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Can I hire employees as independent contractors to save money on taxes in New Mexico? What are the requirements?

Based on the documents provided, it is important to note that New Mexico has specific laws and regulations regarding the classification of employees as independent contractors.

Requirements for Hiring Independent Contractors in New Mexico

In New Mexico, employers must follow specific guidelines when hiring independent contractors to ensure compliance with state laws and regulations. The following are some of the requirements that must be met:

  1. Control over work: The employer cannot have control over how the independent contractor performs their work. The independent contractor must have the freedom to complete the work in their own way and on their own schedule.
  2. Business license: The independent contractor must have a valid business license to operate in New Mexico.
  3. Tax obligations: Independent contractors are responsible for paying their own taxes, including federal and state income taxes, Social Security taxes, and Medicare taxes.
  4. Written agreement: Employers must have a written agreement with the independent contractor that outlines the terms of the work to be performed, the payment structure, and other relevant details.
  5. Nature of work: The work performed by the independent contractor must be outside the usual course of the employer’s business.

It is important to note that misclassifying employees as independent contractors can result in significant penalties and legal consequences. Employers should consult with legal counsel to ensure compliance with state and federal laws.

Additionally, it is important to note that New Mexico has specific surety bond requirements for employee leasing contractors [1.2]. Furthermore, commissioned salespersons who are paid on a commission basis and are not subject to withholding taxes or social security taxes are not considered employees of the company [3.1]. Finally, tax credits for employment increase are available only to manufacturers who increase employment in the relevant periods [7.1].

Therefore, based on the documents provided, employers in New Mexico must follow specific guidelines when hiring independent contractors to ensure compliance with state laws and regulations. Misclassifying employees as independent contractors can result in significant penalties and legal consequences. Employers should consult with legal counsel to ensure compliance with state and federal laws.

Source(s):
Jurisdiction

New Mexico