.

3. Appoint a Registered Agent

   A registered agent is responsible for receiving legal notices on behalf of your organization. The appointed registered agent must be physically located in the state and maintain an office that is open during regular business hours. As a nationwide registered agent, our service is designed to receive your legal documents and provide secure access to those documents through your online account. Our local New Mexico registered agent office is located in Santa Fe, NM. We offer registered agent service independently or as part of our nonprofit formation packages.

4. Prepare and File Articles of Incorporation

   Your nonprofit’s articles of incorporation officially mark the creation of your organization. They document where and when the organization was formed and capture other information necessary to verify its existence. While requirements for language vary from state-to-state, there are some basic provisions that the IRS will look for when you apply for 501(c)(3) exemption. It is important to customize the articles for your organization and make sure you meet the state and IRS requirements. Meeting these requirements from the start will help avoid having to make amendments later or risk getting your 501(c)(3) application rejected. Some states will also require you to publish your articles of incorporation, so be mindful of any deadlines and publishing instructions.

   Agency:	New Mexico Secretary of State - Business Services Division
   Form:	Articles of Incorporation
   Instructions:	Form DNPI: Domestic Nonprofit Incorporation
   Filing Method:	Mail, in-person, fax or online.
   Agency Fee:	$25 + optional $100-150 expedite fee
   Turnaround:	~3 months. ~2 business days for $100 expedite fee. ~1 business day for $150 expedite fee.
   Law:	New Mexico Statutes12.3.3
   Notes:	File signed original, one copy, registered agent statement, and filing fee You must file an Initial Report within 30 days of when the Secretary of State issued your Certificate of Incorporation. See our New Mexico annual report instructions. Expedite fees require a separate check or money order, or your document will be immediately rejected.

5. File Initial Report

   After filing articles of incorporation, you must file an initial report.

   Agency:	New Mexico Secretary of State - Business Services Division
   Form:	Initial Report available online only.
   Filing Method:	Online
   Agency Fee:	$10
   Due:	The initial report is due within 30 days of the date on which its certificate of incorporation or certificate of authority was issued by the commission.
   Law:	53-8-83 NMSA 1978
   Penalties:	$10 late fee.
   Notes:	An officer must file.

6. Obtain an Employer Identification Number (EIN)

   This unique, nine-digit number is assigned by the IRS to identify your nonprofit. All types of nonprofits will apply for an EIN, not only those that hire employees. You will use your EIN to open a bank account, apply for 501(c)(3) status, and submit 990 returns to the IRS.

   Agency:	Internal Revenue Service (IRS)
   Form:	IRS Form SS-4
   Filing Method:	Mail, phone, fax, or online.
   IRS fee:	$0
   Turnaround:	Immediately online or by phone. 4 business days by fax. 4-5 weeks by mail.
   Notes:	The IRS website is only available during certain hours. Print your EIN before closing your session. For additional guidance, see IRS Pub 1635: Understanding Your EIN.

7. Store Nonprofit Records

   As you launch your nonprofit, you will receive a number of official documents. Organizing these documents in one place will save you headaches down the road. You will soon have numerous items to keep in your records including your EIN letter, bylaws, meeting minutes, 501(c)(3) determination letter, and more.

   
   
   

   A great way to maintain necessary documentation is Records Manager, our software for storing records securely, tracking directors and officers, and getting notified of meetings.

8. Establish Initial Governing Documents and Policies

   Your bylaws are the governing document for your nonprofit. They serve as your organization’s operating manual and should be consistent with your articles of incorporation and the law. When your Board of Directors meets for the first time, you’ll review and ratify the bylaws and they will be a roadmap for governance from there.

   At the same time, you’ll also want to create and adopt a conflict of interest policy. A conflict of interest is when someone in a key position in your nonprofit has competing interests and is making choices that could benefit themselves to the harm of the organization. Personal interests should be set aside and organizational interests prioritized. If a conflict of interest does arise, it should be disclosed immediately.

   Your application to the IRS for 501(c)(3) exemption will require that both the bylaws and the conflict of interest policy are approved and adopted. Once they’ve been adopted, safely store them in your Nonprofit Records Kit.

9. Hold Organizational Meeting of the Board of Directors

   The initial organizational meeting of your Board of Directors will be incredibly productive. At this meeting you will approve the bylaws, adopt the conflict of interest policy, elect directors, appoint officers, and approve resolutions such as opening the organization’s bank account. Important decisions are being made so be sure to record them in the meeting minutes.

10. Get New Mexico State Tax Identification Numbers/Accounts

    Non-profit organizations must register if they are doing business in New Mexico. Registering with New Mexico's Combined Reporting System (CRS) is a precursor to obtaining exemption from gross receipts tax.

