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STARTING AND OPERATING A BUSINESS IN NEW YORK Copyright © 2008, Michael D. Jenkins CHAPTER 18
CONTENTS OF THIS CHAPTER:
I. INTRODUCTION I. INTRODUCTION New York has a huge and vibrant economy, and New York City is a place where many businesses feel they have to have a presence. For a small business, however, the tax and regulatory environment in New York, and especially in New York City, can be a daunting challenge, as the legal and tax complexities of doing business in the City exceed those of any other part of America. Fortunately, both the state and the City have recently adopted a number of reforms and simplifications that made it a somewhat less difficult and expensive to start or operate a business. Like most states, New York imposes an income tax, a franchise tax on corporations, a sales and use tax, various excise taxes, with property taxes imposed at the local level. The state has also adopted a limited liability company (LLC) law, and a limited liability partnership (LLP) law, so that businesses operating in New York in LLC form or professional service firms operating in LLP form may obtain the advantages of limited liability, without incorporating or becoming subject to corporate taxation, generally. S corporations are exempted from state income taxation at the entity level. (However, New York City imposes a city tax on the income of unincorporated businesses as well as a corporate income tax on S corporations and other corporations.) At present, the state's economy, like most of the rest of the nation, is reeling from the deep recession, in terms of the level of unemployment and other economic measures. In April, 2008, the state's unemployment rate was only 5.0%, but has since soared to 7.7% in April, 2009, though this is still significantly lower than the national unemployment rate of 8.9% for April, 2009. To view the latest federal Bureau of Labor Statistics unemployment rate data for New York or any other state, visit the BLS website. II. LEGAL ENTITIES -- FILING FEES AND REPORTING REQUIREMENTS. (a) In General. A business that operates in New York can operate as a sole proprietorship, a general or limited partnership, a corporation, or a limited liability company. In addition, like the federal tax law, the state income tax law also recognizes S corporations, for income tax purposes, and generally allows the income or losses of an S corporation to "flow through" and be taxed or deducted at the shareholder level, rather than taxing the corporation itself as an entity (although a small tax burden, not based on net income, is also imposed on an S corporation at the corporate level by the state of New York). New York also provides for limited liability partnerships, in which no partner is liable for debts of the partnership, in general, as in the case of a corporation or LLC, but with fewer legal formalities than are required for either a corporation or an LLC. However, only partnerships that render professional services are allowed to form limited liability partnerships in New York. Each of the above entities is discussed below, along with the basic requirements for forming such an entity and any general ongoing (non-tax) reporting requirements that are applicable to it. The tax treatment of each form of legal entity is discussed in Section IV below. (b) Sole Proprietorships. In general, sole proprietorships in New York can be established with no formalities. However, as discussed in Section IV(b), it will generally be necessary to obtain one or more local business licenses from cities or counties in which you operate and, in some cases, state licenses, as well. In addition, if you make any sales of tangible personal property at retail or provide certain types of services, you may be required to obtain a sales tax license and collect sales tax, as discussed in Section IV(d). No separate tax form filing is required, generally, for a sole proprietorship, under the New York (state) income tax law. Instead, as with the Schedule C on your federal Form 1040, you simply report the net income or loss from your sole proprietorship on your state personal income tax return. If you live in or have a business in New York City, you will also be subject to City income tax, and to the New York City Unincorporated Business Tax on your business income if your business operates in the City. However, depending on your income level, from 15% to 65% of any Unincorporated Business Tax you pay may be claimed as a tax credit against your City income tax. Effective in 2007, new legislation increased the minimum percentage UBT credit allowed from 15% to 23% and, for taxpayers with incomes of $42,000 or less, increased the maximum allowable credit from 65% to a full 100% credit. See Section IV(c) for information on the New York state and City income tax and filing requirements for individuals and the New York City Unincorporated Business Tax on sole proprietorships. Doing business as a sole proprietor in New York is generally much simpler than operating as any other kind of business legal entity. As a sole proprietor, if you have no employees, you are not required to pay any unemployment taxes, withhold any federal or state income tax from wages, nor obtain workers' compensation coverage for yourself. However, if your sole proprietorship operates under an assumed or fictitious business name (trade name), it will be required to register the name with the county or counties where you do business, as discussed in Section IV(g). (c) Partnerships. New York's partnership laws allow creation of either a general partnership, in which all partners are liable for the debts of the business, or a limited partnership, in which only the general partners are liable for debts, while the liability of limited partners is limited to the amount they have invested, usually. New York law also allows for the creation of a limited liability partnership, in which no partner has personal liability, but only for certain types of professional partnerships. As discussed in Section IV(b), it will generally be necessary to obtain one or more local business licenses from cities or counties in which you operate and, in some cases, state licenses, for any type of partnership, including general or limited partnerships or limited liability partnerships. Partnerships, as entities, are not subject to state income tax in New York. Instead, the income or losses of the partnership, as allocated among the partners, must be reported on the personal income tax returns of the individual partners (or on the corporate tax returns of any corporate partners). However, as with other types of unincorporated businesses that operate in New York City, the income of partnerships is subject to the City's unincorporated business tax. Partners are allowed a partial tax credit, which until recently ranged from 15% to 65% of their share of the partnership's unincorporated business tax, as an offset against their New York City individual income tax. The tax credit is computed on Form IT-219. For tax years beginning on or after January 1, 2007, the legislature has increased the minimum percentage UBT credit allowed from 15% to 23% and, for taxpayers with incomes of $42,000 or less, increased the maximum allowable credit from 65% to a full 100% credit. Partnerships are required to file an annual tax information return with the state. For more on New York state partnership tax return filing requirements and the New York City Unincorporated Business Tax, see Section IV(c). A partnership agreement, for any type of partnership, should spell out in considerable detail such matters as the following:
As a rule, general partnerships in New York can be formed with no formalities, although it is highly advisable to have a written partnership agreement. However, as discussed in Section IV(b), it will generally be necessary to obtain one or more local business licenses from cities or counties in which you operate and, in some cases, state licenses, as well. In addition, any partnership or other business that has employees will generally have to register for, and pay, state unemployment tax on wages paid, as discussed in Section V(b). A limited partnership, in which there is at least one general partner (who is liable for partnership debts) and at least one limited partner (who is not liable for partnership debts), may also be formed under New York law. Unlike a general partnership, a limited partnership must generally have a written partnership agreement, and must file a certificate of limited partnership with the Department of State, together with a filing fee of $200. In addition, you must publish a notice that you have formed a limited partnership in two local newspapers in the area where your partnership will do business and file Affidavits of Publication with the New York Department of State. There is a $50 filing fee which must be paid to the Department of State when filing the affidavit. A proof of publication form may be downloaded from the Department of State website (a link to which is provided in Section VI(c)). Foreign limited partnerships must also register before being allowed to do business in New York, and must also pay a registration fee of $200. For information on limited partnership filing requirements, see the contact information for the offices of the New York Department of State, listed in Section VI(a) of this chapter. REGISTERED LIMITED LIABILITY PARTNERSHIPS New York state law now provides for creation of Registered Limited