The rules where you work $17
A first 30 days checklist, everyday forms, licenses, workers’ comp and taxes for New Mexico, with a yearly calendar. Instant PDF download.
Buy the packet: $17Digital product, all sales final. Informational only, not legal, financial, tax or business advice.
What New Mexico expects from a new trade business
New Mexico has a real state contractor license, and the handyman way out has paperwork attached. If you're doing work that needs a license, comp is required no matter how small you are. And there's no regular sales tax. You get a gross receipts tax on what you bring in, labor included.
A state license, and a handyman exemption with strings
You can't act as a contractor, or even submit a bid, without a license from the Construction Industries Division classified for your work. The definition covers constructing, altering, repairing, installing or demolishing buildings and other structures. Electrical and mechanical work must be done by a contractor licensed for it.
Some finish trades are out. The tax department says the division stopped requiring a license on April 1, 2016 for tile, fencing, cabinets and millwork, flooring, ornamental iron and welding, painting, sandblasting, vaults and gunite. Confirm your exact scope with the division.
The handyman exemption has conditions. One project at a time, no more than $7,200 in compensation a year, casual or minor work, no electrical, plumbing or gas fitting, no holding yourself out as a contractor, and you file a declaration with the division each year.
A license takes a $10,000 bond. On home jobs, you owe the owner a written disclosure on the division's form before work, signing or payment, or face a fee of $500 to $1,500. Without a required license it's a misdemeanor, you can't sue to collect, and you have no right to a mechanic's lien. A construction attorney can check your classification.
Source: Construction Industries Licensing Act, NMSA 60-13 (RLD copy, 7-1-21) · NMSA 60-13-3 (RLD copy) · License classifications, 14.6.6 NMAC · NM TRD, Non-Taxable Transaction Certificates · NM Construction Industries Division
Who to call: an attorney near you
Licensed work means comp, at any size
The law covers employers of three or more workers, but it covers every employer doing work that has to be licensed under the Licensing Act regardless of the number of employees. The agency says a construction corporation, partnership or LLC needs it even with one executive employee, and it lists any LLC or incorporated business as covered, with some exceptions. If your trade doesn't need a license, ask the Employer Compliance Bureau where you stand.
Owners can step out, but it takes a form. The agency says an executive who owns 10% or more of a corporation or LLC can file an election with the carrier, and that a construction sole proprietor can use a CID Sole Proprietor Affirmative Election form. The statute separately lets a self-employed person elect to be covered. Ask the bureau what you need to file either way.
Subs can land on you. If you hire a contractor who isn't an independent contractor for work that's part of your business, you're liable for comp as if that contractor weren't there. No coverage can mean fines of $25 to $1,000 per occurrence, a court order stopping your business, and your license. An insurance agent who writes contractors can help you sort it.
Source: NMSA 52-1-6, who is covered (official code site) · NMSA 52-1-4, proof of coverage (official code site) · NMSA 52-1-22, work through a contractor (official code site) · NMSA 52-1-61 and 52-1-62, penalties and injunction (official code site) · NM WCA, FAQs · NM WCA, Employer Guidebook · NM WCA, Employer Compliance Bureau
Who to call: an insurance agent near you
Getting paid: 120 days for primes, 90 for everyone else, and file early on homes
File a sworn claim with the county clerk where the property sits:
- Contract with the owner: within 120 days after your contract is complete.
- Everyone else: within 90 days after the building or the alteration or repair is complete. That's the job, not your last day on it.
- Send the owner a copy within 15 days of filing, by mail, email, certified mail or hand. Skipping it may cost you interest, attorney's fees or costs.
- Enforce by starting court or binding arbitration within 2 years of filing.
Further down the chain, on liens over $5,000, give written notice to the owner or original contractor within 60 days of first furnishing, by certified mail, fax with acknowledgment or personal delivery. Later notice only covers work from 30 days before it. You don't owe that notice on homes of four or fewer units, or if you contract with the owner or directly with the original contractor.
On homes of four or fewer units, don't wait out the clock. Under the Stop Notice Act, an owner's final payment appears to wipe out any lien not yet filed, unless the owner knew you were unpaid. Tell the owner in writing. That act also offers a stop notice against loan funds, with a 20-day notice and a bond. At completion and final payment, the original contractor signs an affidavit about unpaid invoices, and knowingly signing a false one is a felony. Whoever wins a lien dispute recovers fees from the other side. No license, no lien. A construction attorney can set up your forms.
Source: NMSA 48-2-6, filing and copy to owner (official code site) · NMSA 48-2-2.1, 60-day notice (official code site) · NMSA 48-2-10, time to enforce (official code site) · NMSA 48-2-14, fees (official code site) · NMSA 48-2A-1 to 48-2A-11, Stop Notice Act (official code site, as saved with 48-2-17) · NMSA 48-2A-12, closing affidavit (official code site) · NMSA 60-13-30, no license no lien (RLD copy)
Who to call: an attorney near you
Gross receipts tax, not sales tax
New Mexico doesn't do this the usual way. You pay gross receipts tax on your total receipts, and the state's definition of taxable services includes construction and the materials that go into the project. Labor isn't carved out.
It's a tax on your business, but it's common to pass it to your customer. If you do, it must be shown separately on the invoice. Location matters. Construction is reported at the job site, so the rate moves from job to job. The state's share is 4.875%, and totals run up to 10.8125%.
Buying materials is where people lose money. A supplier can deduct a sale of construction material when you give them a Type 6 non-taxable transaction certificate (NTTC) or other evidence. Nails qualify. A hammer doesn't. A sub can also deduct services sold to someone in the construction business the same way. A Type 6 takes license verification, or a written statement if your trade no longer needs a license. Ask a CPA who works with contractors to set this up before your first job.
Source: NM TRD, Gross Receipts Tax Overview · NM TRD, Who Must File? · NM TRD, TRD-41413 Instructions (Rev. 07/01/2025) · NM TRD, Non-Taxable Transaction Certificates · NM TRD, FYI-204 Nontaxable Transaction Certificates · NM TRD, FYI-105 Gross Receipts and Compensating Taxes
Who to call: a CPA or tax pro near you
A $50 LLC filing through the Secretary of State
An LLC registers with the Secretary of State online. A sole proprietorship or general partnership doesn't have to register its structure. The law sets the fee to file articles of organization at $50, and fees aren't refunded on a rejected filing, so get it right the first time. Before you file, check the state's filing portal or call Business Services at 505-827-3600 to confirm whether any report is due after formation. Keep a registered agent: 30 days without one and the state may revoke the company.
The state income tax runs on a graduated table, and pass-through profit lands on your personal return. A multi-member LLC files a New Mexico pass-through return. A single-member LLC treated as disregarded doesn't file that one. Remember that forming an LLC doesn't give it a contractor license or settle comp. Those need their own steps. S-corp timing is a numbers question. Bring what your business clears after your floor rate to a CPA who works with contractors.
Source: NMSA 53-19-63, LLC fees (official code site) · NMSA 53-19-66.1, revocation (official code site, as saved with 53-19-65) · NM Secretary of State, Business Services · NM Business Portal, Register Legal Business Structure · NM TRD, Pass-Through Entity · NM TRD, Personal Income Tax Overview · NM Secretary of State, Business Online Filing Help
Who to call: a CPA or tax pro near you
Education, not legal or tax advice. Rules change. Confirm anything here with a licensed pro in New Mexico before you rely on it. Last updated November 2026.