Being your own boss is the ultimate goal for many employees and aspiring entrepreneurs. While some consider this to be a daunting and difficult task, there are many benefits and rewards. Of course, there is a lot of hard work that goes into running a business, but in the end, this hard work pays off.
Running your own business provides you with flexibility. First, you can choose your working hours, come and go as you like and you will not have anyone giving you orders or telling you what to do, as it is the case when you are working for someone else. Secondly, you make your own team, choosing who you want to work for you. Flexibility is also experienced in the clients and business partners you work with as you are the one taking on new jobs and working with clients you want to. And those flexible working hours give you the opportunity to spend more time with your family, friends or simply to relax by yourself.
Another advantage of working for yourself is the fact that you are the one calling the shots, and although you have the responsibility of making the right decisions, there is no one to answer to.
Another advantage is that you choose what your line of business is. If there is something you are passionate about, it is the perfect road to take in most cases, because doing what you love is not strictly business. This also allows you to see your passion come to fruition, see the company you have created grow from a startup to a respectable company, all in your hands.
Yes, these are all the best case scenarios, and things don’t always work out as well as we’d wish they do. But, as you have been putting in long hours working for someone else, you might as well put in some more hours for yourself to get your business running and enjoy all the rewards mentioned above.
The guide you are reading will focus on the initial steps you need to take to set up and register your business legally in the state of New Mexico. While you will be given directions and pointers, it is highly advisable to consult professionals, attorneys or business advisors to make sure you are not missing any of the important aspects of this process.
Before you get into the legal aspects of registering your business, and in order to reap the rewards of being your own boss afterward, you have to set up everything properly. This does not only mean finding the fanciest office or just jumping into the market that is currently the most popular. A move like that could lead to you closing shop very soon as such markets are usually very competitive and it is hard for new businesses to leave a significant mark and grab a share of the market. This is why there are certain preparatory steps you have to take in order to give yourself the best chance of success.
The first thing to do is to actually find out what your passion is. We mentioned that working on something you are passionate about will bring you more joy and probably make work seems more like a hobby, which is why it is important to look at your passions to find something that you would enjoy as your line of work, that you would develop and see grow into a fully fledged business. But this does not mean that you should jump straight into that market once you realize where your passion is. Rather, this is a starting point for the extensive market research you should conduct within the process of creating and developing a comprehensive business plan. You should carry out market research that will show you the market dynamics, the supply and demand balance and whether there is significant competition in the market.
Blindly jumping into an oversupplied market just because you love a product, for example, is not a good idea. It is usually advisable to start small and to exploit any market gaps your research has discovered. Such markets are considered the best starting points for entrepreneurs just starting out as business owners. They allow business owners to gain valuable experience as the demand exists and is not matched on the supply side. This also means that supplying that market can be a viable option and a great place to start before growing and expanding into new markets, and more importantly, your target market.
But this is not the only advantage of conducting thorough market research. It will allow you to develop a comprehensive business plan that has to include market assessment, your business model, and plans as well as financial predictions such as costs, revenue and profit, essentially proving that your business is sustainable and profitable. A complete business plan is essential for those looking for additional funding. Banks and any other investment and financial institutions will first ask for a business plan before even considering loaning you the money or investing in your company.
Doing the research and developing a business plan on your own can be an overwhelming task, which is why we advise you to consult professionals. The state of New Mexico has a number of resources that will help you understand the business processes and find your feet in the New Mexico business environment. One such institution id the Federal government’s Small Business Administration Learning Centre, as well as NMSBDC and WESST. Many of the sources offer free help and all those starting a business can look to get involved in organizations such as Startup New Mexico or the New Mexico Technology Council.
Once you have developed your business plan and are ready to take on the entrepreneurial world, it is time to legally register your business in the state of New Mexico.
The legal process to register a business in the state of New Mexico does not differ much from other states. Your best source of information is the New Mexico Economic Development Department’s Business Resource Center, which you can browse through for detailed information on various subjects. This guide will focus on the specific steps you have to take in order to register your business.
