Starting a business in New York can be a great decision. Whether you want to operate your business in New York City or smaller cities, you’ll have several options of where to open your business.

While starting a business in New York offers benefits, there are a few things worth knowing first. Depending on your business entity, you’ll need different documents, and there are additional rules worth considering. Here are eight steps explaining how to start a business in New York.

Why Start a Business in New York?

Starting a business in New York can be a wise decision for three important reasons. First, the state has a diverse population. This will help you attract both customers and employees to help your business thrive.

Second, the state of New York has a large workforce with people of all ages and backgrounds. This will allow you to have a large selection of employees to choose from.

Third, both larger and smaller cities in New York are pedestrian-friendly. The accessibility will allow passing customers a chance to visit your business so that it can grow.

How Much Does it Cost to Start a Business in New York?

The exact cost of starting your business in New York will vary depending on a few factors. Your business entity choice will determine the final cost, but you can expect to pay the following fees for corporations:

  • Biennial Statement: $9
  • Incorporation Fee: $125
  • Name Reservation: $20

You can expect to pay the following amounts for LLCs in New York:

  • Articles of Organization: $200
  • Biennial Statement: $9
  • Publication: $50
  • Name Reservation: $20

Limited partnerships have the following costs:

  • Limited partnership: $200
  • Name Reservation: $20
  • Publication: $50

Limited liability partnerships have the following costs:

  • Publication: $50
  • Registration: $200
  • Registered LLP Statement: $20

Step 1: Business Idea

The first step in starting your small business in New York is to develop a business idea. This will give you a chance to imagine how your business will stand out from others and how you’ll do things such as expand, fund, or plan your business.

Step 2: Entity

For the second step of starting your business in New York, you’ll choose a business entity. This may be the most critical step because it determines liability, ownership, and taxes. The state of New York allows you to choose from several business entities:

  • Corporation
  • General partnership
  • LLC
  • Limited partnership
  • S Corporation

Step 3: Name

The next step in starting your business in New York is selecting a business name. You’ll want to choose a business name that’s both available and unique. To see if your business name is available, you’ll work with the New York Department of State.

Depending on your business entity, there are certain naming rules for business that you’ll need to follow.

Step 4: Registration

The fourth step to start your small business in New York is to register your business. To do so, you’ll register with the New York Tax Department.

If you operate your business as a corporation, LLC, or limited partnership, you’ll register with New York State. If you operate your business as a general partnership or sole proprietorship, you’ll register with a county clerk.

After registering your business, you’ll receive a Certificate of Incorporation.

Step 5: EIN

If you haven’t applied for an EIN already, you’ll want to apply for it in this step. The IRS offers this at no cost for business owners. You can apply for an EIN by fax and by mail, but the quickest way to receive your EIN is by applying online.

Step 6: Bank Account

One of the last steps to start your business is to open a business bank account. Business bank accounts offer other benefits that will be helpful as your small business grows, such as: 

  • Allowing another option for a line of credit for your business.
  • Keeping business transactions separate from personal transactions.
  • Providing a credit history for your business.

Step 7: Licensing and Permits

Licensing and permits are among the most important parts of business operation. Several industries in New York require licensing to operate. If your business specializes in one of the following sectors, you’ll work with the state:

  • Architecture
  • Interior Design
  • Medicine
  • Nursing
  • Social Work
  • Veterinary Medicine

If you’re planning to do business in New York City, and you’ll provide goods or services, you’ll also register for certain permits.

Finally, checking on license and permit requirements statewide may be helpful. You’ll also want to check with your city, county, town, or village to determine which licenses or permits you’ll need.

Step 8: Annual Requirements

There are annual filing fee requirements for three business entities in the state of New York. LLCs (including disregarded entities) and partnerships (limited liability partnerships, known as LLPs and regular partnerships) will file and pay an annual fee using Form IT-204-LL.

A second requirement for annual filing fees in New York is that LLCs and partnerships must have income, gain, loss, or deduction within a current taxable year.

For LLCs or limited liability partnerships in New York, the fee owners pay will vary based on gross income. If the gross income of your LLC or LLP is between:

  • $0 and $100,000 in New York, the filing fee is $25.
  • $100,000 and $250,000 in New York, the filing fee is $50.
  • $250,000 and $500,000 in New York, the filing fee is $175.
  • $500,000 and $1,000,000 in New York the filing fee is $500
  • $1,000,000 and $5,000,000 in New York, the filing fee is $1,500.
  • $5,000,000 and $25,000,000 in New York, the filing fee is $3,000.

If your LLC or LLP has a gross income of more than $25,000,000, the filing fee is $4,500.

Regular partnerships in the state of New York will also pay different annual filing fees according to gross income. If the gross income of your partnership is $1,000,000 or less, the filing fee is $500.

If the gross income of your partnership is between $1,000,000 and $5,000,000, the filing fee is $1,500, and if the gross income is between $5,000,000 and $25,000,000, the filing fee is $3,000.

If your partnership has a gross income of more than $25,000,000, the filing fee is $4,500. Disregarded entities have an annual filing fee of $25.

Other Considerations 

If you want to start a small business in New York, you should know a few things. First, businesses that collect sales tax will need a Certificate of Authority. This will allow your business to collect sales tax legally in the state of New York.

Second, certain business entities must file Biennial Statements with the Department of State. Corporations and LLCs must file a Biennial Statement in the calendar month when the Articles of Organization, Application for Authority, or original Certificate of Incorporation was filed.

Third, your business will need insurance to operate in New York. Unemployment Insurance and Workers’ Compensation are requirements, but you can also have Disability Insurance and health insurance.

Finally, you may consider funding opportunities. There are grants and loans available at the federal and state levels. There are also grants and loans available for New York City business owners. 

Some of the state grant programs available are: 

  • New York Forward Loan Fund
  • Pandemic Small Business Recovery Grant Program
  • Restaurant Resiliency Program
  • Restaurant Return-to-Work Tax Credit

There are three funding opportunities available federally from the Small Business Administration:

  • SBA Economic Injury Disaster Loan (EIDL) Program
  • SBA Restaurant Revitalization Funding Program
  • SBA Shuttered Venue Operators Grant

Let Us Help You Start Your Business in New York

Starting a business in New York can be the foundation to success in the state. Because of the population, size of large cities, and workforce, many entrepreneurs decide to move to New York to start their businesses.

While starting a business can be many things—exciting, stressful, and invigorating, to name a few—it should never feel like you’re in it alone. Turn to professionals who can help you with entity formation. Work with the professionals at 1-800Accountant to start your business!

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Written by Rudy Robles

Rudy Robles is the Bookkeeping and Payroll Supervisor for the Eastern Team at 1-800Accountant. Prior to 1-800Accountant, he worked in variou...