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There are many varieties of business ownership:

Sole proprietorship

You are a sole proprietor if you own all the assets of a business. You also assume liability for all debts of the business. You have no partners, and you are not incorporated.


You are a partnership if two or more persons or entities engage in a contract to share in the profits from property, credit, skill or industry.


You are a corporation if you are:

  • organized under the business corporations act of the state of your organization; 
  • a joint stock company; 
  • a real estate trust organized and operated under the Real Estate Trust Act; 
  • a financial corporation, or 
  • a bank.

For information on corporate income and franchise taxes, download FYI-350: Corporate Income Tax and Corporate Franchise Tax.

  • limited liability company - You are a limited liability company when you are organized under the limited liability company act of your state of organization. 
  • nonprofit corporation and organization - You are a nonprofit corporation if you are organized under the nonprofit corporation act of the state where your corporation is domiciled. Certain nonprofit organizations are also tax exempt. You are a tax-exempt organization if the federal government has granted you tax-exempt status under Section 501(c) of the Internal Revenue Code. Business income unrelated to your recognized tax-exempt status is taxable federally and in New Mexico. To see information on tax-exempt organizations, download FYI-103: Information for Non-Profit Organizations. For additional information, see also Brochure #4 501(c)(3) Nonprofit Groups & New Mexico’s Gross Receipts Tax.

If you are considering starting a business in New Mexico, you must decide how to organize your business. The decision involves many different factors, including questions of legal liability, tax considerations, and operational factors. It is a good idea to consult with professionals in making this decision.

Many of the registration and licensing requirements imposed by state and local governments are determined by the type of entity that you select. For more information, see starting a New Mexico business.

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