C-Corps, S-Corps, and Professional Corporations
New Mexico corporations offer a cost-effective alternative to Delaware for businesses that don't need Delaware Chancery Court or VC-preferred Delaware branding. With a flat 5.9% corporate income tax (as of 2025) and low biennial reporting fees, NM corps are ideal for closely-held businesses, professional practices, and regional operating companies.
Unlike New Mexico LLCs (which have no annual reports), corporations must file an initial report within 30 days ($25) and biennial reports every 2 years ($25). However, this is still far cheaper than Delaware's $300/year franchise tax.
Default tax status. Double taxation (corporate + shareholder level), but allows retained earnings, QSB stock benefits, and unlimited shareholders.
Best for: Businesses raising VC, planning to go public, or retaining significant earnings.
Pass-through tax election (file Form 2553 with IRS). Avoids double taxation; income flows to shareholders' personal returns. Still owes NM $50 franchise tax.
Best for: Closely-held businesses, owner-operators wanting to minimize self-employment tax via salary + distributions.
Limits: Max 100 shareholders; U.S. persons only; one class of stock.
For licensed professionals (doctors, lawyers, CPAs, engineers, etc.). Must comply with licensing board rules; all shareholders must be licensed.
Same fees and filings as regular corporations; often elects S-corp status for tax efficiency.
For-profit entity with a public benefit mission codified in articles. Directors must consider stakeholder impact, not just shareholder profit.
Filing: Same as C-corp; must file annual benefit report in addition to biennial corporate report.
Tax-exempt entities (501(c)(3), etc.). Separate formation rules under NMSA Article 8. Lower fees: $25 formation, $10 annual report.
(I recommend a dedicated nonprofit guide; this page focuses on for-profit corporations.)
| Factor | Choose Corporation | Choose LLC |
|---|---|---|
| Investor Expectations | VCs and institutional investors expect C-corps; easier cap table management with stock | Most angel/early-stage ok with LLC; some prefer simplicity |
| Equity Compensation | Stock options, RSUs, ESOP are standard corp tools | Profits interests possible but less familiar to employees |
| Formalities | Board meetings, officer roles, corporate minutes required | Flexible; operating agreement sets rules; less formality |
| Tax Flexibility | C-corp (double tax) or S-corp (pass-through with limits) | Default pass-through; can elect S or C if needed |
| State Fees (NM) | $100-$1,000 formation + $25 initial + $25 biennial | $50 formation + $0 annual (no reports) |
| Ownership Transferability | Shares freely transferable (unless restricted); stock certificates | Transfer restrictions common; membership interests less liquid |
| Going Public (IPO) | C-corp required for public markets | Must convert to C-corp before IPO |
"S-Corp" is a federal tax election, not a separate entity type. You form a corporation (or LLC), then elect S-corp tax treatment via IRS Form 2553.
In New Mexico, S-corps still owe the $50 annual franchise tax even though they're pass-through for federal purposes.
New Mexico requires online-only filing for Articles of Incorporation. The process is straightforward but requires careful attention to share structure and statutory requirements.
Your corporate name must:
If forming a PC, name must include "Professional Corporation," "P.C.," or "PC" and comply with your profession's licensing board rules.
Search availability at the NM SoS Business Portal.
Optional: Reserve your name for approximately $20 for 120 days if not filing immediately.
Every NM corporation must maintain a registered agent with a physical street address in New Mexico to receive legal notices, tax documents, and service of process.
| Option | Cost | Pros | Cons |
|---|---|---|---|
| Self / Director as RA | Free | No cost; direct control | Public address disclosure; must be available 9-5; lawsuits served at office/home |
| Commercial RA Service | $50-$300/year | Privacy; professional mail handling; multi-state support | Annual fee |
New Mexico's incorporation fee is calculated as:
$1 per 1,000 authorized shares
Minimum: $100 (covers up to 100,000 shares)
Maximum: $1,000 (anything above 1 million shares)
| Authorized Shares | Filing Fee |
|---|---|
| 10,000 shares | $100 (minimum) |
| 100,000 shares | $100 |
| 500,000 shares | $500 |
| 1,000,000 shares | $1,000 (maximum) |
| 10,000,000 shares | $1,000 (capped) |
New Mexico allows no-par shares (most common) or shares with a stated par value. Most modern corps use no-par for flexibility.
You can authorize multiple classes (common, preferred, Series A/B/C) if you anticipate investor rounds. Describe rights, preferences, and restrictions in Articles or bylaws.
New Mexico Articles of Incorporation must include:
Standard: 1-3 business days. You'll receive a file-stamped Certificate of Incorporation and Articles via email/portal.
New Mexico corporations must file an Initial Report within 30 days of incorporation.
The initial report confirms:
After filing Articles, the incorporator(s) or initial directors must hold an organizational meeting to:
All corporations must obtain an Employer Identification Number (EIN) from the IRS, even if you have no employees.
