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The 5th largest state by territory, New Mexico is one of the least densely populated states, with only 2.1 million residents. The state’s climate and geography are diverse and so is its economy.
The major economic drivers in the Land of Enchantment are mining, oil and gas, tourism, and the federal government. The state is distinguished by a strong US military presence and federal technology labs maintaining the labor market in the state to a great extent.
Ranking 46th in the CNBC 2022 “Top States for Business” rating, New Mexico is not as attractive for aspiring businessmen as bigger US economies. At the same time, in 2022, the state has seen an 8.2% increase in new business establishments.
Matchable Tax Gross Receipts also demonstrate growth and outpace inflation to prove that the economy is healthy. And state government incentives are meant to support small enterprises (SMEs). So, armed with the business stats, you have all chances to succeed.
As Statista reports, in 2020, the gross domestic product in the state faced a 2.5% drop following the national tendency due to the COVID-19 crisis;
In 2021, though, the GDP has increased by 3.3% as compared to the previous year and even exceeded the pre-pandemic figure;
The IBISWorld survey states that in 2022, New Mexico GDP hits a $95.3 billion mark demonstrating a slight 0.3% increase from 2021 and showing a 1.4% annualized growth rate during a 5-year period;
The state GDP is consistently maintained by the mining, real estate, and professional service sectors collectively generating 43.9% of the entire gross domestic product;
Meanwhile, the leaders by revenue are oil and gas extraction, scientific research and development, and hospitals that have earned $11, $9.1, and $8.5 billion accordingly in 2022;
There are 161.921 small enterprises on the economic orbit of the state, and they make up 99% of the total business activity;
SMEs account for nearly 83% of the state exporters;
In 2020, SME exporters generated $1.9 billion of the entire state export worth $3.6 billion which stands for 53.7% (Census data);
Leaders by SME count are professional, scientific, and technical service and construction sectors enlisting 21.616 and 16.805 smaller private firms accordingly;
In the meantime, the company management industry lags behind all other sectors in SME count, with only 102 private firms currently working there;
For the year 2020-2021, 5.508 SMEs emerged on the NM business horizon, and 5.469 existing entities have closed, thus, resulting in a slight net SME gain;
Net job loss for the same period was 32.870 jobs;
All in all, the SME sector in the state employs 346.374 residents and maintains over 53% of the entire employment market;
The biggest employers among SMEs traditionally fall within the healthcare and accommodation and food service sectors, with 61.231 and 59.968 workers employed in each of them accordingly;
The minimum wage rate in 2022 hits the $11.50 per hour mark showing a $1 increase as compared to $10.50 in 2021;
An average wage rate in the state is $21 per hour resulting in $43.326 of the average annual income;
The unemployment rate in the state is 4.8% exceeding the average federal rate of 3.7%.
Top 10 Industries for Small Businesses in New Mexico
Professional, scientific, and technical services
Other services (excluding public administration)
Healthcare and social services
Real estate, rental, and leasing
Administrative, support, and waste management
Entertainment and recreational services
Transportation and warehousing
NM Small Business Demographics
62.736 SMEs in New Mexico are owned by female owners that make 46.9% of all small businesses in the state. And a bit more than 10% of those firms are employers;
81.207 private entities are owned by male owners, and over 20% of them have employee payrolls;
Companies equally owned by both gender groups account for 8.890 entities, and the majority of them are job-givers;
Women maintain nearly 47% of the labor pool in the state;
Veteran-owned small companies make up 8.4% of the total SME count and veterans represent 6.4% of the workforce;
Hispanics are the leading ethnic group in NM, with a 33.9% share in SME ownership and a 47.5% among state employees (Census data);
Other racial minorities possess 7.8% of private businesses and account for 20.6% of workers, with Asians and American Indians prevailing among them.
NM Small Business Formation
Filing a New Mexico LLC or corporation is as simple as registering formation documents with the state and paying a $50 state fee for an LLC or a $125 incorporation fee;
You will also be required to appoint a New Mexico registered agent for your newly formed entity to keep it in good standing with the state by duly processing your business mail;
While LLCs are free from filing annual reports, corporations will have to file a state report once per two years and pay a $20fee to stay compliant;
LLC incomes are taxed under personal tax returns of the company owners using their individual tax rates that range from 1.70% to 5.90% depending on the amount of income and marital status;
Corporate incomes are also taxed under a graduated system. Net incomes below $500.000 are levied under 4.8% and the sums over $500.000 are taxed at a 5.90% rate also entailing a compulsory payment of $24.000;
All New Mexico corporations are exposed to a franchise tax of $50;
Some corporations in NM are allowed to pay tax over their gross receipts instead of the income under a 0.75% rate subject to:
Sales being their single activity;
Them having no rented real estate;
Their gross sales being below $100.000;
The state sales tax rate in NM is one of the lowest across the country at 0.5%. However, given a maximum local tax of 4.313%, an average combined rate lends at a higher end of the range at 7.84%.