Aspiring entrepreneurs in New Mexico can use online resources to start their businesses faster than ever, but there are still some significant legal and logistical items to address first. Namely, you’ll need to choose your business structure and obtain your required tax ID numbers. There are many good reasons to start a business in New Mexico. The state is friendly to small business owners, and its economy is largely driven by those small businesses. More than 154,000 small businesses are currently in operation in the state, which represent 99 percent of all New Mexico businesses. Those businesses employ 54.2 percent of all New Mexico employees, which number nearly 340,000.
Steps to Obtaining a Tax ID (EIN) Number and Registering a New Mexico Business
- Forming a Business in New Mexico
- Federal Tax ID (EIN) Number Obtainment
- New Mexico State Tax ID Number
- Localized Licenses and Permits in New Mexico
Before you get far in the decision-making process for your business, you’ll want to choose which business structure you want, such as: a sole proprietorship, a partnership, a limited liability company (LLC), or a corporation. There are a few major factors to consider in your decision. The first is sheer complexity (and their rationale). Sole proprietorships and partnerships are very simple, easy to understand, and straightforward to set up and manage. LLCs are a bit more difficult, and corporations are generally challenging to begin and manage. In New Mexico, LLCs are required to file an annual report with some basic information on how the business is operating. Corporations, however, give you the benefit of issuing public shares, which is a convenient way to raise funds (and is ideal for national expansion).
You also need to consider taxes. In sole proprietorships and partnerships, taxes are calculated straightforwardly. You’ll pay taxes as an individual on any money you make in the business. LLCs are considered pass-through entities; you won’t pay taxes on revenue generated by the business, but you will pay taxes as an individual on any money you take from the business, either as profits or as salary. Corporations do things differently, facing a kind of double taxation. Corporations pay taxes on all eligible revenue. In New Mexico, the corporate tax rate is a flat 5.9 percent. You’ll also pay taxes on any dividends, profits, or income you make as an individual from the business.
Then, you must consider liability. In sole proprietorships and partnerships, the liability will fall squarely on you; you’ll personally take on debts and face any and all legal action relevant to the company. LLCs provide some degree of protection, and corporations provide significant protection. Both these business structures are considered separate legal entities, which means they can take on debts of their own. It also means they can be found liable for misdoings, rather than the people that founded them (though this doesn’t always exclude you from personal liability). There isn’t a right or wrong decision for your business structure, but you should make a choice that complements the nature of your business, as well as your intentions for growing it in the future.
Your New Mexico business will likely end up needing a federal tax ID number. Sometimes called an employer identification number (EIN), this is a 9-digit unique number assigned to your business when you register with the government. This is a required number if you’re going to hire employees, or if you’re going to run a business with multiple members, like a partnership, corporation, or LLC. It’s also required of businesses applying for business bank accounts or loans, and those applying for licenses and permits.
You can get a federal tax ID through our federal tax ID number obtainment services. Answer a few questions about your business using our online questionnaire, and you should receive your tax ID in an hour or less.
Your federal tax ID number may not be the only ID number necessary for your business. You may also need a New Mexico state tax ID number. This number is a unique identifier, but it’s one that functions at the state level. You’ll need one if you’re going to hire employees in New Mexico, if you’re going to sell taxable goods and services in the state, or if you’re going to owe excise taxes on certain regulated goods in New Mexico.
You’ll have to get a federal tax ID number before you can get a New Mexico state tax ID number. Once you have that, you can use our New Mexico state tax ID number obtainment services. Simply answer a few questions about your business, and you’ll get your New Mexico state tax ID number in 4 to 6 weeks.
There isn’t a single, general business license for New Mexico businesses to obtain. Instead, license and permit requirements vary by industry and by location. You may be required to have some form of certification to provide certain services, or to operate in a given area. To make matters even more complicated, these rules can vary wildly from area to area. Your best course of action is to speak with someone from your local Chamber of Commerce, who can help you determine which forms of documentation you may need before you start your business.
New Mexico is experiencing a strong period of economic growth, though it’s growing slightly slower than the U.S. economy overall. Small businesses added roughly 6,900 net new jobs in 2018, and are poised for similar growth in 2019. Major cities like Albuquerque, Santa Fe, and Las Cruces represent some of the best opportunities for new entrepreneurs, but there’s a wide range of different areas to choose from.
Launching a new business doesn’t have to be complicated. There are some hard decisions to make and some legal hurdles to get through, but these are navigable if you utilize the right services. Take advantage of our federal tax ID number and New Mexico state tax ID number obtainment services for your own convenience; our online questionnaires are easy to use and understand, and can get you your tax IDs as quickly as possible.