Liability Partnerships (LLP's). These are general partnerships that provide professional services (such as law, medical, or accountancy firms), and which elect to register as LLP's and thereby obtain some degree of limited liability. However, as with a professional corporation or a professional LLC, an LLP will not protect a professional practitioner against malpractice claims against him or her, or wrongful acts that are committed by someone acting under his or her direct supervision or control while rendering professional services for the LLP. To form an LLP in New York, a domestic partnership must register and pay a filing fee of $200 to the Department of State. Note that, unlike a number of other states, the New York LLP law specifically does not permit a domestic or foreign limited partnership to elect to be an LLP (a limited liability limited partnership, referred to as an LLLP in the states that allow such entities). Foreign LLP's, those created under the laws of another state, must register with the Department of State and pay a fee of $250. Both New York and foreign LLP's must, as in the case of limited partnerships, file Affidavits of Publication with the New York Department of State within 120 days after formation, in the case of a New York LLP, or 120 days after filing a notice of intention to do business in New York as an LLP, in the case of a foreign LLP. The affidavits must attest to the fact that the LLP has published notices of its intention to operate as an LLP in two local newspapers. There is a $50 filing fee which must be paid to the Department of State when filing the affidavit. A proof of publication form may be downloaded from the Department of State website (a link to which is provided in Section VI(c)). IMPORTANT NOTE: CAUTION: Every LLP doing business in New York, including both domestic and foreign LLP's, must file a report every five years and pay the applicable fee of $20 for a domestic LLP or $50 for a foreign LLP. All LLP's must also pay an annual fee of $50 per partner, with a minimum fee of $325 and a maximum of $10,000. (For the year 2007.) File Form IT-204-LL with the New York State Department of Taxation and Finance within 30 days after the year-end for the preceding year, to pay this fee. Starting in 2008, LLP's must instead pay a filing fee based on their New York-sourced gross receipts, ranging from as little as $25 per year to as much as $4,500. LLP's doing business in New York City are also generally subject to the New York City Unincorporated Business Tax, which is discussed in Section IV(c). The above fees and the city taxes tend to detract somewhat from the federal and state income tax benefits of operating as a non-corporate entity. For more information on LLP registration and reporting requirements, see the contact information for the offices of the New York Department of State, listed in Section VI(a). (d) Corporations. To form a corporation in New York, you must file articles of incorporation with the New York State Department of State and pay a filing fee of $125. The new corporation must also pay an organization fee of 0.05% of the face value of any par value shares of stock that the corporation is authorized to issue, plus 5 cents per share for each share of no-par stock, if any. The minimum fee is $10. A foreign corporation (one formed under the laws of another state or a foreign country) must obtain a certificate of authority before it may legally conduct business in New York, by filing an application for a certificate of authority and paying a filing fee of $225. A foreign corporation must also pay a license fee, based on the authorized and issued stock employed by the corporation in New York State, computed in a manner similar to the organization tax on domestic corporations. The license fee is sent in along with Form CT-240, Foreign Corporation License Fee Return. For more information on filing articles of incorporation or applying for a certificate of authority to do business in New York, see the contact information for the offices of the Department of State, listed in Section VI(a). In addition, once your corporation is formed, it will be required to file biennial reports and a filing fee of $9 with the Department of State every other year. Failure to file this report on a timely basis could result in suspension or revocation of your corporation's charter. Foreign corporations must also pay an annual maintenance fee of $300 to retain their authority to do business in the state. Besides paying federal income taxes on its income, a corporation that does business in New York must also file corporate income (franchise) tax returns with the state. The state corporation franchise tax is a tax that is computed in at least four different ways; the corporation pays the amount of tax that is the highest each year, plus a tax on the capital of subsidiary corporations, if any. Corporations that have business operations, own property, or maintain offices in New York City are also subject to the New York City general corporation tax. See Section IV(c) for a brief discussion of the New York state corporate franchise tax and New York City corporate income tax and the tax return filing requirements for each. For tax forms and more information on corporate income (franchise) taxes in New York, see the contact information for offices of the New York State Taxation and Finance Department and the New York City Department of Finance, listed in Section VI(a). (e) S Corporations. An S corporation is simply a regular corporation that has elected, for federal or state income tax purposes, or for both, to be taxed somewhat like a partnership, with its income, losses and tax credits flowing through to its owners, who report such income, losses, or credits on their individual tax returns. To be taxed as an S corporation for New York state tax purposes, a corporation must file a separate state election of S corporation status, on Form CT-6. New York State (but not New York City) recognizes S corporations for income tax purposes, and treats them in a manner similar to the federal tax treatment. However, S corporations are not completely exempted from the corporate franchise tax. They are still subject to the fixed-dollar minimum tax, which is primarily based on the size of the company and its gross payroll, and is limited to a maximum of $1,500. See Section IV(c) for more details on the taxation of S corporations by New York state and New York City. (f) Limited Liability Companies. New York, like every other state in the U.S., has adopted a limited liability company (LLC) law. Thus, in addition to the traditional choices of a sole proprietorship, partnership, or corporation, a business that operates in New York may also choose to operate in the form of an LLC. Professional service firms may operate as LLC's, or they may choose to operate as professional corporations or limited liability partnerships (LLP's). In most states, LLC's are very attractive entities for many small businesses, in that they offer the same protection as a corporation from creditors for debts of the business, while offering much of the flexibility plus the flow-through tax treatment of a partnership for federal tax purposes. See Section IV(c) for a discussion of the income tax treatment of LLC's under New York state and City tax laws. To form an LLC under the laws of New York, you must file articles of organization with the Department of State, which must be accompanied by a filing fee of $200. New York state law allows formation of one-owner LLC's. Such LLC's will now qualify for treatment as sole proprietorships (disregarded entities) for federal tax purposes, if owned by one individual. New York is one of only a few states that requires a notice to be published that you have formed a limited liability company. Within 120 days after the effectiveness of the initial articles of organization, a copy of the articles or a notice containing the substance of the articles must be published once in each week for six successive weeks, in two newspapers of the county in which the office of the LLC is located, to be designated by the county clerk. One of the newspapers must be a newspaper published in the city or town in which the office is intended to be located, if a newspaper is published in that city or town; or, if no newspaper is published there, the notice must be published in the newspaper nearest to such city or town. Afterwards, proof of publication, in the form of an affidavit of the printer or publisher of each of such newspapers, must be filed with the Department of State of New York, along with a $50 filing fee. A proof of publication form may be downloaded from the Department of State website (see Internet URL link in Section VI(c). LLC's are required to file a biennial statement and pay a $9 filing fee every other year. Foreign LLC's, those formed under the laws of another state, must obtain a certificate of authority to do business in New York, by filing an application for a certificate of authority with the Department of State and paying a filing fee of $250. LLC's that are not treated as corporations are considered to be partnerships, and must pay an annual fee of $50 per member, with a minimum fee of $325 and a maximum of $10,000. File Form IT-204-LL with the New York State Department of Taxation and Finance within 30 days after the end of its taxable year (such as January 30, if on a calendar tax year), to pay this fee. (For taxable years 2007.) However, a single-member LLC was only required to pay a $100 fee, if it was a "disregarded entity" for federal tax purposes, generally. This fee expired in 2007, and single-member LLC's that are disregarded for federal income tax purposes were not required to file Form IT-204-LL for 2007. However, beginning in 2008, LLC's must pay a filing fee based on their New York-sourced gross receipts. See Section IV(c) for more details regarding this fee. For more information on filing articles of organization for an LLC, see the contact information for the offices of the Department of State, listed in Section VI(a). (a) In General. When acquiring an existing business, there are a number of state legal and tax issues you or, preferably, your business attorney, should attend to before closing the purchase. These include matters such as doing a title search for any real property that is being acquired, checking for any recorded security interests on personal property items, and thoroughly researching county, state, and federal records for any judgment liens, tax liens, or other liens, before property is acquired. You will also benefit from consulting a tax advisor before the agreement of sale is negotiated, in order to seek a structuring of the agreement so that the purchase price is allocated among the assets in a way that favors you. It may be possible to obtain considerable tax savings if the purchase price is allocated in a way that gives you the best possible tax results under federal and state income tax laws, and other state tax laws, such as sales/use tax or property tax laws. Depending upon the state (or states) in which the seller's assets are located, you may also have to comply with state bulk sale or bulk transfer laws. You should also obtain tax releases from various state taxing agencies, as discussed below. (b) Bulk Sale Laws. Typical bulk sale laws require either publication of legal notices to all creditors in advance of the sale and recording of such notices in some cases, or maintenance of detailed lists of the property to be transferred, for inspection by the public. New York formerly had a bulk sale law with which a buyer had to comply when purchasing the assets of an existing business. (Uniform Commercial Code Secs. 6-101, et. seq.). Failure to do so would expose the buyer to liability to any creditors of the seller who failed to get paid off when the sale of the business occurred. However, like more than forty other states have done in recent years, New York repealed its bulk sale law as of July 1, 2001, so this is one less bit of red tape you need to be concerned with, when acquiring assets of an existing business. (c) Tax Releases. When you acquire an existing business, you will want to make sure that you do not unwittingly become liable for any unpaid taxes owed by the seller. Typically, to protect yourself, you will need to receive a tax release or releases from various state taxing agencies, for such taxes as sales and use tax, income tax withholding, and state unemployment taxes, in each state in which the seller does business. If you fail to obtain such a release or written statement from the tax agency that the seller is not delinquent on any tax payments, you will be held responsible for such tax if it is not withheld from the purchase price proceeds and paid to the state at the time the sale of the business occurs. In New York, you should obtain tax releases for sales and use tax by filing Form AU-196.10, Notification of Sale, Transfer, or Assignment in Bulk with the State Department of Taxation and Finance, by registered or certified mail, return receipt requested, at least 10 days before you take possession of the business assets. The state will notify you of the amount of sales and use tax, if any, to withhold from the proceeds when you make payment to the seller. You should also contact the Liability and Determination Section of the New York State Department of Labor with regard to any unpaid unemployment taxes of the seller. Finally, you should contact the Withholding Tax Unit of the New York State Department of Taxation and Finance regarding any unpaid payroll or withholding taxes owed by the seller. (d) Unemployment Tax Rating of Seller. In addition to obtaining tax releases, you may find it advantageous to succeed to the seller's unemployment tax experience rating, if the seller has a tax rate lower than you would otherwise obtain as a new business. PLANNING POINT: EXAMPLE: To obtain the seller's favorable experience rating as a successor employer, you should notify the Employer Account Adjustment Section of the New York State Department of Labor, on Form IA 15, Change of Business Information, requesting that you be treated as a successor employer. (e) Withholding Tax on Real Estate Purchases. If you acquire business real estate as part of the purchase of a business or otherwise, and if the seller is a nonresident individual, estate or trust, you need to make sure by or at the time of the closing that the seller pays the estimated New York state income tax on his or her gain on the sale of the property. This tax payment requirement on fee simple sales of real estate went into effect on September 1, 2003. Sellers of real estate who are subject to this estimated tax payment requirement must complete Form IT-2663, Nonresident Real Property Estimated Income Tax Payment Form, to compute the tax to be paid. The amount of the estimated tax payment is computed on the seller's gain at the highest state income tax rate for the current year. The estimated tax payment is made directly to the county recording office, which collects the tax on behalf of the state Department of Taxation and Finance. No estimated tax payment is required if the property you are purchasing was used as the principal residence of the seller. If this or any other exemption, such as New York residency, applies to the transaction, the resident or nonresident seller must complete Schedule D on Form TP-584. While New York does not, technically, require you (the buyer) to withhold the tax, it is important that you see to it that the nonresident seller pays the tax (or certifies that the tax payment is not required, if the property was his or her principal residence, or if the transaction was otherwise exempt). Otherwise, the county recording office will not register your deed to the property, unless the tax is remitted or the seller certifies on Form TP-584 that the seller was a New York resident or that the property was a principal residence or was otherwise exempted from the withholding requirement. IV. NEW YORK TAXES AND OTHER GENERAL REQUIREMENTS. (a) In General.
The system of taxation your small business will face in New
York is quite bewildering. While some of the key tax rates
are quite moderate, there is a great variety of state and
local taxes, particularly in New York City, many of them quite
complex to comply with, so that you will not only be subject
to a large number of varied taxes of all kinds, but will need
a great deal of competent assistance from tax professionals
to comply with the wide range of taxes. New York has virtually
every kind of tax you can imagine, and a few you have probably
never imagined. On the other hand, the top individual income
tax rate is only 6.85% after 2005, and New York is one of the
few states that imposes no personal property tax on either
tangible or intangible personal property.
A 2005 study by the Tax Foundation found that New York,
at 12.0%, had the second-highest ratio of state taxes to
per capita income of any state in the nation, after Maine
(13.0%).
For state tax forms and tax information, see the contact
information for the State Department of Taxation and Finance
in Section VI(a).
(b) State and Local Licensing.
Nearly any business, operated anywhere in the United States,
will have to have at least one government license of some
kind. In New York, contact the county clerk and village,
town, or city clerk in the jurisdiction where your business
will be located. Local laws to consider include zoning,
parking, sign regulations and various occupational licenses,
such as for auctioneers, electricians, and plumbers. Most
kinds of local business licenses are granted upon payment
of a fee, with no further requirements, except possibly for
annual or other periodic renewal fees.
However, if you are engaging in any kind of food business,
you will usually need to also obtain a health department
permit and show that you are in compliance with health
department food-handling requirements. In addition, be
sure to check with an attorney or local government zoning
or planning department officials to determine if your
business will be in compliance with all local zoning and
planning restrictions. If you own or rent any type of
facility, you will generally need fire department permits,
showing that you meet fire safety codes and any construction
or improvements to an existing structure will usually
require a building permit. If you intend to simply operate
your business from your home, you may be in violation of
local zoning requirements, but this is less likely to be a
concern if you don't have clients, customers, suppliers, or
employees coming to your house on business, on a regular
basis.
In addition to any local licenses, some businesses will
also require specific New York State permits. The state
defines a permit as any license, registration or similar
form of authorization required by New York State. Examples
of businesses that require a state permit are auto repair
shops, beauty shops, restaurants, real estate brokers and
child care centers.
