Starting a new business from scratch in New Mexico

New Mexico is quickly becoming a famous state for incorporating a business. Forbes mentions that the average job growth in 2018 was 1.9% within the state, partially due to more companies seeing it as an excellent place to set up. New business owners want to benefit from a readily available workforce. This, along with a friendly tax rate, can help both them and their company prosper. If you’re going to put together a New Mexico company, this is how you go about doing it.

Picking a competitive idea

Startup Nation mentions that it’s better to be unique in a small business environment. However, just a unique business idea won’t be enough to survive. It is a start, and it’s the first step in incorporating your company in New Mexico.

Competitive ideas mean more than just something that you think will have a large user-base. It also means that your idea needs to be able to compete on a national scale against larger chain-stores. One of the worst things a new business owner can do is develop a business idea that suffers because it is not competitive.

Developing a plan

How is your business going to make money? Having a solid business plan can help you to develop your business outreach in several ways. Most companies that don’t have a plan usually fail because they lack purpose and direction.

Business plans allow a company to figure out how it intends to make money and what are the most common factors that influence this process. A business plan doesn’t even have to be that complicated. Several places online offer single-page business plans that help an owner distill their idea down to its core. Once you have the core business idea, it’s a matter of figuring out where you want the business to be at milestone moments. Then, work towards that goal.

Registering your business

It’s best to set up a structure protecting your assets, yet gives you a favorable tax rate. Most small businesses in the area opt for registering a limited liability company (LLC). LLCs are a strictly better version of a sole proprietorship. It offers protection in the event of any business wrongdoing liability. With an LLC, if someone takes your business to court, they can’t claim your assets as part of the settlement.

Alternatively, a business owner might opt for a corporation. Corporation registration requires a minimum of two members, and it cannot have more than one hundred (100) shareholders, all of which must be American citizens. Corporations are also required to keep extensive records of their meetings, both of the board and with general shareholders. These reports must be summarized and submitted with the requisite maintenance fee to the state each year. Corporations offer a lot of the same liability protections as LLCs but are taxed differently and require much more paperwork overall.

Setting up your tax number

The Employee ID Number (EIN) is how the IRS records the taxes your business pays. Once you’ve successfully filed your articles of incorporation, you can apply to the IRS for an EIN. It’s important to remember that once the IRS grants you an EIN, it’s registered to your business forever. Even if your business shuts down, the EIN cannot be given a reassignment to any other company. If you decide to restart your business, then you can use the original EIN.

The EIN is a point of reference for the IRS to keep track of all business taxes paid. EIN’s can be a corporate equivalent to a Social Security number. Many organizations allow business owners to use their EIN instead of their social security numbers for tax purposes.

Banking accounts

It’s a rule in many states that individual accounts must be separate from company accounts. This rule usually prevents the money from being indistinguishable. New Mexico is no stranger to this law. You must have a bank account dedicated to the business that’s separate from your own account.

Having the funds from your business separate from your own is a requirement because of the asset protections that registering a business offers you. Whether it’s an LLC or a corporation, you have asset protections stemming from your incorporation. If the business were to become the subject of a lawsuit, the settlement won’t be able to access your personal assets as part of the settlement. The company has its own assets (such as its bank account) that the lawsuit may use as part of the settlement.

Permits and licenses

Are you a professional or a member of an organization? If so, you may need to apply to the state board to get licensed or have your existing license recognized. If you perform certain types of businesses, the State of New Mexico may require you to have a permit to operate that business.

As a professional in a field, there’s an expectation that you will have the licenses associated with your profession if you intend to operate it as a company in New Mexico. This is typically easier for American citizens than it is for international professionals. You should consult with the state board if you’re not an American but still want your professional qualifications recognized. An additional cost for this recognition may be applied, depending on which profession it is.

Incorporating a new business is exciting

New Mexico is a comfortable place to set up a new company. Paperwork is simple, and the cost of filing your articles of incorporation isn’t exorbitant. You can always contract a registered agent to act on your behalf and help you file the paperwork and do the running around for you. It will save you time, but it might cost you a bit more. Regardless of what you decide to do, you’ll be setting up shop in a state that welcomes new business and has the labor market growth to support a company.