One of the most important things that you should learn before registering a business in New Mexico is its tax regulations and policies. You need to familiarize yourself with state tax requirements and your obligations as a business owner and taxpayer.
Federal and state taxes are mandatory requirements in all 50 states in the U.S., the reason why you need to be well-versed in this matter. If you fail to study this, it can place you and your business in jeopardy. Business taxes vary from state to state and it is also controlled by many factors which include the nature of the business you’re operating, the entity type (LLC, Corporation, DBA, etc) and the size of your business.
Bottomline is, you need to make sure that you are able to comply with all these requirements. As I said, if you fail to comply, you may encounter several problems such as large amounts of tax fines and even the forfeiture of your legal permission to operate in New Mexico.
To help you get started, this simple guide will walk you through the steps of business tax compliance.
New Mexico is one of the many states in the U.S. that has a corporate income tax. The latter applies to traditional corporations and a franchise tax which is applicable to the same business structure.
To add to this, you may also have to pay for taxes if income from your company is passed to you personally. Personal income tax rates in New Mexico have marginal rate ranging from 1.7% to 4.9%. The state’s franchise tax is constant at $50 which is paid yearly. Both corporate income tax and franchise tax are to be paid on the 15th day of the 3rd month of every business tax year closing.
Federal and state tax requirements in New Mexico are numerous and it can get really confusing at times. All the paperwork, forms, fees and reports will be a little difficult to deal with. To make your life easier, the New Mexico Taxation and Revenue Department has prepared all the federal tax forms and publications for you. You can check out the link above to be guided accordingly.
Businesses in the state of Mexico are required to obtain an unemployment insurance for their employees. The program is meant to give unemployment benefits to eligible employees who are currently not employed but in no fault of their own. This unemployment insurance will provide financial assistance to workers who will meet the guidelines of New Mexico’s state law.
To qualify for an unemployment insurance, the employee should be employed in New Mexico for 12 to 18 months with a minimum wage based on the state guidelines. For more information about the New Mexico Unemployment Insurance, you can check out the New Mexico Workforce Connection website or the U.S. Department of Labor’s State Unemployment Benefits page.
A New Mexico Sales and Use Tax is required from all businesses conducting their operations within the state. The sales tax is imposed for any of the following: sales, leases, rental products, real estate properties and other services. The use tax on the other hand is for products being sold or stored in New Mexico.
It’s certainly true that complying with New Mexico business tax requirements is quite tedious, but it’s something inevitable so you need to pay close attention to it.
If you’re a newbie entrepreneur with little experience in these kind of things, no need to worry because there a lot of tools and resources that can help you deal with the stress of getting your tax requirements done.
To make your life easier, we have a list of tools that will assist you in meeting your tax obligations smoothly and efficiently.
Organizing and keeping track of your business finances in preparation for the tax period is one challenging task. However, with the use of accounting softwares like Xero, QuickBooks, and FreshBooks, accounting, bookkeeping and expense tracking are made easy.
These softwares are three of the best in the industry and with their excellent features and pricing, financial management is a lot simpler. Use these tools to save time, energy and money – they’ll surely make a big difference in your New Mexico small business!
Please note that this article is not meant for legal purposes; it is informational/instructional in nature and should be taken just that. If you need specific answers on New Mexico tax regulations, you need to talk to an attorney who has the knowledge about business taxation.