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New Mexico is nicknamed the Land of Enchantment. Many find it in the state’s pleasant weather, wide-open vistas, and stunning rock mesas formed over millennia. In recent years, New Mexico has enchanted entrepreneurial types, too, thanks to its affordable real estate, growing population, and favorable tax climate. Whether you’re looking to start a sole proprietorship, a limited liability company, or a corporation, here’s how to start a business in New Mexico.
Start a business in New Mexico
1. Choose a business idea
The success of your New Mexico business largely depends on your business idea. You might develop a new product or service or make meaningful improvements to an existing offering. Before setting up a concept for your new small business, make sure you can answer the following two questions:
- Who is your customer? Hone in on a target market—your core customers. Will you sell directly to consumers (B2C) or business-to-business (B2B)? Will your customers find you online, at a brick-and-mortar storefront, or both? Conduct market research, study successful businesses in your sector, and identify holes in the market.
- What’s your projected profitability? You need to make more money than you spend in the long run. What’s your break-even point? How much must you sell—at a minimum—to cover costs? Various elements can impact your profitability, including pricing, packaging, distribution, bundling models, and subscription options.
2. Name your New Mexico business
The next step in your business ownership journey is choosing a name. A great business name can tell potential customers about your company before they even browse your offerings. Take these two hypothetical flooring manufacturers: one called Oak Workers, the other called Laminate Land. You can tell just by glancing at their names that they specialize in different areas. Consider the following guidelines when settling on a business name for your New Mexico business:
- Stand out. Many memorable business names include rhymes, alliteration, and pop culture references. Think about the tone your business name conveys. An ice cream parlor might benefit from a fun, playful name—a mortuary wouldn’t. Shopify’s business name guidelines can be a brainstorming resource.
- Confirm your name is unique. You can only register a name with the state if no New Mexico business has already claimed it. Conduct a corporate business search with the New Mexico Secretary of State to confirm no other entity is already using your preferred title.
- Include certain words. Note that New Mexico LLCs must include the phrase “Limited Liability Company” or its abbreviations (“LLC” or “L.L.C.”) in their business names. New Mexico corporation names must include “Corporation,” “Company,” “Incorporated,” or “Limited” or their abbreviations.
- Register your business name. Once you land on an unclaimed name, reserve it by filling out a name reservation form. For LLCs, file an Application for Reservation of a Domestic Limited Liability Company Name, which costs $20. For corporations, file an Application for Reservation of a Domestic Profit Corporate Name, which costs $25.
- Adopt a DBA. DBA stands for “doing business as.” Adopt a DBA if you want to conduct business using a name different from your company’s legal name. Unlike many other states, you don’t have to report it to state authorities if you decide to use a DBA in New Mexico. (However, this means state regulators won’t come to your defense if another company starts using the same DBA.)
- Reserve applicable domain names and social media handles. Customers expect to quickly track down a business online. Meet their expectations by reserving a domain name (URL) and social media handles that align with your legal name or DBA. Shopify’s domain name generator can help.
3. Create a business plan
A well-crafted business plan helps steer your company toward growth, solvency, and long-term success. Think of it as a blueprint—your business plan should reflect your overall goals and give a sense of how you intend to run your business. It might include the following:
- An executive summary and mission statement
- A detailed company description
- A market analysis
- Your organizational structure
- A list of products or services
- A customer segmentation report
- A marketing plan
- A logistics and operations plan
- A financial plan
4. Choose a business structure and get started
When launching your New Mexico business, you’ll need to choose from one of three business structures: a sole proprietorship, a limited liability company (LLC), and a C corporation. Each type offers different benefits for personal liability, ownership, taxation, and funding. Here’s how they differ:
- Sole proprietorship. Sole proprietorships are informal business structures. The law treats them as an extension of their owner, whereas other business structures like LLCs have independent legal status. You can establish a New Mexico sole proprietorship without legal paperwork, and as a sole proprietor, you get to keep all your business profits. The downside is sole proprietors miss out on the tax benefits and personal asset protections of LLCs or corporations. If a sole proprietorship is sued, the owner may be personally liable.
- LLC. A limited liability company (LLC) is a formal business structure owned by individuals known as “members.” The LLC legal structure offers personal liability protection to its members, meaning that if someone sues the LLC, the suit is against the company, not its members. If the LLC loses, members’ personal assets are not at risk. LLCs are treated as pass-through tax entities, meaning their profits and losses pass through to individual members, who report them on their personal tax returns.
- Corporation. A corporation, or C corporation, is a legal business entity owned by a group of shareholders, making it easier to welcome new owners, sell the business, and raise capital. Like LLCs, corporations separate company assets from their owners’ personal assets, meaning everything a corporation owns, from real estate to intellectual property, belongs to the corporation, not its shareholders. Like LLC members, corporate shareholders are protected in case of bankruptcy or lawsuits. Corporations are taxed at a corporate rate, different from the personal income tax rate. (New Mexico’s corporate tax rate ranges from 4.8% to 5.9%.) Corporations must appoint boards of directors, hold regular meetings, and submit to more strenuous tax reporting.
Obtaining a federal employer identification number (EIN)
Any business that legally incorporates or hires employees needs a federal employer identification number (EIN) from the Internal Revenue Service. (If you’re a sole proprietor with no employees, you don’t need an EIN.) An EIN functions as a business’s federal tax number but also comes in handy when setting up a business bank account, for example.
