Start a New Mexico nonprofit for FREE^*

A nonprofit is an entity or association created to promote and maintain the well-being and greater good of a community, in which profits (or surplus) are directed towards the business and mission rather than divided among the owners and shareholders. Nonprofits are often tax exempt. There are several different types of nonprofits, each with its own purpose, structure, regulations and limitations, and tax implications.

Advantages:

• Forming a nonprofit protects your personal assets from your nonprofit's lawsuits and creditor claims. It also protects your trustees, officers, and volunteers.
• New Mexico nonprofits are usually exempt from federal tax on any income related to the organization's exempt purposes.
• You can obtain an exemption from collecting sales and use taxes if your organization is formed under IRS Section 501(c)(3).
• Your nonprofit may qualify to receive public and private grant money.

Disadvantages:

• Because your nonprofit isn't owned by you or your shareholders, you won't have individual control and autonomy over your organization.
• More paperwork is involved, such as creating bylaws and recording and maintaining corporate minutes.
• You'll need time and money to apply for the federal tax exemption, and you'll need an accountant or legal professional to help you operate your nonprofit.
• Your nonprofit's finances are open to public inspection.

Starting your nonprofit in New Mexico doesn’t have to be a complicated process. Here are a few simple steps:

1. Doing research. Is your nonprofit serving a mission in the community? And do you have the means to maintain it?
2. Making your case. Write your mission statement, think about a name, select your directors carefully.
3. Filing. Rocket Lawyer can help you with this step!

Although they’re used interchangeably, a 501(c)(3) and a nonprofit are not the same thing. 

A nonprofit is an organization that meets the requirements of its state law. While most people think of nonprofits as charitable organizations, states recognize many types of nonprofits, including many that do not perform charitable activities. Insurance companies, industry-specific professional societies, homeowners' associations, and social clubs are just a few examples of nonprofits that are not necessarily 501(c)(3) organizations. 

A 501(c)(3) organization, on the other hand, is an additional application on a federal level. It’s a nonprofit organization that is exempt from most state and federal income tax because it applied for recognition as exempt from tax under section 501(c)(3) of the Internal Revenue Code. A 501(c)(3) organization must operate for exempt purposes. The exempt purpose must be charitable, scientific, educational, religious, literary, public safety, amateur sports competition, or the prevention of cruelty to children or animals.

In addition to 501(c)(3), the IRS recognizes 26 other types of nonprofit organizations. The most familiar type is charitable organizations. Others include:

• 501(c)(4) Civic League, Social Welfare Organization, or Local Employee Association.
• 501(c)(5) Labor, Agricultural and Horticultural.
• 501(c)(6) Trade or Professional Association.
• 501(c)(7) Social or Recreational Club.
• 501(c)(8) Fraternal Societies.
• 501(c)(9) Employee Beneficiary Association.
• 501(c)(12) Local Benevolent Life Insurance Associations, Mutual Irrigation and Telephone Companies, and Like Organizations.
• 501(c)(14) State Chartered Credit Union and Mutual Reserve Fund.
• 501(c)(19) Veterans Organizations.
• 501(c)(29) CO-OP Health Insurance Issuers.

• Articles of Incorporation, filed with the New Mexico Public Regulation Commission, Corporations Bureau.
• Name reservation request form.
• Incorporator's statement.
• Bylaws.
• IRS Form 1023: Application for Recognition of Exemption.
• Form SS-4: Application for employer identification number.
• IRS determination letter.
• Form ACD-31015: Registration to claim exemption from the state gross receipts tax when you're purchasing services or tangibles.
• Form CRS-1: Application for Nontaxable Transaction Certificates.
• IRS Form 990: Annual Information Return.

Fees for registering a nonprofit can differ from county to county and even specific times of the year. Some fees may also be dependent on how much the nonprofit is expected to earn or has earned in previous years. 

There are a few fees that you may be charged when you register a New Mexico nonprofit. They include the following:

New Mexico state filing fees and processing times: 

• State fee: $35.
• State processing time: 4-5 weeks.
• Rocket Lawyer state filing fee: $0 $99.99.
  • First filing FREE* for Rocket Legal+ members.
  • Get additional filings HALF OFF with Rocket Legal+.

