New York small businesses want to be in the Empire State, but in many cases the taxes on small businesses can be a drawback that small business owners must consider.
New York sole proprietorships do not pay any corporation franchise taxes or filing fees. The sole proprietor pays the state and federal personal income tax individually.
New York partnerships are considered “pass-through” businesses where the incomes passes to the individuals who own them. New York partnerships do not pay federal or state income taxes, but are subject to state filing fees, which are calculated based on gross income. The effective maximum tax in New York is $4,500.
New York limited liability companies can be classified as a partnership, a corporation or as a “disregarded” entity. New York limited liability companies that classify as a corporation pay the corporation franchise tax under the same rules as traditional corporations. New York limited liability companies that classify as a partnership follow the same filing fee scheme as New York partnerships. The effective maximum tax in New York is $4,500.
New York S corporations are traditional corporations which allow income to pass through the company to its owner, so long as certain conditions are met. Despite this, New York still requires New York S Corporations to pay a corporation franchise taxes. The effective maximum tax in New York is $4,500
New York C corporations have a multitude of options. New York C corporations can choose a simple calculation that usually results in paying approximately 7% of its net income. New York small businesses with net income less than $290,000 usually get a slightly discounted rate. New York C corporations can also calculate taxable income based on its business and investment capital less liabilities, or can choose to pay based upon gross receipts. Consult with a qualified tax attorney to decide which method is best for your New York C corporation’s needs.
No matter which business model or method your New York small business has chosen, you should always consult an experienced tax attorney to determine the best method for your needs.
*Gene Berardelli may be contacted at: GeneBerardelli@ipglegal.com
Gene is a New York street-smart attorney with an extreme passion for success. Gene specializes in litigation, arbitration and general corporate law for New York-based and international clients. He, also, is the host of a popular New York talk radio program.
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