New York State Tax

New York Small Business Tax

One of the most influential factors involved when an entrepreneur is developing a new company or business is the potential location's tax laws. Some states and cities are more favorable for different types of businesses. Some areas, especially more rural areas looking to increase jobs, will even offer tax-based incentives for a company to start-up or re-locate to their community. Unfortunately, the state of New York has earned a reputation as being one of the least favorable states for new and small businesses. This is based on higher than average personal income and sales taxes and the highest property tax in the country. However, this does not mean that a small business cannot succeed in this state, simply that the owners must be aware of the applicable tax laws and look for any possibilities to lower their tax rate.

Depending on one's personal expertise, it may be best to simply invest their money in a talented CPA or an accounting consultant. These experts can be fairly costly, but there is a good return on investment, since their suggestions and plans can lower the taxes for a business for the current year and often several years into the future. For a business owner that is fairly tax-savvy, a more cost-effective option may be to simply gain further education about the New York state taxation system. The IRS lists a number of small business tax workshops on their website. These are listed by state and there are a wide-range of topics. However, there are frequently classes or presentations that focus on the specific laws that affect a New York business.

The New York State Department provides a large amount of taxation information on their website. They even publish a fairly extensive booklet called the New York State Tax Guide For New Businesses. This publication includes a lot of very valuable information, arranged in an easy to follow and understand format. One looking to start or purchase a business in the state would be able to quickly determine if there were any specific tax implications they should be aware of. For instance, the state of New York does not have a single sales tax rate like most other states. The rate varies by county. Additionally, in some metropolitan areas, there are additional taxes related to maintaining the mass transit infrastructure. New York also has many miscellaneous taxes and fees depending on the type of business being operated. These include cigarette sellers, vending machine operators, sellers and distributors of fuel products, and rental car operators. Understanding if the state will impose additional taxes on the types of goods or services being provided can help a business owner make important decisions about what type of business to start or where to locate it.

Similar to other states, New York also has its own specific payroll tax laws. A business owner will need to understand the types of employment and payroll taxes they are responsible for withholding from an employee's paycheck and any employer portions owed. In New York, the unemployment tax levied on all businesses is actually taxed based on the business's employment history. For example, if the business is consistently laying off workers who are then eligible to collect unemployment wages, they will end up paying a higher rate than a business that keeps employees steadily employed. This is important for a business owner to consider since the rate can range from approximately two to ten percent. A new business will automatically be assigned a rate of about 4.5%, but a positive employment history can quickly lower this rate. For a business owner with a large payroll, a more favorable rate could result in significant savings.

Businesses setting up in or moving to New York may find the following information useful: