You’re about to embark on a long and exciting journey, one full of hard work and rewards: starting a new business.
With wide eyes and big dreams, you’re about to enter the world of business ownership.
But beyond the initial thrill of the startup decision, there’s a lot to consider. In fact, if you’ve never done it before, starting a business can seem like an intimidating mountain of work. Out of all your responsibilities and tasks, you might not even know where to start.
But have no fear. The good news is that once you have everything planned out and understand the process, the formation process is smooth sailing. And this is your go-to guide.
Everything you’ve been wondering about, everything you need to do, every question you have – it’s all right here. By the time you’re through these 16 steps, you’ll be a bonafide business owner who’s prepared for sustained success.
New Mexico Entrepreneur Hack
When you form a business through business formation services (Example: ZenBusiness and LegalZoom), they’ll register your business with the state and help you check off most of the startup-steps in this list. They assist you with everything from building a website to opening a business bank account.
If you’d like to cut through the clutter and compare the best LLC services, see our comparison of the top 7 deals.
1) Write a Business Plan
Jumping into this endeavor without goals, directives, or a sense of direction can lead to a scattered, unproductive business.
A business plan lays the groundwork for your future success. It helps you analyze key elements of your business and forge pathways to achieve your goals. Here are a few things you should consider including in your business plan:
- Executive Summary (a separate document that gives a complete overview of your business’ purpose, plans, goals, competition, opportunities, etc.)
- Company description
- Market Analysis (opportunities, competition, etc.)
- Managerial or organizational structure
- Products and/or services
- Marketing strategies
- Funding goals
- Financial projections
Business plans aren’t just great for internal operations, but they give your business legitimacy in front of potential investors, customers, partners, and more. Need help? Check out this guide from the U.S. Small Business Administration.
2) Decide on a Business Name
You might’ve come up with the perfect name right away. If so, consider yourself lucky.
Sometimes, deciding on a business can be difficult, requiring brainstorming meetings and late-night rap sessions. That’s because your name is your business’ identity and reputation. It should be something that’s unique and memorable but also defines your business purpose.
Not just any name will fly, though. Your business name must follow the guidelines for its specific structure (see step 3). If you choose an LLC, for example, the name must include the words “limited liability company” or an appropriate abbreviation. Going with a corporation? Make sure to include the terms “corporation,” “incorporated,” “company,” “limited,” or an abbreviation.
But that’s not all: your name must also be available as well, meaning it can’t be taken by another company. Search for your desired name to find out if it’s already taken. If not, go ahead can claim it for yourself by filing a name reservation or using it on your formation documents.
3) Decide on a Legal Structure
There are only a few types of business structures, but each one dictates some important parts of how your business will run.
The most popular types are the sole proprietorship, general partnership, limited liability company (LLC), S corporation, and C corporation. Most small businesses go with the LLC because of its unique blend of flexibility and personal asset protection.
However, you shouldn’t make this decision without reading up on all of your options. We’ve done plenty of research on each business type and developed side-by-side comparisons. Check out our LLC vs. Corporation and LLC vs. Sole Proprietorship comparison guides for a closer look.
4) Choose a Registered Agent
The Secretary of State needs a point of contact for your business, someone who will be available at your registered office address during typical business hours – 9am to 5pm.
This person is called a registered agent, and they serve as an intermediary with the state, receiving all of your company’s important legal communications and relaying them on to you. The New Mexico registered agent ensures that no important state documents, deadlines, or payments fall through the cracks, so you’ll want to choose a person or company you trust.
You can choose either an individual or a business entity as your registered agent in New Mexico, but they must:
- Be an individual New Mexico resident or a corporation authorized to do business in the state.
- Have a physical address in New Mexico.
- Have a mailing address in New Mexico (no P.O. boxes allowed).
Any individual you appoint will shoulder the responsibility of keeping your business compliant with the state, so it’s a good move to choose someone with experience running and maintaining a business. The state’s registered agent rules are pretty broad, though, so family members, friends, and acquaintances make for viable options as well.
Or, you can choose a registered agent service instead. These companies take care of all your registered agent responsibilities, and some will even handle your business formation and biennial reporting as well.
