New Mexico vs. Texas: Best State for Mexicans to Start a Business

If you're a Mexican entrepreneur looking to start a business in the United States, choosing the right state is a crucial step. Tax regulations, operating costs, and growth opportunities vary depending on the state, which can directly impact the success of your business. In this comparison, we’ll analyze the advantages of two strategic border states: New Mexico and Texas.

Both states offer specific benefits for foreign entrepreneurs, but which one is the best option for you? Below, we provide a complete guide to help you decide which of these states best fits your needs if you’re a Mexican business owner.

Benefits of Starting a Business in the U.S.

Before diving into the comparison between New Mexico and Texas, it’s important to understand why starting a business in the U.S. is an excellent option for Mexican entrepreneurs:

Access to the U.S. Market:

‍Starting a business in the U.S. gives you access to one of the largest and most dynamic markets in the world. This allows you to sell products or services to U.S. consumers and companies while improving your international trade presence.

Limited Liability Protection:

‍Forming an LLC (Limited Liability Company) or a Corporation provides limited liability protection, meaning your personal assets are protected in case of legal or financial issues with the company.

International Credibility:

‍Operating a business registered in the U.S. increases your credibility in the global market, making it easier to attract investors and sign business agreements.

New Mexico vs. Texas: Which Is Better for Starting Your Business?

Both New Mexico and Texas are border states that share a close relationship with Mexico, making them natural choices for Mexican entrepreneurs looking to expand into the U.S. However, these states offer different tax advantages, operating costs, and business opportunities.

New Mexico

1. Taxes and Operating Costs

• Gross Receipts Tax: Instead of a traditional sales tax, New Mexico imposes a Gross Receipts Tax on most sales of goods and services. Rates vary by municipality but generally range from 5.125% to 9%.
• State Corporate Income Tax: Corporations in New Mexico are subject to a corporate income tax ranging from 4.8% to 5.9%, depending on income levels.

2. Incentives and Business Programs

• Tax Incentives: New Mexico offers several tax credits, such as the High Wage Jobs Tax Credit, designed to attract companies that offer well-paying jobs.
• Lower Costs: Compared to Texas, New Mexico has generally lower living and operating costs, making it advantageous for startups or small businesses.

3. Proximity and Trade with Mexico

‍New Mexico shares a border with Chihuahua, facilitating cross-border trade. Businesses in sectors like manufacturing or import/export can take advantage of their proximity to both Mexican and U.S. markets.

Texas

1. Taxes and Operating Costs

• No State Income Tax: One of the biggest advantages of Texas is that it has no state income tax for businesses or individuals, making it an attractive option for entrepreneurs looking to maximize their profits.
• Franchise Tax: LLCs and Corporations in Texas are subject to a Franchise Tax. However, companies with gross receipts under $1.23 million are exempt. For larger businesses, the rate ranges from 0.375% to 0.75%.

2. Incentives and Business Programs

• Texas Enterprise Fund: Texas boasts one of the largest and most diverse economies in the U.S. and offers incentives to attract businesses. The Texas Enterprise Fund is one of the largest incentive funds in the country, designed to support business expansion and job creation.
• Incentive Zones: Texas has business zones offering additional tax exemptions and subsidies for companies operating in specific areas.

3. Proximity and Trade with Mexico

‍Texas shares an extensive border with Mexico and has several strategic ports of entry, such as Laredo and El Paso, which handle a significant portion of trade between Mexico and the U.S. For businesses looking to import or export, Texas offers world-class infrastructure and logistics to facilitate international trade.

Key Factors to Consider When Choosing Between New Mexico and Texas

A. Cost of Living and Operation

• New Mexico: Known for its lower cost of living, New Mexico can reduce overhead expenses for small businesses, including lower costs for rent, labor, and supplies.
• Texas: While some cities in Texas, like Houston and Dallas, have higher costs, the state offers substantial opportunities in terms of market volume and economic growth. Additionally, the absence of state income tax makes it attractive from a fiscal perspective.

B. Infrastructure and Economic Growth

• Texas: Texas has a fast-growing economy with key sectors like technology, energy, and manufacturing. If you're looking for access to a massive market with advanced infrastructure, Texas is the ideal option.
• New Mexico: Though smaller, New Mexico also offers opportunities in sectors like renewable energy and aerospace. Additionally, businesses can benefit from incentives for sustainable and tech-based companies.

C. Regulations and Compliance

‍Both states have specific regulatory requirements, but Texas offers a more favorable environment for large corporations due to its incentives and lower tax burden. However, New Mexico could be a more affordable and less regulated option for small businesses or startups.

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Which Is the Best State to Start a Business in the U.S.?

The decision between New Mexico and Texas depends on your priorities as an entrepreneur:

• If you’re looking for lower operating costs and want to take advantage of tax incentives while staying close to Mexico, New Mexico may be the best option.
• If you prefer a state with advanced infrastructure, access to a larger market, and no income tax, Texas could be the ideal choice, especially if you plan to scale your business quickly or operate in multiple cities.

How We Can Help You Register Your Business in the U.S.

Comprehensive Consulting from the Start
We help you understand the best business structure for your company in the U.S., whether it’s an LLC, Corporation, or Partnership. We evaluate your needs and offer personalized recommendations based on your industry, business size, and long-term goals.

Management of the Entire Registration Process
We handle the registration of your business in the state of your choice, whether Texas, New Mexico, New York, or another state. We manage the filing of the Articles of Organization or Articles of Incorporation, ensuring your company is registered correctly without delays.

Obtaining EIN and Tax Compliance
We manage the application for your EIN (Employer Identification Number) with the IRS, allowing you to open bank accounts, hire employees, and meet your tax obligations. We also provide advice on federal and state tax issues to optimize your tax situation.

Licensing and Permit Compliance
Each state has different licensing and permit requirements depending on the type of business you operate. We help you obtain all the necessary permits to operate smoothly and in compliance with local regulations.

Ongoing Support and Personalized Consulting

Our service doesn’t end with the formation of your business. We offer continuous support, assisting you with annual report filings, tax payments, and any other legal requirements. We guide you through every stage of your company's growth so you can focus on expanding your business in the United States.

Conclusion

Starting a business in the U.S. from Mexico offers significant opportunities, and both New Mexico and Texas have unique advantages. If you prioritize low costs and tax incentives, New Mexico is an excellent option. However, if you want to capitalize on economic strength and rapid growth, Texas is a hard choice to beat.

Whichever you choose, the most important thing is to assess your business needs and ensure compliance with all tax and legal requirements. If you need help registering your business in the U.S., contact us, and we’ll help you choose the best state and guide you through the process of starting your company.