New Mexico boasts the country’s eighth-best quality of life and ranks as one of the lowest in cost of labor. With zero inventory tax and affordable real estate, the Land of Enchantment provides a fantastic platform for those who want to start a new business.
How to Start a Business in New Mexico:
1. Determine your business structure.
Choosing the right legal structure for your company is important. Your choice will have an impact on taxes, paperwork, personal liability, and your ability to raise funds.
You can choose from the following legal structures:
A sole proprietorship is the simplest structure and usually involves one individual who is solely responsible for the enterprise while a partnership is suitable for businesses with two or more owners. A corporation is a standalone entity with shareholders while a Limited Liability Company (LLC) is the most popular type because of minimal paperwork, flexibility, tax benefits, and simple implementation process. LLC business owners are not obligated to file a corporate tax return.
Businesses are regulated by New Mexico state laws and must be registered through the New Mexico Business Resource Center website.
2. Write a business plan.
Your business plan is the foundation of your new business and will serve as an invaluable guide for how to structure, run and grow your company. The business plan must meet your needs and can fall into one of two common categories: traditional or lean startup.
The traditional plan is very detailed, takes more time to write, and is quite comprehensive while the lean startup plan is high-level and quickly written.
A strong business plan can help you get funding and makes opening a new business easier. You can consult with the New Mexico Business Portal, a free service that offers business planning and consulting for small business owners in New Mexico.
3. Sign up for business banking.
Your business and personal finances must be kept separate to maintain accurate records. With a business bank account, you can easily obtain statements and access products that would not be available to you as an individual. You can check our guide on the Best Business Bank Accounts for Small Businesses.
Best Banks for Small Business in New Mexico:
4. Seek funding.
Opening a new business often requires capital. If you are unable to fund your new business, you will need to take out a loan. There are three common ways to fund your business: commercial loans, business lines of credit and small business loans.
A popular organization that can assist you with small business loans in New Mexico is The Loan Fund.
5. Decide on a business name.
Make a list of names that you like and perform a Google search to find any conflicts with other New Mexico business names.
Once this is done, you will need to do a trademark search to ensure that the business name that you chose has not already been trademarked. You can perform the trademark search at the U.S. Patent and Trademark Office and the Trademark Electronic Search System. These databases have a comprehensive list of business names that are registered together with their classification.
After you have confirmed that your business name is not trademarked, you need to check the New Mexico Secretary of State website to ensure that your business name is not the same or similar to another corporation registered in New Mexico.
If you are satisfied that your business name is available, you can then register it on the U.S. Patent and Trademark Office website. You can check out our guide on How to Name a Business to assist you with naming your business.
Once you have found a suitable name, make sure to register the matching web domain and social media handles, should you wish to market your business online.
You can view our guide on How to Name a Business.
6. Request an Employer Identification Number (EIN).
Every business needs to have an Employer Identification Number (EIN). Registering for an EIN is very easy—all you need to do is go to the IRS website. You can complete the application online, and save your EIN confirmation notice once you receive a number from the IRS.
7. Acquire business licenses and permits.
The state of New Mexico does not require businesses to have a statewide business license. You will, however, require a local business license depending on the location of your business.
You will need to consult with your local municipality or county to check the business license requirements. It is also important to consult with the Planning and Zoning Department of your municipality or county to get more information regarding rules, regulations, and restrictions that may apply to your business.
Some businesses may require additional licenses and permits depending on the size or industry. You can view the specific business types and requirements here.
8. Hire employees.
To start hiring you will need to register at the New Mexico New Hires Directory. Each employee will need to be registered within 20 days of starting work, in accordance with the Personal Responsibility and Work Opportunity Reconciliation Act.
The New Mexico Human Rights Act protects employees against discrimination on the basis of age, race, creed, color, sex, sexual orientation, gender identity, national origin, religion, or disability.
The Fair Pay for Women Act prohibits gender pay discrimination between employees of different genders who require the same skills, responsibility, and effort to do the same job.
With reference to the pre-employment screening process in New Mexico, an employer is entitled to view a job applicant’s criminal history and obtain the relevant records from the criminal justice system.
You can check our guide on Hiring Software to assist you with the recruitment process.
Mandatory Posters for New Mexico Business Premises:
New Mexico Minimum Wage Law.
Job Health & Safety Law.
Workers’ Compensation Law.
Equal Opportunity Law.
Unemployment Insurance Notice.
State Whistleblower Protection.
9. Check your business employer requirements.
Business employer requirements are specific to the type of business that you are starting and include various labor, safety and tax obligations that need to be met. You should consider hiring a tax or business attorney to ensure your business is fully compliant with the laws in New Mexico.
If you are starting a business in New Mexico, you will need to take note of the following important items:
New Mexico’s law requires all employers to provide workers’ compensation coverage to their employees. You can obtain more information at the New Mexico Workers’ Compensation Administration website.
Health insurance isn’t a requirement for small businesses in New Mexico.
In New Mexico, your small business is required to establish an unemployment insurance tax account with New Mexico Department of Workforce Solutions. If your business is required to contribute towards unemployment insurance, you will need to file quarterly reports.
New Mexico Sales & Use Tax
Every business selling taxable tangible personal property in the state of New Mexico is required to pay sales and use tax. Services rendered are not taxable. You will need to register for a sales tax permit with the New Mexico Department of Taxation & Revenue.
Starting a business in New Mexico FAQs:
How much does it cost to start a business in New Mexico?
New Mexico articles of incorporation for LLCs cost $50.00.
New Mexico Registration and Filing Fees:
LLC Articles of Organization
You can view a comprehensive list of fees here.
How do I register a business in New Mexico?
You can register your business with the New Mexico Business Resource Center that is managed by the New Mexico Secretary of State.
How do I start a business in New Mexico with no money?
Use services to generate cash flow and fund a product-based business.
Get creative to discover funding sources.
Grind it out and look for business, even if you don't get paid for it.
Use your current resources in different ways to generate income.
Get a credit line to help with the early stages of your business.
Locate an accelerator if you can hit the market swiftly.
Crowdfund and allow the public to invest a small percentage of money in return for a future buy-in.
Use a business incubator to provide funding designed specifically to financially assist a startup company.
How can I protect the name and logo of my business in New Mexico?
The easiest way is to register your business name on the U.S. Patent and Trademark Office website. Prior to registration, remember to check on the Trademark Electronic Search System and the New Mexico Secretary of State website to ensure that your business name is not already registered by another company.
Do I need workers’ compensation for my new business in New Mexico?
All employers in New Mexico are compelled to provide workers’ compensation coverage to their employees.
Does my business in New Mexico need to contribute to health insurance?
Health insurance isn’t a requirement for small businesses in New Mexico.
Browse The SMB Guide for more helpful articles for small business owners, and be sure to download our How to Start a Small Business checklist.