Register your business with the New Mexico Taxation and Revenue Department with your federal EIN and file Form ACD-31015 online through the state’s Taxpayer Access Point (TAP). This authorizes you to conduct financial transactions and pay New Mexico business tax.
Incorporating in New Mexico
Find New Mexico Articles of Incorporation on the Secretary of State’s website. However, you must submit the form by mail or in person with a filing fee ranging from $100 to $1,000, based on the number of initial shares your company offers. Your Articles of Incorporation must include:
- Your corporation’s proposed name
- Information about your business’s corporate shares of stock
- A declaration of how long you intend the corporation to exist
- Contact information, including your company’s mailing address, email address, and phone number
- Your registered agent’s name and address (your registered agent, who accepts legal documents on behalf of your corporation, must have an address located in New Mexico)
- The name and address of each incorporator
- The signature of at least one incorporator
- The name and address of each initial member of your board of directors
5. Obtain a business license and permits
Ensure you have appropriate business licenses. New Mexico requires special licenses and permits for companies operating in particular industries, including architecture, food service, construction, and alcohol sales. Some New Mexico licenses are issued at the state level, while local government agencies issue others. The New Mexico Regulation and Licensing Department and the New Mexico Business Portal connect you to state- and local-level permitting offices.
6. Examine business insurance options in New Mexico
You can protect your assets by establishing your company as an LLC or corporation, but you may still want to purchase business insurance to cover your products, vehicles, and other property from unforeseen mishaps.
The Superintendent of Insurance enforces insurance law in New Mexico. The state mandates some policies, like workers’ compensation insurance (coverage for work-related illnesses and workplace injuries) and auto insurance (covers the cost of damages to a specialized work vehicle and related expenses). Other policies are legally optional but may be required for renting property or obtaining a loan. Other common types of business insurance policies include:
- Professional liability insurance. Professional liability insurance provides coverage for any damages due to claims of negligence or misconduct.
- Commercial general liability insurance. Commercial general liability insurance—sometimes called business liability insurance—covers general third-party claims against your business, including bodily injury and property damage.
- Unemployment insurance. Unemployment insurance (purchased on behalf of your employees) goes to the state’s unemployment insurance fund for laid-off workers.
7. Understand financial considerations
Once you have a federal EIN from the IRS, you’ll set up a business bank account at a commercial bank or credit union. If you plan to create subsidiary companies, set up additional accounts for each separate legal entity. You may want to hire lawyers, accountants, or other professionals to support your endeavors. (Corporate bookkeeping, for example, can be more labor intensive than personal bookkeeping.) You might have to make other investments, like renting retail or warehouse space, getting a professionally designed website, and purchasing ads, equipment, and software.
Startups need capital to finance these expenses. The New Mexico Finance Authority or the Finance New Mexico web portal can connect you to funding, grants, and special tax benefits to get your new business off the ground. You can explore federal resources via the US Small Business Administration, which has a district office in Albuquerque serving the entire state. You can also connect with lenders and investors through a merchant support service like Shopify Capital, which offers fast funding and flexible payments.
8. Market your business
New Mexico’s state motto is “Crescit eundo”—It grows as it goes. For the same to apply to your new business, devise a strong marketing strategy. Building your brand involves market research, where you describe your target customer, assess current market offerings, and identify a niche you can fill. Use this research to develop marketing campaigns that might include:
- TV and radio ads. TV and radio ads come at a cost, but these traditional marketing methods can help you reach a broad, diverse audience.
- Social media influencer campaigns. Social media influencers can help you reach younger audiences. You pay influencers to showcase your products and services on their feeds.
- Pay-per-click web ads. Typically more affordable and targeted than TV or radio ads, pay-per-click campaigns appear during web videos, sponsored search results, websites, and social media feeds.
- Organic marketing. Organic marketing—sometimes called awareness content—includes newsletters, search-engine-optimized (SEO) articles, blog posts, informational videos, and podcasts. It provides value to users while helping your brand turn up in organic search results.
Starting a business in New Mexico FAQ
How much does it cost to start a business in New Mexico?
Startup costs for a New Mexico business include a $20 fee to reserve your company name, plus a $50 fee to file Articles of Organization if you choose to organize as an LLC (or $100 to set up a foreign LLC, i.e., out-of-state) or a $100 to $1,000 for your Articles of Incorporation if you choose to establish your business as a corporation.
Is New Mexico a good state to start a business?
New Mexico’s natural beauty, abundant land, and relatively affordable cost of living draw many to the state. Santa Fe, the oldest state capital in the United States, is a cultural destination for art and architecture. New Mexico’s top business tax rate of 5.9% is near the median of all states, while its 5% sales tax (known in New Mexico as a gross receipts tax) is near the national average at 5.09%.
Downsides include New Mexico’s small population and poorly performing public education system. You may find a more abundant, well-trained workforce in neighboring states like Colorado. While the Albuquerque–Santa Fe area is teeming and growing, the rest of the state is sparsely populated, which may limit business opportunities.
Do you need a business license in NM?
Certain New Mexico businesses require a license to operate. Consult the New Mexico Business Portal for information about licenses and permits in your specific industry. All New Mexico businesses must register with the New Mexico Taxation and Revenue Department to remit sales tax and pay business tax.
How do I get a seller’s permit in New Mexico?
Unlike many other states, New Mexico does not issue a formal seller’s permit to merchants. However, it does require businesses to register with the New Mexico Taxation and Revenue Department, which then issues a Combined Reporting System (CRS) number. Once your company is established in the state’s tax collection system, you can access tax-related forms through the state’s Taxpayer Access Point (TAP).