Important: You must continuously maintain a registered agent on file with the Secretary of State. If your agent resigns or you appoint a new one, you’ll need to notify them by filing the appropriate documents.
5) Register Your Business
This is the big one, the step that officially creates your business. No matter which business type you choose, you’ll need to register it with the Secretary of State.
LLCs: To get your LLC on the map, you’ll need to file an Articles of Organization. The Secretary of State no longer offers this New Mexico LLC filing as a hard copy, so you’ll need to file it through the online portal. It costs $50, payable by credit card or eCheck.
Corporations: If you’re going with a corporation, the filing procedures are slightly different. Instead of the Articles of Organization, you’ll need to file the corporation-specific Articles of Incorporation for $100 using a paper form.
Sole Proprietorship/General Partnership: There are no official forms or fees to register as a sole proprietor or general partnership. Simply start doing business and that’s it! While this is obviously faster and easier, we recommend incorporating your business because of the personal asset protection LLCs and corporations provide.
Foreign Entities: Any business that comes to New Mexico from another state is considered a foreign entity and must apply for foreign qualification before commencing business activities in the state. This means filing an Application for Registration for LLCs or an Application for Certificate of Authority for corporations, which will take the place of the Articles of Organization or Incorporation.
6) Get an EIN
The Employer Identification Number (EIN) is your ticket to doing state and federal taxes. It’s a nine-digit number, much like a Social Security Number, that identifies your business on tax documents.
If you’re forming an LLC, it will be considered a “pass-through” entity, so the business itself won’t pay federal income taxes. Instead, you and the other members will report income and losses on your personal tax returns.
But this doesn’t mean you can go without an EIN. If your LLC pays any type of business taxes – like Sales, Use, or Unemployment Taxes – or hires employees, you’ll need to get one.
Unsure if you need one? The IRS provides a useful “Do I need an EIN?” link on this page, where you can also apply for an EIN. If you go through the online application process, you’ll receive your number immediately.
Otherwise, you can submit a Form SS-4 by fax to (855) 641-6935 or by mail to :
Internal Revenue Service Operation
Attn: EIN Operation
Cincinnati, OH 45999
7) Open a Business Bank Account
LLC and corporation owners are required to keep their personal and business finances completely separate, or they risk losing their personal asset protection. To do so, you’ll need a business bank account.
The good news is that opening a business bank account is pretty simple. Just pay a visit to your bank’s local branch and sit down with one of the bankers there. You will need to present your formation documents, an EIN number, and some personal information. Then, you can direct all of your business income and expenses to that account instead of a personal one.
It doesn’t really matter which bank you choose, whether it’s a national giant like Chase or Bank of America or a small, local bank. However, it’s usually easiest to go with the one where you have existing accounts.
8) Handle Any Tax Obligations
Ah, taxes. They’re always part of the picture, especially when you run a business.
Familiarizing yourself with your business’ tax requirements will help you establish a solid financial plan going forward. LLCs don’t need to file a corporate tax return and pay federal income taxes, so you’ll handle these taxes as part of your personal return.
Corporations, on the other hand, will need to pay a Corporate Income and Franchise Tax, while sole proprietorships/general partnerships will need to pay self-employment taxes.
Even though New Mexico doesn’t have franchise or privilege taxes for LLCs, every New Mexico business must obtain a CRS tax identification number through the New Mexico Taxation and Revenue Department. Plus, there are a few other taxes your business may owe, depending on its activities:
Gross Receipts Tax: There’s no sales tax in New Mexico, but your business may owe a Gross Receipts Tax if it sells or leases property, licenses franchises, or performs services in the state. For more information, see the Gross Receipts Overview page on New Mexico’s Taxation & Revenue website.
Wage Withholding and Unemployment Insurance Taxes: These taxes are necessary if your business hires any employees. You can pay the Wage Withholding Tax through the Department of Taxation & Revenue, while the Unemployment Insurance Tax goes through the Department of Workforce Solutions.
Other Taxes: The state has other, more specific taxes that may apply to your business if it participates in certain activities or sells certain goods, like the Alternative Fuel Tax and the Liquor Excise Tax. You can view a full list here.
9) Find an Accountant
Sometimes it’s easier to hand off your financial responsibilities to a professional. Not only will an accountant ensures that your taxes are filed and paid correctly, but they might also find a few ways to save your business money.
Bookkeeping and tax procedures are time-consuming and require some specialized knowledge. Balance sheets, financial reports, cash flow, audits, and much more – an accountant can ensure that your company operates smoothly and streamlines its expenses.
This can be expensive depending on the complexity of your finances, but the benefits an accountant offers can be well worth it.
10) Create an Operating Agreement
An operating agreement constructs a framework of procedures and standards for your business. This is where you can lay out processes for member conduct, asset allocation, compensation policies, voting procedures, dissolution, and much more.
While operating agreements aren’t technically required in New Mexico, they are essential to your business’ stability and success. They provide a safety net in legal disputes and legitimacy in front of banks, courts, government agencies, and other businesses.
You can either draft one yourself using an online template, or you can hire an attorney or an incorporation service to take care of it for you.
Once you’ve drafted your agreement, it must be approved by each of your LLC’s members, then filed with the rest of your business documents. You do not need to submit it to the Secretary of State.
11) Acquire the Necessary Licenses
After filing your formation documents, your business is legitimate, but it might still need specific licenses before opening its doors in New Mexico. This all depends on your business activities, but it’s good to be aware of the following common license types:
Professional Licenses: Certain occupations must obtain licensure from a state board before conducting business in New Mexico. You can find a complete list of licensed professions here.
Environmental Permits: If your business affects New Mexico’s land, air, or water quality, it may need a special permit. Visit the New Mexico Environment Department website for more information.
Other Licenses: There are a few other outlying state-wide licenses that your business might require if it meets certain conditions. You can find them on this page.
Local Licenses: Your specific city, county, or municipality might have its own licensure requirements. Take a look at your local government’s website to find out.
12) Consider Business Insurance
Even though it’s not pleasant to consider, there’s always a chance that unforeseen events might take a toll on your assets.
While forming an LLC or corporation offers some personal asset protection, additional business insurance can also protect your business assets in cases of lawsuits, damages, etc. You can acquire insurance for your business products, vehicles, specific occupations and much more.
If you hire employees, you’ll also need to get workers’ compensation insurance. SBA.gov has a useful guide for determining which forms of insurance your new business might need.
13) Build a Website
Your company’s digital presence is just as important as its physical one. Like it or not, most potential customers will find your business online, and if you don’t exist online, you’re missing out.
But don’t worry, you don’t need to be an HTML or web design expert to build a website. Sites like WordPress and Squarespace make it easy to construct an elegant and responsive website, no coding necessary. But if you’re not comfortable or confident doing it on your own, you can always hire a professional web designer to take care of it for you.
14) Launch Social Media Accounts
Making your mark on the digital landscape doesn’t start and end with your website. Most successful businesses also have a robust social media presence on multiple platforms. Facebook, Twitter, and Instagram are all great ways to connect organically with potential customers and develop your brand voice.
Just don’t forget to publish consistent social media content, or you’ll have trouble building a base of followers.
15) Understand Ongoing New Mexico Requirements
After you’ve launched your business, things will likely be moving at 100 miles per hour as you evolve and grow. But in all of the excitement, you can’t forget your state’s ongoing compliance requirements. Every state has its own annual or biennial business requirements.
Most states require their businesses to file annual or biennial reports to keep their records up to date. If you’re forming an LLC, you’re in luck, because New Mexico doesn’t burden them with any reporting requirements.
Corporations, however, must file an Initial Report within 30 days of receiving their Certificate of Incorporation, then file Biennial Reports every other year after that. Each report costs $25 and you can file them through the Secretary of State’s online portal. Your Biennial Report due date is the 15th day of the 4th month of your fiscal year.
16) Check Out New Mexico Small Business Resources
You’re not on this journey alone. There are plenty of free resources available to make starting and growing your business a smoother, easier process.
Anything you need to know about starting a business in New Mexico, you can likely find on SBA.gov. It’s a gold mine of business resources, support, and information. For an overview of everything they offer, check out New Mexico’s SBA district office webpage and this comprehensive guide on the state’s small business resources. From financial consulting to loan opportunities to networking events, you’ll find everything you need to pave a path to future success.