State governments, including that of New York state, also
traditionally required special licenses for many kinds of
professionals, such as physicians, dentists, lawyers, and
accountants. Many such state licenses not only require
payment of fees, but are only issued for a given profession
or occupation upon showing that you have completed certain
educational or experience requirements, or passed certain
tests, or some combination of the foregoing.
For help with state licensing and business registration
requirements in New York or to obtain the state publication,
Starting a Business, see the contact information
for the Governor's Office of Regulatory Reform, listed in
Section VI(a). For New York City's
business licensing and registration requirements, see the
contact information for the New York City Department of Small
Business Services, also listed in Section VI(a).
(c) Income and Franchise Taxes.
New York has both an individual income tax and a franchise
tax on corporations, which is often based on a corporation's
income, but may be based on capital or other factors, whichever
calculation yields the greater tax liability. Note that in
computing individual income tax or corporate franchise tax,
New York does not allow the deduction of the 50% bonus depreciation
that is allowable in 2008 for federal tax purposes.
The City of New York also imposes individual and corporation
income taxes, plus an income tax on unincorporated businesses.
TAXATION OF SOLE PROPRIETORS AND PARTNERSHIPS
The New York individual income tax was imposed at a maximum
tax rate of 7.7% on taxable income in excess of $500,000 in
2005, but the top rate was reduced to 6.85% in 2006 and subsequent
years. Individual taxpayers generally pay state income tax on their
business earnings from a sole proprietorship, or on their share of
the earnings of a pass-through entity, such as a partnership, S
corporation, or LLC.
The New York State personal income tax return is
Form IT-201 for residents, or Form
IT-203 for nonresidents, which must be filed with the
New York State Department of Taxation and Finance by April 15th
following each taxable year. Persons with New York City sources of
income must also pay City income tax, which is computed on the state
income tax form and paid to the state, along with the state income
tax. The City personal income tax rates range from 2.907% to 3.648%
for 2008, a substantial decrease from the 2003-2005 rates.
Rates were scheduled to decline by 50% in 2009, but the current
rates have been extended for another three years, through 2011.
Sole proprietors who do business in the City must also pay
the New York City Unincorporated Business Tax, as discussed
below.
New York City is not the only city in the state that imposes
its own individual income tax. Residents of Yonkers are subject
to a Yonkers city income tax, including a surcharge that was
extended in 2007 through January 1, 2010.
Partnerships, or entities taxable as partnerships, such as
LLC's, are not subject to state income taxation in New York,
but must file an information return with the New York State
Department of Taxation and Finance each year, showing each
partner's share of taxable income, losses, and credits, on
Form IT-204. The partnership information return
is due by April 15th of the following year, in the case of a
calendar year partnership.
Note, as discussed below, that the
income of a partnership (or an LLC treated as a partnership)
that is taxable in New York City will be taxable to the partners
who live in the City for both state and City income tax purposes,
and the income of the business will also be subject, at the
entity level, to the New York City unincorporated business
tax (UBT), unless the entity has gross income of $25,000 or less
and taxable income of $15,000 or less.
However, from 23% to 100% (15% to 65% prior to 2007) of the
unincorporated business tax may be used as a tax credit to offset
your individual City income tax. A 100% credit is only available
if taxable income is $42,000 or less. Any unused credit can be
carried forward to subsequent taxable years.
Like LLC's, limited liability partnerships (LLP's) must
pay an annual fee of $50 per partner, with a minimum fee of
$325 and a maximum fee of $10,000 for 2007. File Form
IT-204-LL with the New York State Department of
Taxation and Finance within 30 days after the end of the
taxable year. Beginning in 2008, such entities pay a filing
fee based on New York-source gross receipts, ranging from a
minimum fee of $25 for such gross receipts of $100,000 or less
to as much as $4,500 if such gross receipts exceed $25 million.
All partnerships and LLC's taxable as partnerships, which
have New York-source income, must pay estimated taxes on
behalf of any partners that are C corporations or nonresident
individuals.
Individual taxpayers doing business as sole proprietors
(or who are partners in partnerships, members of LLC's, or
shareholders in S corporations), who have taxable income
from the business, will generally be required to make advance
payments of estimated New York individual income taxes if
their net tax liability (not covered by withholding) exceeds
$300, for New York state income tax, New York City income
tax, or Yonkers income tax (computed separately for each tax).
Estimated tax payments are due in four installments, on the
15th day of the 4th, 6th, and 9th months of the taxable year,
and the 15th day of the first month of the following year.
To avoid penalties for underpayment of estimated tax, you
must either pay in 90% of the current year's tax, or 100%
(110% if prior year adjusted gross income was over $150,000)
of the previous year's tax. If basing your estimated tax on
your prior year tax liability, you must re-compute the prior
year's tax, using current year tax rates and rules.
NEW YORK CITY UNINCORPORATED BUSINESS TAX
Note that if a sole proprietorship business is taxable by
New York City, the owner will not only pay federal, state,
and City income taxes on the business income, but will also
be required to file Form NYC-202 and pay City
Unincorporated Business Tax on the business income, as well,
at a 4% tax rate. Thus, a sole proprietor who resides in New
York City will pay two taxes to the City on his or her business
income, although a partial (15% to 65%) tax credit is now
allowed against City income tax for any UBT paid. These city
income taxes will be on top of any federal and state income
taxes the sole proprietor must pay.
Certain very small businesses are exempted from the UBT,
including sole proprietorships, unless they have more than
$75,000 of gross receipts, or more than $35,000 of taxable
income. Also, an $1,800 tax credit against the UBT is
allowed for small businesses, but the credit phases out
in part if the tax before the credit exceeds $1,800, and
is completely phased out if the tax before the credit
equals or exceeds $3,200. There is an exemption of $5,000
and a deduction for the services of a sole proprietor
is allowed, equal to 20% of taxable income (before the
allowance or exemption) or $10,000, whichever is less.
Partnerships (and LLC's taxable as partnerships) are also
subject to the UBT, but are exempted unless they have more than
$25,000 of gross receipts, or more than $15,000 of taxable income.
Partnerships file UBT returns on Form NYC-204.
Sole proprietorships, partnerships, or other entities subject to
the New York City UBT must make quarterly estimated tax payments,
if the total UBT liability for the year is expected to exceed $1,800.
New York State does not have a corporate income tax, as
such. However, it does impose a franchise tax, which is
computed in four different ways, one of which is based on
its entire net income, and is thus like an income tax. If
the tax computed under any of the other three methods is
higher, however, the highest amount computed, plus a tax
on subsidiary capital, is the franchise tax for the year.
The four methods of computing the state franchise tax,
for corporations other than S corporations, are as
follows:
As complex as this tax calculation seems, it is actually
significantly more complicated than indicated by the brief
outline above. Also, in addition to whichever of the four above
taxing methods applies in a given year, a corporation must also
pay an additional franchise tax on .09% of its "apportioned
subsidiary capital," if that tax is applicable to any
subsidiary companies owned by the taxpayer corporation.
The state corporation franchise tax return is Form
CT-3 (or Form CT-4 for certain qualified
small businesses), which must be filed with the New York State
Department of Taxation and Finance by the 15th day of the third
month following the end of the taxable year, or by March 15th in
the case of a corporation whose taxable year is the calendar year.
Corporations are required to make estimated tax payments
of their state corporate income tax in advance, if their tax
liability for the year equals or exceeds $1,000. Estimated
tax payments are due in advance, in four installments,
on the 15th day of the 3rd, 6th, 9th, and 12th months of
the taxable year. Where the tax on the prior year return
was more than $1,000, pay 25% of that amount when filing
the prior year return or when filing an extension request.
Subtract that amount from the total estimated tax the
corporation will owe in the current year and divide the
balance by three to compute the amount of the second,
third, and fourth estimated tax installment payments.
An estimated tax declaration is due by the 15th day of
the 6th month. The total estimated tax that must be paid
in is usually equal to 91% of the actual tax liability for
the year (100% for large corporations). However, if the
preceding year was a full year of 12 months, the current
year payments need only be equal to 100% of the prior
year's tax liability, if less. (This exception is not
allowed for large corporations -- those with allocated
entire net income of $1 million or more for any of the
three preceding taxable years.)
Penalties are imposed for failure to make the required
estimated tax payments on a timely basis.
Note that S corporations are not entirely exempt from the
state franchise tax. In the past, they generally paid a tax
equal to the difference between the top individual income tax
rate and the corporate tax rate on income, or, if higher, the
fixed-dollar minimum tax. However, for tax years beginning in
2003 and thereafter, only the fixed-dollar minimum tax (generally
$100 or $800 or more, up to $1,500) applies to S corporations.
A corporation that has elected federal S corporation treatment
must also make a New York S corporation election, if it wishes
to be treated as an S corporation by New York State. The state
S corporation election must be made by filing Form CT-6,
Election by a Federal S Corporation to be Treated as a New York
S Corporation. (New York City does not recognize S
corporation elections for purposes of the City corporate
income tax.)
For tax years beginning on or after January 1, 2003, S
corporations, like partnerships or LLC's, must now make
estimated tax payments on behalf of nonresident shareholders.
NEW YORK CITY TAXATION OF
CORPORATIONS
New York City also imposes an income tax on corporations
that are subject to its jurisdiction, including S corporations.
The tax is computed in a complex manner, similar to the State
franchise tax, with the tax on income being calculated at a
rate of 8.85%. This tax rate was recently extended until the
end of 2008, after which the rate was scheduled to be reduced,
beginning in 2009. However, it has again been extended, until
December 31, 2011.
Three additional alternative calculations must be made for
the City tax on corporations, and the highest tax calculated
under the four methods, plus a tax on subsidiary capital,
applies. The four alternative calculations are as follows:
There is also an added tax computed on subsidiary capital
of corporations at the rate of 0.75% of the subsidiary
capital allocated to New York City.
Corporations that do business in the city but do not do
any business outside the city and which have no subsidiary
or investment capital may file a simplified New York City
General Corporation Tax Return, Form NYC-4S.
Corporations that do not qualify to file that form must
generally file Form NYC-3L. Either such
return is due by March 15th of the following year for
a calendar year corporation, or by the 15th day of the
third month after the end of the taxable year.
TAXATION OF LIMITED LIABILITY COMPANIES
In New York, a limited liability company (LLC) is taxed
in the same manner as a partnership, thus avoiding the possible
double taxation of income that can occur with a corporation. As
with partnerships, an LLC that is recognized as a partnership
for New York State tax purposes had to pay an annual fee of
$50 per member, with a minimum fee of $325 and a maximum of
$10,000, for the taxable year 2007.
Beginning in 2008, LLC's (other than disregarded entities)
must pay an annual filing fee based on their New York-source
gross receipts. This fee ranges from a minimum of $25 if
gross receipts do not exceed $100,000, to as much as $4,500,
if gross receipts exceed $25 million.
While LLC's that are treated as partnerships are not
taxable by the state on their income, they, like partnerships
and S corporations, are required to make estimated state
income tax payments on behalf of any members who are
nonresident individuals or C corporations, on their share
of any New York-source income of the LLC.
LLC's that are "disregarded entities" for federal tax
purposes pay a $25 annual filing fee, beginning in 2008.
Under IRS regulations, an LLC, unless it elects otherwise,
is generally treated as a partnership if it has more than one
owner, or as a sole proprietorship if it does not, for federal
tax purposes. New York's LLC law now permits the formation of
a single-member LLC.
Note that it is not always entirely clear whether an LLC is
a "single-member LLC" or not, where the "single owner" is a
married couple who hold the entire ownership of the LLC in some
form of co-tenancy, such as joint tenants with right of survivorship,
tenants by the entirety, or as tenants in common. The federal Internal
Revenue Service (IRS) has taken a very lenient position in Rev.
Proc. 2002-69, where a couple hold the LLC interest as community
property, ruling that the IRS will accept whatever choice the couple
make, either to disregard the LLC as an entity (treating it as a
"single-member LLC") or to treat it as a partnership between
the husband and wife.
However, New York is not a community property state, so where
the LLC is owned by a husband and wife in some form of co-tenancy,
it is unclear whether the IRS treatment would be as lenient as
for community property owners, since the IRS has not issued any
published rulings on whether an LLC can be a disregarded entity
if held in one of the various forms of co-tenancy by a married
couple, rather than being held as community property. Thus, it
is also unclear, where an LLC is owned by a husband and wife as
co-tenants, whether New York would treat the LLC as a single-member
LLC or as a partnership. Presumably, since New York will consider
an LLC a partnership even where it is owned by husband and wife
as community property, it would also consider it a partnership
if owned by a married couple in some form of co-tenancy.
New York City generally treats an LLC as a partnership,
and thus requires it to pay the City unincorporated business
tax, as noted in the discussion of NEW YORK CITY UNINCORPORATED BUSINESS TAX
in this section, above. As in the case of
other unincorporated businesses, from 23% to 100% of the unincorporated
business tax that is paid may be claimed as a tax credit by the
individual LLC members on their New York City personal income tax.
Effective for tax years that begin in 2007 or later, new legislation
has increased the minimum percentage UBT credit allowed from 15% to
23% and, for taxpayers with incomes of $42,000 or less, increased
the maximum allowable credit from 65% to a full 100% credit.
(d) Sales and Use Tax.
New York imposes a general sales tax on retail sales of tangible
personal property and certain types of services at the statewide
rate of 4% (4.25% from June 1, 2003 to May 31, 2005).
Localities are also allowed to impose sales and use taxes that
may be greater than the state sales tax rate in some areas. The
total rate in New York City is 8.375%, consisting of the 4% state
rate, the local tax, and a Metro Commuter District tax. The
combined sales tax rate in New York City was scheduled to revert
back to 8.25% on June 1, 2005, but the legislature adopted a 1/8%
rate increase for the Metro Commuter District (which includes
New York City and several major surrounding suburbs).
A statewide special sales tax of 5% applies to automobile
rentals. This tax increases to 6% on June 1, 2009.
Sellers are required to register and obtain sales tax
certificates of authority from the Department of Taxation
and finance at least 20 days before starting a business.
Sellers are generally required to file quarterly sales tax
returns (Form ST-100), or, if taxable gross
receipts were $300,000 or more in any of the four preceding
quarters, must file monthly returns (for the first two months
of each quarter) on Form ST-809,). Monthly
filers must also file Form ST-810 at the end
of each calendar quarter. Permission to file annual returns
only (on Form ST-101) may be granted for
firms with not over $3,000 sales/use tax liability for the
last 6 quarters and not over $3,000 of tax expected for the
next 12 months.
