What is the proper way to enter a new member (that is also a new company in the database). I tried to do this via "memberships" "new member" and it did not seem correct and gave me an error message about missing a membership ID. Is it necessary to add a new organization via "contact" first?
It's a little hard to answer your question with just the info you gave and no screenshots, but I'll try my best.
Note that the Member field allows me to either type in the name of an existing contact, or I can press New Organization (or Individual or Household) to create the contact on the fly.
To help us help you, it would be good to share the exact text of the error message and not a paraphrase. Also, it's helpful to edit your original question so other folks see the whole issue at once.