Suppose you’re starting a business in New Mexico. You may feel overwhelmed with the information you’ve come across in your research – especially if you have already started or run a business in another state. Some of the requirements may seem ridiculous, but they’re essential to ensuring that your company operates safely and legally.
While some legal administrative tasks are tedious, you won’t have to deal with them much – aside from the regular updates and filings. So, this article will discuss a few of the New Mexico business requirements and tips for getting knocked out without overwhelming you.
Defining Your Business
Before you start structuring your business, you should have a good idea of what kind of product or service you’ll provide, who you’ll serve, and the path to success. If you don’t have those details mapped out comprehensively, you are essentially just grasping at straws. By defining your business, you set both short and long-term goals. By writing those short/long-term goals out, you can hold yourself, and anyone else involved responsible. Additionally, you should know all of the roadblocks that could negatively affect your hard work. It’s essential to know every detail because you’ll use this information to write a business plan.
A business plan is necessary for various reasons:
- It’ll give you a clear roadmap of the steps you need to take to get your business off the ground.
- You can show investors and banks that you know what you’re doing so they can trust that they’ll see a return on their initial investment.
- All business partners will be on the same page regarding responsibilities, operation procedures, and profit allocation.
Structuring a Legal Entity
Registering your business with the state is a critical step that confuses people. However, it’s not as complicated as it seems. Once you decide which of the following structures suits your business, you need to register with the state online, in person, or by mail, depending on your choice. If you are unsure what structuring your business should have, it would be good to meet with a professional business consultant, as one may be a better choice than another.
An LLC, or Limited Liability Company, is one of the most popular structures. It offers the same liability protection as a corporation, but you can take advantage of pass-through taxation. This means that you can claim your company’s earnings and losses on your personal tax return.
A corporation allows you to sell stock in your company. An S-corp is ideal for those who want the same liability protection as an LLC and don’t want to deal with double taxation.
This type of corporation can be owned by multiple shareholders, who are all taxed separately from the company.
You need to meet New Mexico’s business insurance requirements depending on your industry and the number of employees you hire. For example, you will most likely need an essential workers’ compensation policy. In the state of New Mexico, the law requires all businesses with three or more employees (whether full-time or part-time) to carry workers’ compensation insurance.
In addition, most of your clients might prefer if you had a public or general liability policy, even though it might not be required. Aside from it being required for legal operation, general liability can help protect you and your business from devastating losses that could cripple most businesses — things like bodily injury, property damage, or even downtime. You can learn more about your New Mexico business’s insurance requirements and recommendations here.
Once you’ve registered your business, obtained your Employer Identification Number (EIN), and opened a bank account, you must register your business with the state for taxation. If you don’t have experience doing so, it could be a good idea to consult with an accountant or CPA prior to registering. They can make recommendations on the best approach and how to maximize your return come tax season.
Unfortunately, New Mexico doesn’t have a sales tax, so you must pay a gross receipts tax. Don’t worry, though, because you can avoid paying it yourself by including the taxes in the sales price of your products.
Hiring employees can be nerve-wracking. You’ve put so much effort into your business, and you may not have trust in others to help you run it smoothly. However, when you have extra help, you can afford to expand your business significantly.
The key is to hire trustworthy people and give them chances to learn from mistakes instead of firing them at the drop of a hat. Keep in mind that every time you hire a new employee, you need to report it to New Mexico’s New Hire Directory for record-keeping purposes. Also, turnover is expensive, so take your time interviewing. Hiring for the sake of quickly filling a spot can turn around to bite you in the end.
Your brand is a critical part of your business. From your name, logo, mission, and website, your brand is what makes your company unique. So you need to ensure that your business name and logo aren’t already patented by someone else.
It would be upsetting and awkward if you had to do a total rebrand because you didn’t take the necessary steps to register your name and logo legally. Luckily, plenty of online directories will help you determine whether your idea is already in use by someone else. They may even allow you to register your brand to hold rights to it for a set period.
New Mexico can be an excellent place to start a business, but you won’t make it very far if you don’t do your due diligence to comply with state and federal regulations. You may be overwhelmed, but you’ll quickly knock out the tedious administrative tasks if you take things one step at a time.
Then, you can move on to the enjoyable parts, like finding a location, buying equipment, marketing, and decorating your shop for opening day. Starting a business is hard work, but you should enjoy this time as it could become a source of pride for your family.