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Starting a business in NY can be a great decision, but you must be prepared. Not only should aspiring owners follow the steps below, but you'll also need to grasp the market you're entering. As wonderful as running a business in New York can be, there are challenges. This includes numerous regulations to deal with, high taxes, and intense competition that is simply a part of operating in such a popular state.
As intimidating as that may sound, thousands of businesses make it in New York, and some of that success is attributed to smart and savvy planning from inception. Use this blog as your guide to give your new business the solid foundation you need to compete and grow in one of the most popular states in the nation, New York.
Why Start a Business in New York?
There's a tremendous upside in establishing your business in New York, but three reasons stand above the rest when compared to similar states.
How Much Does it Cost to Start a Business in New York?
The exact cost of starting your business in New York will vary, but in most cases, be prepared to spend a couple of hundred dollars no matter your business entity choice. Regardless of your selection, certain costs are the same, no matter your business structure. These costs include:
8 Steps to Establishing Your Business in New York
Step 1: Business Idea
The first step in starting your small business in New York is to develop a business idea. What's the next big idea that New Yorkers can't live without? Asking tough questions and conducting market research will help you form and tweak your vision, all while considering how you'll expand, fund, and plan your New York business.
Step 2: Entity
Now 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:
1-800Accountant provides complimentary formation services to owners and entrepreneurs seeking to establish businesses in New York. Just pay the state fees, and we'll work with New York on your behalf!
Step 3: Name
You’ll want to choose a business name that’s both available and unique. You’ll work with the New York Department of State to see if your business name is available.
Finding the perfect brand name and web domain can be time-consuming, which is why free tools from Business Name Zone and others quickly generate name and domain combos for you based on your parameters.
Also worth keeping in mind, depending on your business entity, there are specific naming rules that you’ll need to follow.
Step 4: Registration
Register with the New York Tax Department to receive your Certificate of Incorporation.
If your business structure is a corporation, LLC, or limited partnership, you’ll register with New York State. If your business structure is a general partnership or sole proprietorship, you’ll register with your county clerk.
Step 5: Employee Identification Number (EIN)
An EIN (aka Federal Tax ID) is like a Social Security number for your business, which the IRS uses to identify you for tax purposes. Without an EIN, you won't be able to hire employees, open a business bank account, and do other things essential to the successful operation of your business.
There is no cost to obtain an EIN, but the process does involve a lot of paperwork. And if there's an oversight or mistake on your application, it may delay you in obtaining your EIN. 1-800Accountant's EIN filing service removes that hassle and gets you your EIN fast!
Step 6: Bank Account
Opening a business bank account offers numerous benefits that will help as your small business grows, such as:
Step 7: Licensing and Permits
Several industries require licensing and permits to operate in New York. If your business specializes in one of the following sectors, you’ll work with the state:
If you plan to do business in New York City and provide goods or services, you’ll also register for certain permits.
Finally, checking on statewide licenses and permit requirements is helpful. You’ll also want to check with your location to determine any applicable licenses or permits you’ll need to operate.
Step 8: Annual Requirements
There are annual filing fee requirements for three entity types in the state of New York. An LLC (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.
The fee owners pay for a New York LLC, or limited liability partnership will vary based on gross income. Unless your business makes over a million dollars annually, fees will range from $25 to $500. If your gross above a million dollars annually, fees range from $1,500 to $4,500.
Regular partnerships 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.
Other Considerations
Other than the New York state business and LLC tax rates, you should know that 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, and there are also grants and loans available for New York City business owners.
Let Us Help You Start Your Business in New York
Establishing your new business in New York is exciting but can also be overwhelming, especially if you're just starting out. That's why so many New York owners and entrepreneurs use 1-800Accountant, America's leading virtual accounting firm for small businesses, for their needs.
Whether it's small business taxes, tax advisory, or any of our professional accounting services, we have the solution you need at a price that works for you. Schedule a quick consultation – usually 30 minutes or less – to learn how we can help.
This post is to be used for informational purposes only and does not constitute legal, business, or tax advice. Each person should consult his or her own attorney, business advisor, or tax advisor with respect to matters referenced in this post. 1-800Accountant assumes no liability for actions taken in reliance upon the information contained herein.