Business Taxes Overview
To keep a business in good financial standing, a business owner must calculate and pay federal, state, and local taxes. The links on this web page connect you to information and sites to pay taxes.
For general information on when the business tax year starts, click on Determine When the Tax Year Starts.
For general information from the New Mexico Small Business Development Center on the different types of business taxes, Click on Taxes Under Various Forms Of Business.
Business Taxes Overview
You must file a federal tax return and if required pay federal taxes on your business income. Federal tax law is highly complex; as a business owner you are encouraged to seek the advice and support of a professional.
Below is information regarding federal taxes:
Pay State Taxes
You must file a state tax return and if required pay state taxes on your business income. New Mexico businesses are liable for many different types of state taxes and fees that are collected by the New Mexico Taxation and Revenue Department. To pay your taxes online, click the TAP login. You will need to create a username and password when you first access the system.
The business link provides information on your business tax obligations to the state. Information is provided on how to file and pay your taxes either online or by paper return, take certain tax credits, change your contact information and close or sell your business. Click on the link All New Mexico Taxes for detail information on each specific tax or select the Frequently Asked Questions link for common questions.
State tax law is complicated. As a business owner you are encouraged to seek the advice and support of a professional when learning about and paying state taxes.
The three basic business taxes in New Mexico include gross receipts, compensating, and wage withholding.
- Gross Receipts Tax – Gross receipts are the total amount of money received from:
- Selling, leasing, or licensing New Mexico property.
- Granting a right to use a franchise in New Mexico.
- Performing services in New Mexico.
- Selling research and development services performed outside New Mexico in which the product is initially used in New Mexico.
Compensating tax is an excise tax imposed on persons using property or services in New Mexico, also called “use tax” or “buyer pays.” Compensating tax is reported on the Combined Reporting System, CRS-1 form. The tax is due on or before the 25th day of the month following the report period in which the taxable transaction occurs.
Wage Withholding Tax
Employers must withhold a part of their employees’ wages for payment of income tax. State withholding tax is similar to federal withholding tax. An employer who withholds a portion of an employee’s wages for payment of federal income tax must withhold state income tax.
Pay Local Taxes
In addition to federal and state taxes, you may also be liable for local taxes. If you own a building and/or land, you are liable for property tax, which is collected by the county. If your business is a lodging, some communities will charge you a lodger’s tax.
You should receive a bill for property tax from the county at the end of the year. If you are liable for lodger’s tax, you will be responsible for reporting the relevant income and for reporting and paying the tax.
If you own a business that provides lodging, you may owe lodging tax. Some municipalities in New Mexico impose a lodging tax that you must collect from persons using your commercial lodging accommodations. This tax provides revenues for advertising, publicizing, promoting, acquiring, and constructing recreational and tourist facilities. Often the lodger’s tax must be reported and paid once a month.
To determine the practice of your municipality, look up your business’s municipality and “Lodger’s Tax” on the internet, and follow the instructions provided there. You may need to telephone the municipal offices to learn what is required for Lodger’s Tax.
If you or your business own real property, you need to pay property taxes as least once a year. You will receive a property tax bill in the mail. Property taxes are collected by the assessor of each New Mexico County. The county commission sets the tax rate.
In some counties, you can pay your property tax online. In most counties, you will need to submit your payment by mailing it or by bringing the payment to your county assessor’s office. To determine whether you can pay your property tax online, look up your business’s county and “property tax,” on the internet and check out the county web site. You may need to telephone the county offices to learn what is required for property tax.