There are numerous exemptions from the sales tax, the
most important of which is the resale exemption. If you are
a wholesaler or retailer who purchases goods that you will
resell, your purchase of such goods may qualify as an exempt
sale for resale. Similarly, if you sell goods to wholesalers
or retailers for resale by them, your sale may also qualify
as an exempt sale for resale. In any such transaction, the
exemption is ordinarily available only if the purchaser gives
the seller a valid resale certificate, Form ST-120,
certifying that the items are being purchased for resale,
and not for use or consumption by the buyer.
Some of the other major categories of goods and services
that are subject to sales or use tax in New York include:
Major categories of goods or services that are exempt from
sales tax in New York include:
However, New York City taxes a number of services that
are not subject to state sales tax, such as:
A shadow tax, the use tax, is also imposed at the same
rate as the sales tax. It is primarily intended to tax
property that is acquired from sources outside of the state,
in transactions not subject to sales tax, when such property
is used or consumed within New York. Use tax may also apply
to items purchased on an exempt basis, such as for resale,
if such items end up being used or consumed, instead of
being resold.
Out-of-state vendors who sell to New York residents are not
required, under federal restrictions on states' taxing power,
to collect sales or use tax unless they have some kind of
presence or "nexus" in the state. However, New York has recently
expanded the grasp of its use tax law to any out-of-state vendor
(Amazon.com being its first target) that generates over $10,000
of sales from links on Web sites of New York residents, such as
sales made under "affiliates" or "associates" programs like that
of Amazon, which pays its "associates" a percentage of book
sales their Web sites generate from links to books or other
products on Amazon.com.
Before making any taxable sales, you will need to register
with the State Department of Taxation and Finance on Form
DTF-17, Application to Register for a Sales Tax Certificate of
Authority (4/07).
For more information on New York sales and use tax
registration and compliance, see contact information for
the offices of the Department of Taxation and Finance in
Section VI(a).
(e) Real and Personal Property Taxes.
In New York, as in every other state, any business real
estate you own will be subject to real property taxes.
In general, there is little that you must do, unless you
wish to challenge your assessed valuation, since the
assessor will bill you for each year's property taxes as
they come due.
New York, unlike most other states, does not impose any
property taxes on personal property of any kind, either
tangible or intangible. ("Personal property" is any kind
of property that is not real estate.)
Note that New York City imposes a commercial occupancy
or "rent tax" on commercial or business rentals of premises,
if the base rental is $250,000 or more. At one time, this
tax applied to rents in all of the boroughs of New York
City. However, it now only applies to the portions of
Manhattan that are south of the center line of 96th Street.
Furthermore, effective since August 30, 2005, the tax no
longer applies to tenants in an area defined as the "World
Trade Center Area" in Manhattan or in an area defined as an
Commercial Revitalization Program abatement zone.
A commercial rent tax return is no longer required
if your annualized gross rent paid is $200,000 or less and
you do not receive over $200,000 in rent from any subtenant.
Use Form CR-A if your business is required
to file a commercial rent tax return with New York City.
New York City also imposes various other miscellaneous
taxes relating to real estate, such as a real estate
conveyance tax and a tax on recording of mortgages.
(f) Other Business Taxes.
New York state imposes a number of excise and other taxes
on businesses, including:
There are no natural resource severance taxes in New York.
(g) Trade Names. A trade name, also known as a fictitious or assumed name, is any name used in the course of business that does not include the actual legal names of all the owners of the business. Thus, if your business goes by any name other than your own real name, it is operating under a trade name. The same is true of a corporation, if it operates under a name other than its legal name. A trade name might also be one that suggests the existence of additional owners, by using such words as "company," "associates," or "group." In most states where you do business, it will be necessary to register a trade, fictitious, or assumed name, so that people who do business with you can find out who the actual owners of your business are. You may also want to register any such trade name, as a means of protecting against other companies usurping that particular trade name. In New York, state law requires any business doing business under an assumed name to file an assumed name certificate. You can pick up a certificate of assumed name form at almost any stationery store in New York. Complete and file it with your county clerk in each county where you do business, unless your business is a corporation, LLC, or a limited partnership. Keep in mind that registration of an assumed name is not permission to conduct business. For a corporation, LLC, or a limited partnership, file with the Department of State and include a list of all counties where you will do business in the state. Include a $25 filing fee for the Department of State, plus applicable filing fees for each county clerk in counties where you will do business. Other types of business entities such as sole proprietorships, general partnerships, or limited liability partnerships need only to file with the county or counties where they do business. The county filing fee is generally $25, or $100 in the five counties (boroughs) that make up New York City. No fee is charged for filing a proof of publication. You can register trademarks, service marks, and certification marks that are used in interstate commerce with the U.S. Patent Office in Washington, D.C. A trademark is a word, name, symbol, device or any combination of these that identifies and distinguishes goods, while a service mark is a mark that identifies and distinguishes services and includes various distinctive features of advertising. A certification mark is a mark used in connection with the goods or services of any person other than the owner of the mark to certify regional origin, quality, accuracy, material mode of manufacture, production of goods by union labor, or other characteristics of the goods or services. The primary advantage of registering any kind of mark is that it gives notice of your claim to the mark, so that someone else cannot claim any rights to the mark. Trademark and service mark registration is available for local marks in New York. Under state law, if you adopt and use a trademark or service mark in the state you may file it with the Department of State, who will issue a certificate of registration. For more information and an application form for registering trade or service marks, contact the Miscellaneous Records Section of the New York Department of State, at the address listed for that agency in Section VI(a) of this chapter. V. EMPLOYER REQUIREMENTS IF YOU HAVE EMPLOYEES (a) Employer Registration and Withholding. A business that has any employees will already be withholding federal income tax and FICA taxes from their wages. Since New York imposes a state income tax on the income of individuals, an employer will also need to withhold New York state income tax from the wages of your employees, as well as New York City or Yonkers earnings taxes, for employers in those cities, all of which taxes are administered and collected by the state Department of Taxation and Finance. Before you begin to pay wages, you must register as an employer with the Department of Taxation and Finance. Note that it is not necessary to obtain a state employer identification number for state and City withholding tax purposes. For convenience, you are instead allowed to use your federal employer identification number for all State and City withholding tax filings. In fact, New York has become the first state in the nation which has cooperated with the Internal Revenue Service to set up a joint state-federal service for immediately issuing federal taxpayer identification numbers to businesses. However, a separate employer identification number will be issued to you for unemployment tax purposes, when you file Form NYS-100 to register as an employer for both withholding and state unemployment tax purposes. Also, you are allowed to file one Form NYS-1-MN to report all state income tax withholding and withholding of New York City and Yonkers income or earnings taxes, and quarterly Form NYS-45-MN to report state and city withholding taxes and state unemployment tax. Employers who have less than $700 of tax withheld during the quarter do not have to file Form NYS-1-MN. Instead, they only file the quarterly Form NYS-45-MN returns. If, at any time, after payment of payroll, an employer has $700 or more of state and city taxes withheld, it must file Form NYS-1-MN and remit the withheld tax within 5 business days (or within 3 business days if the employer was required to withhold $15,000 or more of such taxes in the preceding calendar year). Note that since July 1, 1999, New