New York LLC Taxes
New York’s massive, diverse population — and the fact it’s home to one of the largest cities in the country — make it a popular spot for new businesses. Yet, as more business owners choose to start their ventures in the state, many may find it challenging to understand the business taxes involved.
Regardless of the size of your business, if you operate a limited liability company (LLC) in New York, you will need to ensure you stay up to date on your finances and pay federal, state, and local taxes. Our guide will help you understand which taxes you will need to pay for your New York LLC.
Recommended: Schedule a free consultation with an accountant to stay on top of your taxes.
New York LLC Taxes Owed
LLCs benefit from pass-through taxation, meaning the business’s profits pass through to the members’ individual tax returns.
As a result, your LLC itself does not pay taxes to the federal government or to the State of New York. Instead, LLC owners must pay taxes on their portion of the income made from the LLC. In short, the members pay taxes, not the LLC itself.
Pass-through taxation protects LLC owners from double taxation, or paying both income and employment taxes for their business and on their personal tax returns.
In New York, LLC owners can expect to pay the following taxes:
Federal Taxes
Regardless of where your business is located, if you have an LLC within the United States, you will have to pay federal income taxes and federal self-employment taxes. These taxes are reported on your Form 1040.
Federal Self-Employment Taxes
It doesn’t matter if your LLC is a single-member LLC or a multi-member LLC; all LLC members must pay self-employment taxes on their share of the LLC’s profits. The self-employment tax rate is 15.3%.
Federal Income Taxes
Your federal income taxes will depend on your tax bracket, and the cutoffs for individual tax brackets, as well as the percent owed, will change each year.
New York State Taxes
Each state has its own laws dictating how individuals and businesses are taxed.
New York Income Taxes
New York’s state income tax ranges from 4% to 10.9% for individuals, depending on their income. This is in line with many other states in the US. LLC owners and members must pay personal income tax based on earnings and expenses from their LLC, especially if it’s treated as a sole proprietorship.
In New York, LLCs are not required to pay federal or state income tax. However, LLCs that gain or lose income must pay an annual filing fee, which, depending on their gross income, can range from $25 to $4,500. These filing fees can be submitted online or by mail using Form IT-204-LL on or before Tax Day. No extensions for filing are available.
Visit the New York Department of Taxation and Finance website to learn more about annual filing fees.
If not enough taxes are being withheld, LLCs may be required to make estimated tax payments to the state on behalf of members.
New York Sales and Use Tax
According to the New York Department of Taxation and Finance, sales tax applies to retail sales of certain goods and services, while use tax applies to goods and services purchased outside the state but used within New York. After collecting these taxes, vendors must remit or pay them back to the state.
New York has a state sales tax rate of 4%. This rate is then combined with local city or county tax rates.
For example, New York City has an additional 4.5% sales tax on certain goods and services and a 0.375% Metropolitan Commuter Transport District tax. This means sales tax in New York City is 8.875%.
To find your local sales tax rates, visit the New York Department of Taxation and Finance website.
Taxes can be paid online, and your filing frequency is based on how much you collect in annual taxes.
Register as a Sales and Use Tax Dealer in New York
If your business sells taxable goods or services, you must register as a sales and use tax dealer with the New York Department of Taxation and Finance.
Visit the New York Department of Taxation and Finance website for more information.
New York Corporate Franchise Tax
LLCs in New York that elect to be taxed as a corporation may have to pay an additional corporation tax in order to continue to operate. This fee is calculated based on your business’s income, capital, and minimum rate.
To learn more, see the corporation tax page of the New York Department of Taxation and Finance website.
Withholding and Employer Tax
If you have employees in New York, you must withhold personal income tax from employees who are New York residents working out of the state, non-residents working within the state, New York City residents (even if the work is performed outside of the city), and Yonkers residents (even if the work is performed outside of the city).
LLCs in New York with employees may also be required to make unemployment insurance contributions and pay the metropolitan commuter transportation mobility tax.
To learn more, visit New York State’s withholding tax guide.
Additional State Taxes
New York’s Department of Taxation and Finance oversees the reporting and collection of various taxes that businesses may have to pay depending on their industry and location.
These are a few industries that may require business owners in New York to pay additional taxes:
- Cigarettes and tobacco
- Cannabis
- Trucking
- Real estate sales/transfer
To read the full list of other taxes, check out New York’s Department of Taxation and Finance website.
New York Local Taxes
The local laws and ordinances in New York City may differ greatly from those in Buffalo. Regardless of where you live in New York, we recommend you check with your local jurisdiction and ensure that your business obtains the proper local permits and follows any local regulations that may impact your business’s operation.
To look up your local sales tax rates, visit the New York Department of Taxation and Finance website.
New York City Taxes
As mentioned above, New York City has a 4.5% sales tax on certain goods and services and a 0.375% Metropolitan Commuter Transport District tax, in addition to New York State’s sales tax. This means sales tax in New York City is 8.875%.
New York City-based LLCs, or LLCs who are not based in New York City but make $1 million or more from New York City sources in a year, must also pay a Business Corporation Tax to the City. Depending on the type of business and its income, this tax is either paid at a rate ranging from 4.425%–8.85% or as a fixed dollar minimum amount ranging from $25–$200,000.
Business Corporation Taxes are due by April 15 each year and can be submitted online or by mail with Form NYC-2. Extensions are available with valid requests. Businesses that do not pay this tax will be dissolved.
To learn more, check out the New York City Department of Finance website.
New York LLC Compliance
You must be sure to obey New York state and local laws to keep your business compliant and in good standing. While New York LLCs technically do not file taxes with the state, New York businesses must still file a biennial report every two years with the state.
New York LLC Biennial Statement
All New York LLCs must file a report through the New York Department of State every two years, known as a biennial report or biennial statement. These reports ensure that the state has updated information on your business and your business’s finances. Even if nothing has changed since you filed your last statement, you are still required to file a report for your LLC every two years.
Biennial reports are due every two years by the end of your LLC’s anniversary month, meaning if you initially registered your LLC on June 15, 2022, your next biennial statement would be due by June 30, 2024. Late filings will result in your LLC losing good standing with the state. Failure to file will result in your business being dissolved.
These reports can be filed online with New York’s Department of State for $9 by yourself or a registered agent.
For more information, check out our New York LLC Biennial Statement guide.
LLC taxes are complex. While our guide can provide you with important information, we recommend you schedule a free consultation with an accountant to ensure that you handle your business taxes correctly.