How to Set Up a Sole Proprietorship in Albuquerque

Step 0: Be Sure You Are Choosing Your Ideal Business Structure (Why a Sole Proprietorship Might Not Be the Best Choice)

Before you start—sole proprietorships aren’t perfect for everyone. If your business gets sued or owes money, you have to pay, even if it means using your personal savings or selling your house or car. There’s no separation between you and the business, which can be risky if you’re in a field like construction or food service where accidents happen. Plus, it’s harder to get loans or investors since banks and partners often prefer businesses set up as LLCs or corporations. If you’re planning to grow fast or take on big projects in Albuquerque, you may quickly outgrow a sole proprietorship.

Step 1: Pick a Business Name

First, choose a name for your business. You can use your own name, like “Jane Doe’s Cleaning Service,” or come up with something catchy. In New Mexico, you don’t have to register your name with the state if you’re just using your real name. But if you pick a different name (called a “trade name” or “DBA” – doing business as), you’ll need to file it with the New Mexico Secretary of State. This costs about $25, and you can do it online or by mail. It makes sure no one else in the state is using the same name.

Step 2: Get a Business License

Next, check with the City of Albuquerque. Most businesses here need a local business license. Go to the city’s website or stop by City Hall to apply. The cost depends on what you do—say, $35 a year for a small shop—but they’ll tell you exactly what you owe. This license keeps you legal and lets the city know you’re operating.

Step 3: Register for Taxes

Since you’re in New Mexico, you’ll need a tax ID called a BTIN number (Business Tax Identification Number). It’s free and comes from the New Mexico Taxation and Revenue Department. You can sign up online in about 10 minutes. This number lets you pay state taxes, like the gross receipts tax, which is a big deal here because it applies to most sales and services. As a sole proprietor, you report your business income on your personal tax return, so you don’t need a separate federal tax ID unless you hire employees later.

Step 4: Check Zoning Rules

Where are you working? If it’s from home or a rented space in Albuquerque, make sure it’s okay with the city’s zoning laws. For example, running a loud repair shop in a quiet neighborhood might not be allowed. Call the Albuquerque Planning Department or check their website to confirm your location is zoned for business. This step saves headaches later.

Step 5: Open a Bank Account (Optional)

You don’t have to, but it’s smart to get a separate bank account for your business. It keeps your personal money and business money apart, which makes taxes and tracking easier. Most Albuquerque banks, like Wells Fargo or Nusenda Credit Union, offer small business accounts. Bring your BTIN number and business license to set one up.

Step 6: Get Insurance (If Needed)

Think about what you do. If you’re a handyman or baker, mistakes could cost you. New Mexico doesn’t require insurance for sole proprietorships, but a basic liability policy can protect you if something goes wrong—like a client tripping over your tools. Talk to a local insurance agent in Albuquerque for a plan that fits.

Why It’s Easy

A sole proprietorship doesn’t need fancy forms like corporations do. You’re in charge, and the profits are yours. It’s a quick way to start selling at places like the Rail Yards Market or offering services around town.

Local Tip

Albuquerque loves small businesses—think food trucks, art shops, or landscaping. Network at places like the Hispano Chamber of Commerce or the Downtown Growers’ Market to get your name out there. Starting simple with a sole proprietorship lets you test the waters without big risks.

Ready to start? You can be up and running in a week if you follow these steps. Questions? A local lawyer or the Small Business Development Center at CNM can help.

References

• New Mexico Secretary of State: Filing a trade name (www.sos.nm.gov)

• City of Albuquerque: Business license info (www.cabq.gov/business)

• Albuquerque Planning Department: Zoning rules (www.cabq.gov/planning)

• Small Business Development Center at CNM: Free help for startups (www.cnm.edu/sbdc)