Register with the NM Taxation and Revenue Department (TRD) via TAP or Form ACD-31015:
To elect S-corp tax treatment, file IRS Form 2553 within:
All shareholders must consent and sign Form 2553.
Depending on your business location and activities, you may need:
Check with your city clerk's office and county offices.
Deadline: Within 30 days of incorporation
Fee: $25
Late Penalty: $200
Filing: Online only via NM SoS portal
The initial report provides the state with current information about your corporation:
Frequency: Every 2 years
Due Date: 15th day of the 4th month after your fiscal year ends
Example: Calendar-year corp → due by April 15 of odd-numbered years (if incorporated in even year) or even-numbered years (if incorporated in odd year)
Fee: $25
Late Penalty: $200
Filing: Online only
The biennial report updates:
Separate from SoS reports, you must file annual tax returns with both IRS and NM TRD:
| Tax Return | Who Files | Deadline |
|---|---|---|
| IRS Form 1120 (C-Corp) | C-Corporations | 15th day of 4th month after fiscal year end (April 15 for calendar year) |
| IRS Form 1120-S (S-Corp) | S-Corporations | 15th day of 3rd month after fiscal year end (March 15 for calendar year) |
| NM CIT-1 (C-Corp) | C-Corporations doing business in NM | Same as federal (April 15 for calendar year) |
| NM RPD-41359 (S-Corp) | S-Corporations doing business in NM | Same as federal (March 15 for calendar year) |
| NM Gross Receipts Tax | Corps with NM receipts | Monthly/quarterly/annual depending on volume |
| Filing Type | When Needed | Fee |
|---|---|---|
| Articles of Amendment | Change name, shares, registered agent, purpose, etc. | $100+ |
| Restated Articles | Consolidate all amendments into one document | $100+ |
| Articles of Merger | Merge with another corporation | $100-$1,000 |
| Certificate of Good Standing | Proof corp is in compliance (for banks, investors, foreign qualification) | ~$25 |
| Statement of Change (RA/Office) | Update registered agent or office | $20 |
| Articles of Dissolution | Voluntarily dissolve corporation | $25 |
To maintain limited liability protection, you must observe corporate formalities:
Courts can disregard the corporate structure and hold shareholders personally liable if you:
Maintain clean records and treat the corporation as a separate legal entity.
If you fail to file required reports or pay taxes, the NM SoS or TRD may administratively revoke your corporation.
To reinstate:
Reinstatement can take several weeks and may not be retroactive; contracts and transactions during revocation may be voidable.
Rate (2025+): Flat 5.9% on New Mexico taxable income
Who Pays: C-Corps and S-Corps doing business in New Mexico
Form: CIT-1 (C-Corp) or RPD-41359 (S-Corp)
As of tax years beginning January 1, 2025, New Mexico simplified its corporate tax structure to a single flat rate of 5.9%. This replaced the previous two-bracket system.
You owe NM corporate income tax if:
If you're a multi-state corporation, NM taxes only your NM-apportioned income (using factor-based apportionment: sales, property, payroll).
Even though S-corps are pass-through for federal purposes, New Mexico still requires S-corps to:
Amount: $50 per year
Who Pays: All corporations and LLCs taxed as corporations (C-corps and S-corps)
Reported On: CIT-1 (C-corp) or RPD-41359 (S-corp)
This is a flat annual tax for the privilege of exercising your corporate charter in New Mexico. It's due every year as long as the corporation exists, even if you have zero income.
Compared to Delaware's complex franchise tax (which can run into thousands for high-capitalization corps), NM's $50 flat fee is trivial.
New Mexico offers a Pass-Through Entity Election for partnerships and S-corps (and multi-member LLCs) to pay entity-level income tax instead of having owners make estimated payments individually.
If your S-corp or partnership elects PTE, the entity pays NM tax and members get a credit on their personal NM returns.
New Mexico's gross receipts tax is levied on businesses for the privilege of doing business in the state. It applies to all business entities (corps, LLCs, sole props) with NM receipts.
Note: GRT is legally a tax on the seller, not the buyer, though businesses typically pass it to customers.
| Tax / Fee | C-Corporation | S-Corporation |
|---|---|---|
| Federal Income Tax | 21% flat on corporate income | Pass-through; shareholders pay on personal returns |
| NM Corporate Income Tax | 5.9% flat on NM income | Pass-through; shareholders pay on NM PIT-1 |
| NM Franchise Tax | $50/year | $50/year |
| Double Taxation | Yes (corp + shareholder dividend tax) | No (single layer at shareholder level) |
| Self-Employment Tax Savings | N/A (dividends not subject to SE tax, but corp already paid 21%) | Yes (distributions beyond reasonable salary avoid 15.3% SE tax) |
| Shareholder Limits | Unlimited | Max 100; U.S. persons only |
| Stock Classes | Multiple classes allowed (common, preferred, Series A/B/C) | One class only (voting/non-voting ok) |
Under FinCEN's interim final rule, all entities created in the United States — including New Mexico corporations — are now exempt from BOI reporting.
Only entities formed under foreign law that register to do business in a U.S. jurisdiction remain "reporting companies" under the CTA, with 30-day filing deadlines.
If you incorporated in New Mexico, you have no BOI filing requirement.
| Item | New Mexico | Delaware |
|---|---|---|
| Formation Fee | $100-$1,000 (share-based) | $89 (base) + ~$50-$200 (tax calculation) |
| Year 1 Initial Report | $25 | Included in franchise tax |
| Annual/Biennial Reports | $25 every 2 years (biennial) | $300+/year (franchise tax) |
| Franchise Tax | $50/year | $300-$180,000+/year (complex calculation) |
| Corporate Income Tax | 5.9% flat (if NM nexus) | 8.7% on DE-source income |
| Total Year 1 | ~$175 (assuming 100K shares) | ~$450-$650 |
| Total Years 2-5 (annual) | $50-$75/year avg (biennial report) | $300-$1,000+/year |
| 5-Year Total | ~$375-$650 | ~$2,000-$5,000+ |
| Feature | New Mexico | Delaware |
|---|---|---|
| VC/Investor Preference | Uncommon; VCs usually require DE C-Corp | ✓ Industry standard for VC-backed startups |
| Court System | General courts; less corporate case law | ✓ Chancery Court; 200+ years of precedent |
| Corporate Flexibility | Standard modern corp act | ✓ Most flexible corp statute; allows complex structures |
| Privacy | Biennial reports list directors/officers | Annual franchise tax reports list directors/officers |
| Speed | 1-3 days online filing | Same-day / 2-hour expedite available (extra $$$) |
| Cost | ✓ Much lower long-term | Higher annual costs (franchise tax) |
| Best For | Closely-held corps, family businesses, regional ops, cost-sensitive founders | VC-backed startups, public companies, complex multi-class structures |
If you're building a venture-backable tech startup with plans to raise $1M+ from VCs, just incorporate in Delaware. The $300/year is a rounding error compared to legal fees, and trying to convert from NM to DE later is expensive and annoying.
New Mexico corporations are ideal for:
See the New Mexico LLC Guide for a full comparison. Quick summary:
| Factor | NM Corporation | NM LLC |
|---|---|---|
| Formation Fee | $100-$1,000 (share-based) | $50 (flat) |
| Annual/Biennial Fees | $25 initial + $25 every 2 years + $50 franchise | $0 (no reports) |
| Formalities | Board/shareholder meetings, minutes, bylaws required | Flexible; operating agreement; minimal formalities |
| Ownership Structure | Stock certificates; share-based; easy to transfer | Membership interests; transfer restrictions common |
| Investor/VC Readiness | Better for equity raises, stock options, VC funding | Less common for VC; more for angels/bootstrapped |
| Tax Flexibility | C-corp or S-corp election | Pass-through default; can elect S or C if needed |
| Best For | Investor-ready businesses, equity comp, going public, professional image | Holding companies, real estate, simple ops, cost-minimization |
As an attorney, I provide full-service incorporation for New Mexico C-Corps, S-Corps, and Professional Corporations, with ongoing compliance and tax support.
$399
$1,299
$2,499
| Service | Price |
|---|---|
| Registered Agent (annual renewal) | $149/year |
| Custom Bylaws | $699 |
| Shareholder Agreement | $999+ |
| Articles of Amendment | $399 (+ state fee $100+) |
| S-Corp Election (Form 2553 prep & filing) | $499 |
| Stock Option Plan (409A-compliant) | $1,999+ |
| Foreign Qualification (per state) | $599 (+ state fees) |
| Annual Compliance Package (biennial reports + tax reminders) | $599/year |
| Conversion (Corp to LLC or vice versa) | $1,299+ |
| Dissolution & Wind-Down | $899 (+ state fees) |
Every incorporation is personally reviewed with corporate and tax law experience. I'm an attorney, not a document mill.
I specialize in non-resident founders, cross-border structures, and multi-state operations. Foreign qualification, nexus, tax residency—I handle it.
I don't just file your Articles and disappear. I analyze C-corp vs S-corp, payroll strategies, PTE elections, and help you minimize tax from day one.
I track your initial report deadline, biennial reports, franchise tax, and annual tax filings. You'll never miss a $200 late fee.
Reserve attorney time to blueprint your New Mexico corporation, capitalize appropriately, and plan tax elections.
Prefer email? I reply within one business day (Mon–Fri).
Complete the form below to begin your New Mexico corporation formation. I'll review your information and reach out within 24 hours with next steps.