Business Management
Choosing and running the entity
Sole proprietorship, LLC, S corporation, or corporation changes liability, taxation, and how the CID license is held. The license must be in the exact legal name of the entity, with a qualifying party attached. Keep the license, workers compensation coverage, general liability policy, and gross receipts tax registration current and in that same name.
Gross receipts tax
New Mexico has no sales tax; it has a gross receipts tax levied on the business and usually passed through on the invoice. Rates vary by location and change often, so use current Taxation and Revenue Department schedules. Contractors generally owe GRT on the full contract amount, including materials they install, and cannot treat installed materials as a separate retail sale.
Job costing and pricing
Labor burden - FICA, FUTA and SUTA, workers compensation, liability, benefits, paid time - commonly adds 25 to 40 percent to the wage. Overhead (office, vehicles, tools, insurance, estimating) must be recovered across billable hours. Markup on cost is not margin on price, and confusing them quietly erodes profit.
Worked example
Direct job cost is $18,000. Overhead runs 12 percent of sales and the owner wants 8 percent net. Priced at a 20 percent markup, the job sells for $21,600. Gross margin is 3,600 / 21,600 = 16.7 percent, leaving only 4.7 percent net. To reach 8 percent net with 12 percent overhead, margin must be 20 percent: price = 18,000 / 0.80 = $22,500.
Traps
Quoting a markup and calling it profit; ignoring labor burden; forgetting GRT, permits, and retainage in the price; letting receivables and retainage starve cash flow.