How Much Does It Cost to Set Up an S Corp in New York: Fees, Regulations & More

Now is a great time to consider forming your business as an S corp in New York State. Doing so can be particularly advantageous to entrepreneurs navigating the state's business tax challenges. But before you set up your New York S corp, consider the filing costs and other responsibilities associated with establishing your new business. This article summarizes the cost of establishing a New York S corporation and explains the pros and cons of choosing an S corp business structure.

Setting Up an S Corp in New York: Cost Breakdown

How much does it cost to establish an S corporation in New York? Fixed and variable costs are associated with starting a New York S corp. The price tag includes the following: 

• Articles of incorporation filing fee: $195 - $205

The cost of the Certificate of Publication, a step requiring new businesses to advertise their formation in two local newspapers for six weeks, varies depending on the region and publications selected.Most New York businesses must also file a Biennial Statement or Biennial Report with the New York Department of State every two years to remain in good standing. Businesses may e-file for a fee of $9. This statement should include: 

• The business name and business address of its CEO

• The address of its principal executive office

• The address where the New York Secretary of State will send copies of process accepted on behalf of the corporation 

• The number of directors constituting the board and how many directors are women

Pros and Cons of Setting Up an S Corporation in New York

While New York is a clear leader in business and commerce, there are pros and cons of establishing your business as an S corporation in the state. Review the following advantages and drawbacks of operating your business as an S corp in New York. 

Advantages of Establishing New York S Corps

Qualified Business Income (QBI) deduction

New York S corp owners can deduct up to 20% of their business income via QBI tax deductions. Taking eligible tax deductions will reduce your taxable income.
Pass-through taxation

Unlike C corporations, which are subject to double taxation, New York S corporations are pass-through entities. Pass-through entities avoid being taxed twice, with profits passed through to an owner or owners and taxed at an individual rate.
Writing off losses

S corp business losses can be reported in an owner's personal income tax filing.
Payroll and income tax savings

You can be treated as an employee in your payroll system, leading to additional tax savings.
Reasonable Salary

The Internal Revenue Service (IRS) will expect you to pay yourself a reasonable salary, which isn't perfectly defined by the organization. Typically, a safe way to determine a reasonable salary is by comparing yourself to other owners in your region and industry. 

Drawbacks of Establishing New York S Corps

Strict requirements and regulations

Your New York-based S corporation must adhere to certain requirements that other business entities aren't subject to. Requirements include not exceeding 100 members (owners) and only issuing one class of stock.
Possible IRS audits

S corporations operating in New York are more likely to be audited than other business entities.
More complex bookkeeping and accounting

Paying yourself a reasonable salary while classified as an employee will increase the complexity of your bookkeeping and accounting initiatives. If properly managing your New York S corporation's books is challenging while addressing regional tax matters, such as New York City's 8.85% business tax, consider working with the S corporation bookkeeping experts at 1-800Accountant.

Get Expert Advice on Setting up a New York S Corporation

1-800Accountant, America's leading virtual accounting firm, helps business owners with entity formation, EIN filing, and registered agent services. If you’re considering starting a New York S corporation, consult with accounting professionals who can take over tedious paperwork and complicated forms. You’ll also get year-round tax advisory and tax return support. Schedule a free consultation with 1-800Accountant–usually 30 minutes or less–to get state-specific expertise on your new business.

New York S Corp FAQ

What is an S Corp?

An S corporation is a pass-through business entity, which means it does not pay federal income tax on its earnings. Instead, the S corporation passes revenues and expenses to its shareholders.

Why should small businesses set up an S Corp?

If forming as an S corp is advantageous for your business for financial, regulatory, or tax purposes, small business owners should consider this entity type. S corps also provides liability protection to owners, protecting their personal assets. When you trust 1-800Accountant with your complex financial work, we evaluate your current entity type and recommend adjustments, if necessary.   

How can you file as an S Corp in New York?

We've identified a thorough, 10-step process for forming your business as an S corporation in New York yourself.  Please review our blog for detailed information. 

What are the requirements to meet before filing as an S Corp in New York?

New York S corp requirements include no more than 100 members and a single class of stock. The members must be US residents and cannot be certain entities, such as a corporation or insurance company.
Which forms are necessary to file an S Corp in New York?

You must file Form CT-6 and IRS Form 2553 to obtain S corp status in the state. Form 2553 allows a corporation to make an election to become a New York S corporation. There are four parts to Form 2553. Form CT-6 allows your federal S corporation to be treated as a New York S Corporation.

How are S Corps taxed in New York?

Like other entities, including sole proprietorships and limited liability companies (LLCs), New York S corps are pass-through entities. Pass-through entities avoid being taxed twice, with profits passed through to ownership and taxed at an individual income tax rate.