    Submit to:	New Mexico Taxation and Revenue Department http://www.tax.newmexico.gov/
    Form:	Form ACD-31015: Application for Business Tax Identification Number
    Fee:	$0
    Filing Method:	Mail or online at Taxpayer Access Point (TAP)
    Notes:	New Mexico will issue your nonprofit a CRS Identification Number, an 11-digit number also known as a business tax identification number.

11. Apply for 501(c)

    Applying for 501(c) tax exemption can feel like the most daunting step in bringing your nonprofit dream into reality, but obtaining tax exemption comes with many benefits. You will be able to apply for grants and grow your fundraising success in addition to being exempt from IRS income tax. 501(c) is the chapter of the Internal Revenue Code that regulates nonprofit organizations. Like others, you may be most familiar with 501(c)(3) nonprofits, including charities and foundations. 501(c)(3) nonprofits apply using Form 1023 or Form 1023-EZ. Review the criteria for each application and make sure you meet the eligibility requirements set out by the IRS. Other types of nonprofits, including 501(c)(4)s and 501(c)(6)s, apply using Form 1024. After reviewing and approving your application, the IRS will return a Determination Letter officially recognizing your exemption.

    Completing the federal application for tax exemption is significantly easier with the assistance and support of a professional. Find someone with the expertise to ensure the correct application is being used and is completed accurately. A well-prepared application takes time, over 100 hours by IRS estimates, so put yourself on the path to success by finding a specialist to walk alongside you in the journey - from start to tax-exempt finish!

    Agency:	Internal Revenue Service (IRS)
    Form:	IRS Form 1023, IRS Form 1023-EZ, or IRS Form 1024
    Instructions:	IRS Instructions for Form 1023, IRS Instructions for Form 1023-EZ, or IRS Instructions for Form 1024.  Also see guidance IRS Pub 557: Tax-Exempt Status for Your Organization.
    Filing Method:	Mail
    Agency Fee:	$275 for organizations filing Form 1023-EZ and $600 for organizations filing Form 1023.
    Turnaround:	1023-EZ average: <1 month. 1023 average: 3-6 months.

    

    Tax-Exempt in 2 Weeks!

    Download the case study of how our client, Reform It Now, obtained 501(c)(3) tax exemption in only two weeks using the new IRS Form 1023-EZ!

    From filing the 1023EZ on August 1st to receipt of the determination letter on August 14th is, in my humble opinion, simply breathtaking and I dare say, ONLY Harbor Compliance could have achieved that.

    

    Dr. Bob A.Reform It Now, Inc.

12. Apply for State Tax Exemption(s)

    With your IRS Determination Letter in hand, make sure you familiarize yourself with your state’s requirements for recognizing your nonprofit’s tax-exempt status. This is an area where requirements vary state-by-state. Many states issue their own tax-exempt certificate that can be used for sales and use tax purposes, but it may require application and periodic renewal.

    To file to obtain exemption from state income tax:

    Not required

    
    
    

    Upon obtaining your IRS Determination Letter, your organization is exempt from New Mexico corporate income tax and franchise tax.

    More information: New Mexico Taxation and Revenue Department

    To file to obtain Gross Receipts Tax Exemption:

    Not required

    
    
    

    If your IRS determination letter stipulates that your nonprofit is an educational or social organization, you are automatically exempt from New Mexico’s gross receipts tax. If you purchase taxable goods, you can apply for a Nontaxable Transaction Certificate (NTTC). You will file Form ACD-31050: Application for Nontaxable Transaction Certificates with the New Mexico Department of Taxation and Revenue.

13. Register for Charitable Solicitation (Fundraising)

    This is another area where laws differ from state to state, but most states require any nonprofit soliciting donations to register to do so on an annual basis. This means registering in the state prior to soliciting any resident of that state. Registering in your home state is essential, but you may also need to register other states depending on the scope of your organization.

    New Mexico Charitable Organization Registration

    Agency:	New Mexico Attorney General - Charities Unit
    Law:	New Mexico Statutes Ann. § 57-22-1 et seq.
    Foreign Qualification is Prerequisite:	No
    Registered Agent (Special Agency) Required?	Yes

    Automatic Exemption

    More Details

    Exemption Eligible Organizations:

    Religious organizations Educational institutions and organizations defined in Section 6-5A-1 NMSA 1978 Persons soliciting for an individual or group that has suffered a medical or other catastrophe if the individual or group is identified by name at the time of the solicitation, the purpose for the solicited contribution is clearly stated, and the gross contributions collected, without any deductions for or by the solicitor or any other person, are deposited directly to an account in the name of the individual or group in a local federally insured financial institution established for that sole purpose and solely used for the direct benefit of the named individual or group as beneficiary

