Starting a business is a dream for many and a reality for those willing to put in the work to launch one. You’ll need to pay close attention to the legal requirements of a business, and formally structure one before you can start making money, but if you know what you’re doing, this can be a straightforward process. New York is experiencing an unusually fast rate of economic growth. Its annualized economic growth rate is a hearty 4.0 percent, which is higher than the national average of 3.4 percent. Compared to its growth rate of 0.6 percent in 2016, that’s a massive improvement. New York has many diverse areas for entrepreneurs to consider, from big cities like New York City and Buffalo to sprawling rural landscapes and small towns.
Steps to Obtaining a Tax ID (EIN) Number and Registering Your Business in New York
- Form a Business in New York
- Federal Tax ID (EIN) Number Obtainment
- New York State Tax ID Number
- Localized Licenses and Permits in New York
To get started, you want to make an informed decision on how to structure your business. The main options are: sole proprietorships, partnerships, limited liability companies (LLCs), and corporations. There are several factors you can use to determine which business structure; consider the potential liabilities of each company. In sole proprietorships and partnerships, you’ll have zero liability protection; any debts you take on will be taken on personally, and you’ll be vulnerable to any legal action taken against the business. LLCs provide you with some protection, and corporations provide you with thorough protection. Both these corporate structures are treated as separate legal entities, which can take on debts and legal responsibilities of their own.
You should also consider taxes. Sole proprietorships and partnerships have straightforward taxation models. You’ll simply pay taxes as an individual on any money you make in the business. LLCs are considered pass-through entities. They don’t pay taxes on revenue they make, but you’ll need to pay taxes on any money you make as an individual from the business. If your LLC has a gain, loss, or deduction in New York, it will need to file an annual report.
Corporate income taxes in New York are somewhat complicated. You’ll be taxed on the greatest of three values; your corporation’s business income base tax, its business capital base tax, or a fixed dollar minimum (FDM) tax. The business income base rate is 6.5 percent by default, but you may qualify for 4.875 percent if you’re an emerging technology company or 0 percent if you’re a manufacturer. No matter what, you’ll pay federal corporate taxes on eligible income and individual taxes on money you make from the business, resulting in double taxation. Corporations also have a unique advantage; they can issue public shares to raise capital for the business. This makes them significantly more complicated than any other business type, but they’re ideal if you’re aiming to expand your business nationally.
Your federal tax ID number is a 9-digit, unique number assigned to your business when you register it with the federal government. Sometimes called an employer identification number, or EIN, this is a requirement for many (but not all) New York businesses. You’ll need this number if you’re going to hire employees, or if your business will have multiple members. You’ll also need this number to apply for financial products, like business bank accounts or loans, or for licenses and permits.
The most convenient way to get your federal tax ID number is to make use of our federal tax ID number obtainment services. All you need to do is answer a few questions about your business using our online form. From there, you’ll receive your federal tax ID number via email in an hour or less.
Most New York businesses will also need to obtain a New York state tax ID number. This is a unique identifier, much like a federal tax ID number, but it applies on the state level. You’ll need this number if you’re going to hire employees in the state of New York, if you’re selling taxable goods and services in the state, or if you’ll owe excise taxes on regulated goods like alcohol or tobacco.
You’ll need to get your federal tax ID number before you get your New York state tax ID number. Once you have that, you can use our New York state tax ID number obtainment services to get your state tax ID much faster and more conveniently. Just answer a few questions about your business, and you’ll get your New York state tax ID in 4 to 6 weeks.
Many New York businesses will need at least one license, permit, or certification to operate legally. However, this may not be a straightforward process. There isn’t a catch-all business license, nor is there a single department in charge of licensing. Instead, various departments at both the state and local level dictate standards for licensing, and each industry will have its own standards for what types of businesses require this documentation. It’s usually best to speak with someone at your local Chamber of Commerce, so you can figure out exactly which licenses you need. Just make sure you have your federal tax ID number so you can complete your applications.
New York is home to a diversity of entrepreneurs and businesses, and small businesses in particular. There are 2.1 million small businesses in the state of New York, which account for 99.8 percent of all New York businesses. Together, these businesses employ 4 million New York residents, or 50.2 percent of the working population. They play a major role in the development of New York’s economy, adding 113,528 net new jobs in 2018 alone. You can launch your business and start generating revenue faster when you get your tax IDs faster. Use our federal tax ID number and New York state tax ID number obtainment services to get your tax ID numbers in record time.