York City employers are no longer required to withhold New York City nonresident earnings tax from wages of New York State residents who do not live in New York City. The state Court of Appeals ruled in 2000 that the commuter tax was unconstitutional, by exempting only New York State residents, so the tax is now only imposed on residents of New York City. To claim exemption as a nonresident of New York City, workers must sign and submit to their employer an exemption form in order to avoid having New York City nonresident earnings tax withheld from their earnings. For more information on New York (state) income tax withholding and registration requirements for employers, obtain a copy of Form NYS-50, New York State Employer's Guide from the Department of Taxation and Finance, and see the contact information for the offices of the Department, listed in Section VI(a). IMPORTANT NOTE: (b) Unemployment and Other State Payroll Taxes. If your business has one or more employees, you, as an employer, will be required to pay state unemployment tax based on the amount of such wages paid, beginning with the first day of the first calendar quarter in which you pay $300 or more in wages. Employers subject to the New York unemployment tax are required to register with the New York State Department of Labor or State Department of Taxation and Finance on Form NYS 100, which will also serve as registration for employer wage withholding of state and city (New York City and Yonkers) taxes. New employers are required to pay tax (at a rate that is determined annually) on the first $8,500 of wages paid to each employee. There is a small subsidiary tax and a Re-employment Service Fund tax, resulting in a total new employer rate of 4.1% in 2008. Quarterly wage reporting returns, on Form NYS-45-MN, must be filed by most employers with the New York State Department of Taxation and Finance. After you have had employees for a while, you will develop an unemployment tax experience rating. This rating is based on the number of employees you terminate who then claim unemployment benefits and the amount of such benefits paid to those former employees, under complex formulas. The state will inform you when they have assigned you an individual tax rate based on your firm's experience rating. That rate may be higher or, if you have had relatively few benefit claims charged to your account, lower than the standard new employer tax rate you initially were paying. State unemployment taxes are imposed upon you as employer, and, under New York law, cannot be charged to your employees or withheld from their wages. Employers that are subject to state unemployment taxes must display an unemployment insurance poster in the workplace. For more information on your New York unemployment tax obligations as an employer, see the contact information for the offices of the New York State Department of Labor, listed in Section VI(a). (c) Workers' Compensation. Workers' compensation insurance is a state-mandated insurance requirement for most employers, in almost every state. In New York, virtually all businesses with one or more employees are required by law to have workers' compensation insurance, except those able to self-insure. In New York, you have the option of purchasing workers' compensation insurance from either the State Insurance Fund or from private insurance companies. Note, however, that a sole proprietor or a partner in a partnership is generally not considered an employee. Similarly, one or two employees of a corporation who are the sole stockholders of that corporation may be exempted from coverage for workers' compensation purposes. Licensed real estate brokers or salespeople and insurance brokers or salespeople, who are solely compensated on a commission basis, may also be exempted from coverage requirements, if they enter into a contract that meets certain specifications that establish that they are independent contractors (rather than employees). Every New York employer, subject to workers' compensation, must keep a detailed record of all injuries sustained by its employees in the course of employment, and must also report within 10 days to the Workers' Compensation Board all accidents which:
Workers' compensation provides wage loss and medical benefits to employees injured on the job and it protects you, as an employer, from legal action for damages for injuries or job-related illnesses suffered by your employees. In effect, it is a "no-fault" insurance system for work-related injuries or illnesses. CAUTION: As an employer, you must notify injured employees of their benefits by posting a notice in the workplace informing your employees of their workers' compensation coverage. Your insurance carrier will provide you the required poster or notice. For more detailed information regarding your obligations as an employer under the New York workers' compensation laws, contact your insurance carrier or see the contact information for the offices of the Workers' Compensation Board or the State Insurance Fund, both of which are listed in Section VI(a). (d) State Wage and Hour Laws. Some employees of certain small firms not engaged in interstate commerce are not covered by the federal minimum wage and overtime laws. However, even if few or none of your employees are covered by the federal wage-hour laws, because your firm does less than $500,000 a year in gross sales and the employees in question are not deemed to "...engage in (interstate) commerce...," they will still generally be subject to the New York wage-hour laws, which have provided for a state minimum hourly wage that was the generally the same as the federal minimum, until 2005. In 2005, the minimum wage was set by statute at $6.00 an hour, increasing to $6.75 on January 1, 2006 and to $7.15 on January 1, 2007. Once the federal minimum wage increases beyond the above amounts, the state minimum wage will automatically increase to match the higher federal minimum wage level (to $7.25 on July 24, 2009). Note that, as under federal wage-hour laws, certain classes of executive, administrative, and professional employees are exempted from the New York wage-hour rules, as are outside salespersons and taxicab drivers. IMPORTANT NOTE: Besides the federal wage-hour posters that you must display in the workplace, you must also display a state wage-hour poster, which you can obtain from the Division of Labor Standards, New York State Department of Labor. In addition to wage-hour laws, most businesses are subject to federal child labor laws, which put numerous restrictions on the working hours and kinds of work in which minors under the age of 18 may engage. Your business must also be cognizant of similar state child labor laws, in New York. In general, New York law prohibits employment of children under 18 when they are required to be in school. No child under age 16 may be employed in a factory, except certain delivery and clerical work. Children under age 14 generally may not be employed at all, with a few exceptions, such as for child performers or models, or minors of at least age 11, who may deliver newspapers. Children of ages 14 or 15 are subject to the following limits on working hours:
Children of ages 16 or 17 are subject to the following limits on working hours:
The above restrictions on working hours do not generally apply to child performers, models, or newspaper carriers. Employers of minors under the age of 18 are required to post a notice in the workplace of the hours that are to be worked by such minors. For more information on New York's wage-hour and child labor laws, contact the New York Department of Labor, at the address listed for that agency in Section VI(a). (e) State Occupational Safety and Health Laws. Approximately half of the states have their own OSHA-like agency, charged with administering the state's own occupational safety and health laws. The remaining states have no such enforcement agency, and thus rely instead on the federal Occupational Safety and Health Administration (OSHA) to administer the federal job safety rules within such states. New York is one of the states that has its own OSHA-type agency, but it only enforces job safety requirements for employees of state and local governments, leaving the enforcement of safety standards in the private sector to the federal Occupational Safety and Health Administration. To determine if your workplace is in compliance with federal job safety requirements, you may wish to contact the Division of Safety and Health, New York State Department of Labor, and request a free on-site safety consultation. You will not be cited for any violations detected, provided that you promptly correct the unsafe conditions. This differs from the rules for consultations by federal OSHA inspectors, who are required to cite you for any violations they find. Employers are required to display a "Right to Know" law poster in the workplace, outlining employees' right to be informed of any hazardous substances in the workplace. For information on your job safety and health obligations as an employer and to obtain required posters, contact the nearest office of the U.S. Department of Labor, Occupational Safety and Health Administration, at the address listed in Section VI(a). For possible on-site safety consultations, see the contact information for the offices of the Division of Safety and Health, New York State Department of Labor, also listed in Section VI(a). (f) Other Miscellaneous State Labor Laws. Other New York labor laws