    Initial Registration

    More Details

    Filing Method:	Online
    Agency Fee:	$0
    Turnaround:	2-3 weeks
    Notes:	The CFO (or another authorized officer) signs online. You will get immediate confirmation of receipt as you file online. Some New Mexico counties and municipalities may require charities that solicit in-person to register prior to fundraising.
    Before you Apply:	Domestic Applicants: Check the available exemptions to see if your charity is eligible for exemption from the full registration requirement. Appoint a registered agent to receive legal documents in New Mexico. If your charity meets the audit threshold, obtain an audited financial report to submit with your registration application. Look through the list of required attachments and make sure that you have each required document in hand before starting the registration application. Foreign Applicants: Check the available exemptions to see if your charity is eligible for exemption from the full registration requirement. Appoint a registered agent to receive legal documents in New Mexico. If your charity meets the audit threshold, obtain an audited financial report to submit with your registration application. Look through the list of required attachments and make sure that you have each required document in hand before starting the registration application. If you will foreign qualify in New Mexico, obtain a certificate of good standing from your home state to submit during the foreign qualification process. The certificate cannot be more than 30 days old when filing foreign qualification documents.
    How to Apply:	Domestic Applicants: File entity formation documents with the New Mexico Secretary of State - Corporations Bureau. Create an NM-COROS account and complete the charitable organization registration through the New Mexico Attorney General - Charities Unit. Foreign Applicants: Determine whether or not your charity will need to foreign qualify based on your activity in New Mexico. If not required, skip to number 3. File foreign qualification documents with the New Mexico Secretary of State - Corporations Bureau. Create an NM-COROS account and complete the charitable organization registration through the New Mexico Attorney General - Charities Unit.
    Required Attachments:	IRS form 990 Audited financials (if applicable) Articles of incorporation Bylaws IRS determination letter IRS form 1023 (if established after 1987) List of officers and directors Professional fundraising contracts

    Registration Renewal

    More Details

    Filing Method:	Online
    Agency Fee:	$0
    Due:	Annually within 6 months after the close of your fiscal year. So if your fiscal year ends December 31, renewal is due by June 30. There is no official start to the renewal period, so renewals may be submitted as soon as financials become available for the most recently completed fiscal year.
    Due Date Extension:	Due dates can be extended for 6 months beyond the original due date by submitting a request for extension through the online portal.
    Penalties:	There is a $100 late fee for failing to file on time.
    Required Attachments:	IRS form 990 Audited accrual basis financials (if applicable) List of officers and directors Professional fundraising contracts Only if amended: IRS determination letter, articles of incorporation, and bylaws

    Change of Fiscal Year

    More Details

    Agency Fee:	$0
    Turnaround:	1-2 business days
    Notes:	Email Charity.Registrar@nmag.gov to update fiscal year.

    Cancellation

    More Details

    Agency Fee:	$0
    Notes:	To close out your registration, file final reporting documents as requested by the state. Also submit a notarized letter with the following text: "AS OF (DATE), (ORGANIZATION NAME & FEIN ) NO LONGER EXISTS, OPERATES OR SOLICITS IN NEW MEXICO, THEREFORE PLEASE WITHDRAW THEIR REGISTRATION.".

    To fundraise nationally or online, please see our Fundraising Compliance Guide. Our services manage your initial, renewal, and exemption filings in every state.

14. Obtain Other Business Licenses & Permits

    Running your nonprofit corporation legally also means securing all applicable licenses and permits. The range of local, state, and federal requirements is wide. Access resources like the Small Business Administration Business License & Permit look-up tool and search by your business type and locality.

    Nonprofits who wish to conduct bingo, raffles, and other charitable games must obtain licenses. Unless specifically permitted by law, gambling is prohibited in New Mexico pursuant to §60-2E-4 of the Gaming Control Act and the New Mexico Criminal Code, 30-19-1 thru 30-19-15 NMSA 1978. Properly qualified organizations may conduct certain games of chance in New Mexico for fundraising purposes on a limited basis.

    Submit to:	State of New Mexico - Gaming Control Board http://www.nmgcb.org/
    Form/Fee/Filing:	Varies based on game. Please see Gaming Control Board website.
    See also:	IRS Pub 3079: Tax-Exempt Organizations and Gaming

You’ve made it! You turned your passion into a legitimate nonprofit corporation exempt under IRS 501(c) and are benefiting your community. That solid foundation on which you built your organization requires ongoing maintenance. Investing in maintaining compliance with all of the government agencies is an ongoing responsibility and commitment needed to ensure your vision continues long into the future. Check out our compliance guide to learn more!

Once you have registered your nonprofit per the steps listed above, you will need to maintain compliance with all of the government agencies. Staying current with the IRS and state requirements is an ongoing responsibility. Continue reading our New Mexico nonprofit compliance guide to learn more!

Continue reading "New Mexico Nonprofit Compliance"

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