501C IRS filing fees and processing times

• IRS exemption-status fee: $275 for shorter applications or $600 for applications requiring more detailed information (including LLCs, organizations with higher income or value, foreign organizations, churches, schools, some healthcare organizations, and some research organizations).
• IRS processing time: typically 6-12 months.
  • Simple applications may be processed more quickly.
• Rocket Lawyer IRS filing fee: $599 $1,199.
  • Rocket Legal+ members get HALF OFF.

The Business Services team at Rocket Lawyer are pros when it comes to the requirements for registering a nonprofit and the steps and processes required to file in New Mexico. They can help you gather and file the necessary information quickly and at an affordable price. Rocket Legal+ members get their first business registration filing for free, paying only the state filing fees, and also get access to professional services for up to half off, including registered agent services, tax prep and filing, trademark registration, and more.

If your nonprofit does not have a physical address in New Mexico (P.O. boxes are not acceptable substitutions), you may be required to have a registered agent. Registered agents accept official and legal correspondence on behalf of your organization. While you are setting up your nonprofit, why not set up Rocket Lawyer as your registered agent at the same time? Better yet, if you have a Rocket Legal+ membership, you can save on your business registration and your registered agent services with the membership that pays for itself.

Businesses can save up to $2,500 per year with a Rocket Legal+™ membership. This calculation is based on total savings on an initial business registration and registered agent, trademark, and business tax filing services for Rocket Legal+ members (a total cost of $924.97) compared to Rocket Legal members (a total cost of $1,949.96). This is in addition to savings on the average cost of 5 hours for document preparation by a non-Rocket Lawyer network attorney at the average attorney hourly rate in the U.S. of $300 (an estimated cost of $1,500 when purchased without any form of Rocket Lawyer membership) compared to unlimited use of customizable business documents for both Rocket Legal+ and Rocket Legal members at no extra cost.

Yes. One resource for finding grants and loans for New Mexico nonprofits is the New Mexico Community Foundation. The NMCF is a grant program that supports a variety of nonprofit organizations by making funds available in a number of programs. It also provides management services.

Grants can be used for general purposes, or to help your organization meet its operating expenses. If a grant is awarded for a specific project, you should take steps to restrict the funds to that project.

A mission statement clarifies your goals and explains how you plan to meet them. As a guideline, describe what, where, when, and how your nonprofit's purpose will be met, as well as who is going to help your nonprofit meet it. It may take a few tries to narrow your ambitions down into a workable plan.

Although you're creating a nonprofit because you want to give back to your community, you still have to meet certain requirements to protect yourself and to ensure that you achieve your organization's goals. When you create a mission statement, you can explain your organization's purpose. Consider what problem or issue your organization wants to address, then focus your statement on including the efforts and values that will guide your nonprofit to these goals.

After you form your New Mexico not-for-profit organization, be sure to follow specific guidelines to retain your nonprofit status:

• Keep detailed records of all sources of income.
• File annual reports.
• Keep unrelated activities separate from your nonprofit and pay separate taxes on income your organization receives from these activities. They could jeopardize your nonprofit status if they make up a substantial portion of your business.
• Ensure that the time and resources spent on your nonprofit are related to your organization's exempt status.
• Maintain detailed records of corporate meetings.
• Make sure that your nonprofit's assets are distributed to another tax-exempt group when and if it dissolves.
• Do not make loans to any of your directors or officers.
• Do not issue shares of stock or pay dividends or other shares of income to members, directors, or officers.
• File a Return of Organization Exempt from Income Tax form with the IRS each year, if required, based on your annual gross receipts.

• New Mexico Department of Taxation and Revenue

If you are planning to operate in another state, you may need to register a nonprofit in that state. Rocket Lawyer can help you determine which states you should register in.

Other states may have their own rules for foreign nonprofits that originate in New Mexico or domestic nonprofits that also operate in New Mexico. Talk to an attorney to understand the legal and tax requirements for the state(s) in which you plan to operate.