Business, Contract, and Employment Practices
Gross receipts tax, not sales tax
New Mexico levies no sales tax. Contractors pay gross receipts tax (GRT) on receipts from construction services - labor plus materials - at the combined rate for the location where the work is performed, and remit it on the CRS-1. Materials are generally taxed when purchased, because the contractor is the consumer rather than a reseller; a resale certificate does not cover material you install.
Contract essentials
A roofing contract should fix scope, price, payment schedule, change-order procedure, warranty, and dispute terms. Change orders should be written and signed before the work proceeds; unbilled extras are the most common source of nonpayment disputes.
Liens and payment
Unpaid contractors and suppliers may claim a construction lien against the improved property. Deadlines are short and strictly enforced, and the claim is recorded with the county clerk. Suppliers and subcontractors can have rights even without a direct contract with the owner, so get lien waivers as payments are made.
Employee or subcontractor
Crews paid on 1099 who work under your direction, use your tools, and follow your schedule are employees in the eyes of regulators. Misclassification creates unemployment insurance, workers' compensation, and tax exposure.
Worked example
A $40,000 reroof is performed where the combined GRT rate is 7.875%. GRT = $40,000 × 0.07875 = $3,150, remitted to the Taxation and Revenue Department. The materials bought for the job were already taxed at purchase, so the invoice and the tax return must be reconciled to avoid paying twice or underpaying.
Traps
Treating the license bond as liability insurance; using a resale certificate for roofing materials; proceeding on an oral change order; releasing lien rights by signing a waiver before the check clears.