Here’s an overview of the key steps you’ll need to take to start your own business in New Mexico.
The most common legal structures for a small business are:
There also are special versions of some of these structures, such as limited partnerships and S corporations. You’ll want to consider which business entity structure offers the type of liability protection you want and the best tax, financing, and financial benefits for you and your business. Check Choose Your Business Structure on Nolo’s website for more information on how to choose the best ownership structure for your business.
For LLCs and corporations, you will need to check that your name is distinguishable from the names of other business entities already on file with the New Mexico Secretary of State (SOS). You can check for available names by doing a business search on the SOS website. You can reserve an available name for 120 days by filing anApplication for Reservation of Name with the New Mexico SOS (there are separate forms for LLCs and corporations). There are certain name requirements for LLCs and corporations (like including a word such as “LLC” for LLCs or “Company” for corporations). See How to Form an LLC in New Mexico and How to Form a Corporation in New Mexico for more information.
Unlike most other states, New Mexico does not have a method for registering the business name of a sole proprietorship or general partnerships when that business name is different from the name of the owner or owners. Nevertheless, you should do a business name search to make sure the name is distinguishable from the names of other businesses on record with the Secretary of State. In addition, if the business name is associated with a service or product, you may want to look into state trademark registration.
If you plan on doing business online, you may want to register your business name as a domain name. See Choose and Register a Domain Name for more information. In addition, to avoid trademark infringement issues, you should do a federal and state trademark check to make sure the name you want to use is not the same as or too similar to a name already in use. See How to Do a Trademark Search for more information.
Tax Registration. If you will be selling goods in New Mexico, you must register with the New Mexico Taxation and Revenue Department (TRD) to collect the state gross receipts tax (also known as sales tax). If you will have employees in New Mexico, you must register with the TRD for employer withholding tax. For both types of tax (and others) you can register online using the TRD’s Taxpayer Access Point (TAP) or on paper using Form ACD-31015,Application for Business Tax Identification Number.
EIN. If your business has employees or is taxed separately from you, you must obtain a federal Employer Identification Number (EIN) from the IRS. Even if you are not required to obtain an EIN, there are often business reasons for doing so. Banks often require an EIN to open an account in the business’s name and other companies you do business with may require an EIN to process payments. You can get an EIN by completing an online application on the IRS website. There is no filing fee.
Regulatory licenses and permits. These cover areas such as:
Virtually every New Mexico business must register with the New Mexico TRD. You can find more information about the business registration requirement in the Register Your Business section of the TRD website. For information about local licenses and permits, check the websites for any cities or counties where you will do business.
Professional and occupational licenses. These cover people who work in various fields. The state’s Regulation & Licensing Department (RLD) oversees many (but not all) of the regulatory boards and commissions for licensed professions and occupations. The Boards and Commissions section of the RLD website lists the professions and occupations the RLD handles.
You’ll need to pick a location for your business and check local zoning regulations. That includes if you work from home. You may be able to find zoning regulations for your town or city by checking municode.com.
New Mexico taxes every kind of business. See New Mexico State Business Income Tax for more information on state business taxes in New Mexico.
Sole proprietorships. Pay state taxes on business income as part of their personal state income tax returns (Form PIT-1).
Partnerships. Partners pay state taxes on partnership income on personal tax returns. In addition, most partnerships also must file Form PTE, New Mexico Information Return for Pass-Through Entities.
LLCs. Members pay state taxes on their share of LLC income on personal tax returns. In addition, most LLCs also must file Form PTE, New Mexico Information Return for Pass-Through Entities. Unlike most other states, New Mexico does not require LLCs to file annual reports. See New Mexico LLC Annual Report and Tax Requirements for more information.
Corporations. Shareholders must pay states taxes on their dividends from the corporation. A shareholder-employee with a salary also must pay state income tax on his or her personal state tax return. Moreover, the corporation itself is subject to New Mexico corporation taxes and a franchise tax. Finally, corporations must file abiennial report with the New Mexico SOS.
If you have employees, you must also deal with state employer taxes.
And, apart from New Mexico taxes, there are always federal income and employer taxes. Check IRS Publications 334, Tax Guide for Small Business, and 583, Taxpayers Starting a Business, available at irs.gov.
Insurance is a good idea for most kinds of business. While insurance often is regulated at the state level, the types of business insurance available are usually similar across the fifty states. Check Obtaining Business Insurance for more information.