Do you have a great business idea, but you’re not quite sure how to get from the idea phase into owning and operating your own business in New Mexico? You’ve come to the right place! There are many important aspects to running a company, and like any other state, New Mexico has its own rules and regulations to consider.
In this guide to starting a business in New Mexico, we’ll discuss all the relevant details to business ownership in this state. By the time you’re done reading, we think you’ll have a strong grasp on the necessary steps involved.
How to Start a Business in New Mexico (in 10 Steps)
1) Create a Business Plan
The first step to creating any business in any state is to plan what products and services you’ll sell, set your operational budget, and figure out how you want to market your company.
Your business plan doesn’t have to be fancy at all, you just need to make sure you spend enough time considering these important aspects before you actually launch your business. To get started, SBA.gov has a great free tool.
2) Choose a Name
The name of your business is an extremely important attribute because it’s often how you make your first impression to potential customers.
Legal Considerations
Depending on whether you choose to form a corporation or a limited liability company, there are some legal aspects as well (for example, an LLC must include “LLC” or “limited liability company” in the business name, and a corporation must include “incorporated,” “corporation,” “Inc.,” or “Corp.”).
Explanatory Naming
Beyond the basic legalities, you should focus on clearly identifying what your company does in your business name. You can also consider incorporating your values into your business name, like using the word “green” to denote environmental friendliness.
Something You Love
Finally, choose a name that you personally like and take pride in, and one that both sounds good when spoken aloud and looks good on paper.
One big piece of advice we have for naming a business is that you shouldn’t get too focused on one idea until you either form your company or reserve the name.
In New Mexico, you can run a business name search via the Corporations and Business Services Division of the Secretary of State’s office. If you wish to reserve your business name before filing your formation paperwork, you may do so by filling out the Application for Reservation of a Corporate Name and submitting the form to the Secretary of State. Name reservations cost $25 to process and last for 120 days.
3) Decide on a Registered Agent
A New Mexico registered agent is the person or service in charge of receiving your important government documents, and forwarding them to you.
According to the New Mexico Secretary of State, a registered agent must be “an individual or corporation, which may be a domestic corporation or a foreign corporation authorized to transact business in New Mexico that is authorized to accept service of process on behalf of the entity.”
This position is vital to any New Mexico business because without a registered agent, you could lose your good standing with the state, see your business dissolved by the state, or even remain unaware of a lawsuit progressing against your company.
Though the New Mexico Secretary of State does not provide a list of commercial registered agents, there are various companies throughout the state that can provide this service.
Rocket Tip: We recommend designating an online service to handle these requirements. This eliminates junk mail and keeps your personal and/or business address off public record. ZenBusiness and IncFile both offer a free registered agent service when you use them to form a business online.
4) Choose a Structure and Form Your Business
If you’re just operating a sole proprietorship or general partnership, you don’t need this step (or several of the others in this guide, including selecting a registered agent), because those business structures don’t require any sort of formal formation process.
This leaves two main options: the corporation and the limited liability company.
The LLC is the more common option, partially because it’s much simpler. There’s not much paperwork involved, and the maintenance requirements basically amount to an annual report. Furthermore, LLC owners still receive the personal asset protection that makes a corporation so attractive as a business type in the first place. For more specific information about starting an LLC, check out our full article on the topic.
For some entrepreneurs, the corporation is the better choice. There’s far more effort involved both in forming one and in maintaining it with the state of New Mexico, but for larger businesses they’re usually the better option, as they allow for more growth and investment than LLCs generally do.
If you would like to know more, check out our “LLC vs Corporation: What Is the Difference?” article. No matter which business structure you choose to form, you can find all the relevant forms on the Iowa Secretary of State’s website or have a professional business formation website do it for you.
5) Take Care of Tax Obligations
The vast majority of businesses operating in New Mexico will need a federal tax ID number (EIN), which can be acquired from the IRS.
On the state level, there are a variety of tax registration requirements that may or may not apply to your company, depending on the nature of your business. These include taxes like wage withholding tax, compensating tax, corporate income and franchise tax, etc.
Thankfully, the Department of Taxation & Revenue makes it pretty simple to register your business and learn about your specific tax obligations. You can find out more at this link.
Keep in mind that your city and/or county may have taxation requirements as well, so make sure to check with them to make sure you aren’t missing anything.
Here are some business resources for each of the largest cities in New Mexico:
6) Acquire Business Licenses and Permits
There are no statewide business license requirements in New Mexico. However, according to the Department of Economic Development, “registering and licensing your business varies according to the ordinances of the county or municipality in which you are operating. In New Mexico, this is typically accomplished at the county clerk’s office, but not always. For example in Albuquerque, a business license is under the purview of the Planning Department. Also, if you are operating within multiple communities across New Mexico, you will need to register your business in each of those communities.”
There are hundreds industry-specific licenses and permits ― from manufactured housing installation to money order agents ― that may apply to your company depending on the nature of your business. To search through the full database of business licenses and permits, you should reference this list.
Much like with taxation issues, there’s also the matter of local licenses to consider. You can learn more about county-level occupational licenses right here.
7) Obtain Required Insurance Policies
In order to operate a business with employees in the state of New Mexico, you are legally required to obtain two essential insurance policies. First, you will need to obtain workers’ compensation insurance. According to the Workers’ Compensation Administration, there are three types of insurance that your business can acquire:
- “Conventional coverage – the voluntary market;
- Assigned risk pool – for high risk employers;
- Self-insurance – for larger companies, businesses with similar activities, and governmental entities.”
In addition to workers’ compensation insurance, all employers in the state will need to obtain unemployment insurance. This insurance can be obtained through the New Mexico Workforce Connection website.
You can learn more about these insurance types and how they apply to New Mexico businesses by visiting the Workers’ Compensation Administration and/or the Workforce Connection websites.
It is the employer’s responsibility to get these policies to protect your employees, regardless of what line of business you’re in. Of course, it’s probably a good idea to acquire industry-specific policies to protect your company in other ways, but unemployment and workers’ comp are the ones strictly required by law.
8) Open a Business Bank Account
Whether you start a limited liability company or a corporation, you’ll need to keep your business and personal assets separated.
This is where opening a business bank account comes in. While having a separate checking account for your company isn’t a legal requirement, it makes separating your assets considerably easier, and we always advise that any business owner does so.
9) Develop a Business Website
In this day and age, even strictly local businesses should have a website, because the internet is your first point of contact for many of your customers. Your site doesn’t need to be fancy, but you should put some thought into your domain name, and make sure it’s something memorable and easy to type without misspellings.
If you’re not comfortable designing a site yourself ― and if you also don’t have the budget to hire a professional designer ― there are plenty of website builder tools that can help you put together a solid website. WordPress and Weebly are very easy to use.
10) Don’t Be Afraid to Ask for Help
If you run into problems with any of the steps outlined in this guide, remember that you can always find help.
In this state, the New Mexico Small Business Development Center exists solely to (in their own words) “develop skilled entrepreneurs and strong businesses.” With locations across New Mexico, the SBDC is ready and willing to help if you need assistance.
Another excellent resource is the New Mexico chapter of the U.S. Small Business Administration. Their website has information regarding small business events, business resources, press releases, SBA programs, and more.
Conclusion
While there are several vital steps in the process of starting a business in New Mexico, taken individually these steps aren’t terribly complex.
It can seem overwhelming if you consider the entire process all at once, but if you break down these steps and take care of them one at a time, they’re all quite manageable. Keep in mind that you don’t need to go it alone with the DIY option ― if this process becomes overwhelming, or if you simply don’t have the time and energy to devote to these steps ― assistance is available.