you need to be aware of, as an employer, include the following: (1) Wage payments to employees. State law requires that an employer pay wages at least semi-monthly, for most types of workers. Manual laborers must be paid at least weekly, while commissioned salespersons need only be paid once a month. Terminated employees must be paid their final wages by the next regular payday, and you must mail the payment to them if requested. New labor law provisions, effective on October 16, 2007, require agreements with commissioned salespersons to be reduced to writing and kept on file for at least three years for inspection, if requested, by the New York Department of Labor. (2) Right-to-work laws. About half the states have enacted "right-to-work" laws, which guarantee that no person may be denied employment for refusing to join a union or for not paying union dues, thus banning either "union shop" or "agency shop" agreements, or both. In a union shop, an employee not belonging to a union may be hired but then must join the union, usually within 30 days. In an agency shop, an employee need not join the union but, to remain employed, must pay union dues. New York does not have such a right-to-work law and allows union shop or agency shop contracts between an employer and a union. (3) State anti-discrimination laws. In addition to complying with federal anti-discrimination laws, employers must also be aware of and comply with state civil rights laws in New York, and display a poster informing employees of their rights under the state's Human Rights Law. You can obtain this poster from the New York City (Bronx) office of the Division of Human Rights, at the address listed in Section VI(a). Besides the typical prohibitions against discrimination on the basis of age, race, religion, gender, national origin, marital status or disability, or military status, the New York law also forbids discrimination on the basis of "genetic disposition or carrier status" for individuals with certain genetic anomalies (sickle-cell trait, carriers of Tay-Sachs disease, or carriers of Cooley's anemia). Also, effective January 16, 2003, New York enacted a Sexual Orientation Nondiscrimination law, which added discrimination based on sexual orientation to the list of prohibited practices. (4) Reporting new hires. Under federal welfare reform laws, employers in all states are now required to report newly-hired (or rehired) employees to a designated state agency (the New York State Department of Taxation and Finance for New York employers) within 20 days after the date of hire. Since July 1, 2005, employers have been required to use as the employee's date of hire date the first day that compensated services are performed by that employee. If an employer reports new hires on magnetic media or electronically, reports must be filed twice monthly, not less than 12 days and not more than 16 days apart. See the New Hire Reporting contact information in Section VI(a) below or see the link to the New Hire Reporting page on the Department of Taxation and Finance website, at the link listed in Section VI(c). VI. STATE SOURCES OF HELP AND INFORMATION (a) Key State Agencies Contact Information. Unlike most other states, New York does not have a single agency to whom you can go to handle all your licensing and permitting requirements for your business under the laws of New York. Accordingly, you will need to contact the various New York state and City agencies that are mentioned in this book or listed below on an individual basis, to register and obtain any needed permits. A list of addresses and other contact information for such key agencies is set forth below for your convenience. The state provides a great deal of information and assistance for new businesses or businesses moving into New York State. BUSINESS STARTUP INFORMATION. A key agency that can provide helpful information on getting your business up and running in New York is the Governor's Office of Regulatory Reform, which offers a 24-hour telephone line where callers with touch-tone phones may listen to a number of prerecorded messages on topics such as taxes, licenses and government programs. This agency also has information on some 1200 required state permits, and can provide you with a comprehensive and personalized permit assistance kit to help you get through the permitting process with a minimum of difficulty. For information and help, contact: New York State Governor's Office of Regulatory Reform NEW YORK CITY STARTUP INFORMATION. New York City also provides a business action center that can help your business get started in New York City, the Department of Small Business Services. For information and assistance, contact: New York City Department of Small Business Services DEPARTMENT OF STATE. Contact the New York State Department of State for information on:
Division of Corporations TAXES. Obtain state income, sales and use tax, and other miscellaneous business tax forms, instructions and information from the New York Department of Taxation and Finance, which is the main tax collection agency in New York. Also register with this agency as an employer, for state income tax withholding purposes. Tax Compliance Division For general information on business taxes: (800) 225-5829 (Office of Tax Enforcement -- In state only) For information on New York City business taxes, contact: New York City Department of Finance STATE LABOR LAWS. Contact the following agency about your obligations as an employer under various state labor laws, including:
Division of Labor Standards STATE UNEMPLOYMENT TAX. Contact the New York State Department of Labor, Liability and Determination Section, to determine whether you are an employer subject to payment of state unemployment taxes, and for registration as an employer if you are subject, at: Liability and Determination Section STATE SALES TAX. Obtain your sales and use tax license or permit and information on the New York sales and use tax law, from the Department of Taxation and Finance, at the address listed above for that agency. NEW HIRE REPORTING. Report newly hired or rehired employees to the New York New Hires Registry, at the following address (or see the Internet URL for new hires in Section VI(c)): New York State Department of Taxation and Finance WORKERS' COMPENSATION INSURANCE. If you employ workers for whom you must supply workers' compensation coverage, contact the following agency for further information: New York State Workers Compensation Board Or, with regard to obtaining workers' compensation insurance coverage, contact: The State Insurance Fund STATE OSHA PROGRAM. There is no state OSHA program regulating private employers in New York. The federal government provides federal OSHA enforcement instead. For required posters and information on federal occupational safety and health laws that affect you as an employer in New York, contact: U.S. Department of Labor -- OSHA For free workplace safety consultations, contact: Division of Safety & Health STATE ANTI-DISCRIMINATION LAWS. Contact the following state agency for more detailed information on New York human rights laws that may apply to your business, and to obtain anti-discrimination notices you are required to post in the workplace: New York State Division of Human Rights (b) Small Business Development Centers. A number of Small Business Development Centers (SBDCs) are located throughout New York to assist you. These centers, usually located on college campuses, provide a wealth of start-up information and sponsor frequent business-oriented seminars. Contact the lead office below for information, or for the location of other SBDCs nearer to you, at the address or website listed below. New York State SBDC: Administration Office (c) Internet Sites. If you have access to the Internet, there is a wealth of state and even local business information provided by state and local governments. All states now have a state government Web page, and most major state agencies also have sites on the Internet where you can obtain useful small business information on matters such as state taxes, financing sources, or the addresses and phone numbers (or e-mail addresses) of various state and federal agencies' offices in New York. Since new sites are appearing frequently, you might also want to search for other New York government Web sites by using one of the popular Internet search engines, such as Google, Excite! or Yahoo. To start your Internet search for New York government information, you may want to begin with the following Internet sites:
New York State Government Information Locator Service: New York State Department of Labor home page: New York State Department of Taxation and Finance home page: New York Department of State (corporate, LLC, LLP, and limited partnership filings): New York City Department of Small Business Services: New York City Department of Finance (city tax forms and information): New Hire Reporting: (d) Financing Sources. For information and help on locating financing for your small business, contact the nearest U.S. Small Business Administration office in New York, or contact the following state agency, which provides financing to small and medium-sized businesses having difficulty securing financing: Empire State Certified Development Corporation The New York City District Office of the U.S. Small Business Administration is located at: U.S. Small Business Administration |
Copyright © 2008 Michael D. Jenkins
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