The first step to take is to choose a unique name for your business and you can use the New Mexico Office of the Secretary of State’s website to check for name availability. This website will also allow you to register your desired business name as well as a trademark with the US Patent and Trademark Office. However, prior to registering a trademark, make sure you do another search for the trademark availability.
With your name selected, it is time to choose the legal structure for your business. This will largely depend on the type of business you plan on conducting, the size and scale of the operation you plan on running as well as the number of members that might be joining forces to create and run the business. The legal structure is registered with the New Mexico Office of the Secretary of State. One legal structure that is also the most common one is a sole proprietorship, which requires no legal paperwork. The state of New Mexico does not have any other special requirements for this type of legal structure. However, as you are the business, you are liable for all the risks.
Partnerships are next on the list and these include general partnerships and limited partnerships. The first enables the partners to have equal rights according to a partnership agreement while in a limited partnership partners have various degrees of ownership, which are relative to the investment each partner makes in the partnership.
You can also choose a limited liability company (LLC), which is usually described as a combination of partnership and corporation. The partners in an LLC are known as members and the organizational structure resembles that of a partnership while the liability protection is taken from the corporate structure. Speaking of the corporation, it exists as an independent entity that has to pay taxes and gives full liability protection to its shareholders.
Once you have selected the legal structure for your business, it is time to move on to registering and licensing your business. Which permits and licenses you might require will depend on the county or municipality you will run your business from. It will also determine which entity you should approach for business licensing. You are also advised to contact the Planning and Zoning Department, which can be called differently in different counties, to learn more about zoning requirements. Some businesses might also require specific licenses and this can be checked at the Regulation and Licensing Department.
With all that complete, it is time to turn to tax requirements and tax-related permits.
The first step to take in this part of the process is to obtain a Federal Employer Identification Number (FEIN) from the Internal Revenue Service (IRS). The process is free of charge and you can apply for your EIN online.
The next step is where New Mexico differs from other states. Instead of collecting sales tax, New Mexico collects gross receipt tax (GRT). Businesses report the gross receipt tax on the Combined Reporting System (CRS) report, which the state of New Mexico uses to track and determine tax payments. Registering for a Combined Reporting System number is completed through the Taxation and Revenue Department. The process is also free of charge and can be completed online through the New Mexico’s Taxpayer Access Point (TAP) or by completing the ACD-31015, Application for Business Tax Identification Number with your local tax office. Sole proprietorships can use their social security numbers (SSN) while registering although it is advisable to obtain the FEIN.
If you apply online you will immediately receive your CRS identification number, while mailed applications take up to two weeks to process.
As a seller, you are not required to collect sales tax, but you are required to collect gross receipt tax. However, there are certain transactions that do not have to be taxed, and as a seller, you can avoid collecting gross receipt tax.You can do this by obtaining a Nontaxable Transaction Certificate (NTTC) from the Taxation and Revenue Department and using it for qualified transactions.
If you are purchasing products you intend to resell, you can use the Nontaxable Transaction Certificate to avoid paying gross receipt taxes. You can obtain your NTTC through the New Mexico Taxpayer Access Point (TAP). The Taxation and Revenue Department notes that resale certificates issued by other states are not valid in New Mexico. Out of state buyers who are not required to register with the TRD can use the Multijurisdictional Sales and Use Tax certificate issued by the Multistate Tax Commission or a Border States Uniform Sale for a Resale certificate.
You as a buyer can also deliver the paper copy of the NTTC to your seller. Just make sure you fill in all the data. You should also check the data upon receipt of a paper copy of an NTTC. to apply for your permit, complete the form ACD-31050, Application for Nontaxable Transaction Certificates (NTTCs) and file it to the address listed in the Contact Details section below.
While this guide gives you directions and shows you the steps needed for the registration of your business in the state of New Mexico, we urge you to contact your local authorities or consult a business advisor in order to cover the whole process thoroughly and avoid potential issues.
1100 South St. Francis Drive
Santa Fe, NM 87504
Phone: (505) 827-0700
District Field Offices
New Mexico Capitol Annex North
325 Don Gaspar, Suite 300
Santa Fe, NM 87501
Phone: (505) 827-3601
Toney Anaya Building
2550 Cerrillos Road
Santa Fe, NM 87505
Phone: (505) 476-4500
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