How to start a business in New York [Updated 2024]

With its large pool of diverse, well-educated talent, tax benefits and incentives, and the nation’s largest city, the state of New York is an attractive place to start a small business. Just ask any of the 2.3 million small business owners currently operating in the Empire State. 

Before you can get your new business up and running, you’ll need a solid business plan, thorough market research, and a way to get the necessary capital together. As these pieces fall into place and opening day nears, you’ll also need to select the right business structure, comply with the state’s registration requirements, and navigate New York’s complex tax laws. 

This step-by-step guide will prepare you to successfully open a new business in the state of New York. We’ll review everything from choosing a business name to tax filing requirements to getting a federal tax ID. Let’s get started.

1. Name your business

Your big business idea needs a great name to go along with it. But before you settle on something, it’s crucial to make sure your business name complies with New York State regulations. Here’s what you need to do:

• Search the New York Department of State database to make sure your chosen business name is available.
• Ensure it meets New York’s naming criteria. Among other things, your business name must be unique, and it can’t use certain restricted terms, like “academy,” “insurance,” or “urban development.”
• Search the website of the US Patent and Trademark Office to check that your chosen business name hasn’t already been trademarked. 
• Register your business name when you file your Articles of Organization (for an LLC) or other paperwork with the New York Secretary of State. You can also reserve your business name for a temporary period by filing this form with the Department of State and paying any necessary filing fees.

While registering your business name, consider registering social media accounts and a web domain name to prevent anyone else from using them.

In some circumstances—like if you’re planning to do business using a name other than the legal name of your LLC or limited partnership or if your sole proprietorship is operated under a business name that doesn’t contain your name—you’ll need to file a Certificate of Assumed Name Form. An “assumed name” is New York’s term for a fictitious name, trade name, or “doing business as” (DBA) name.

2. Explore your funding options

Your business plan needs capital before it can become a reality. And there are a lot of ways to get seed money in the Digital Age: You can bootstrap the cost, engage in crowdfunding, or secure private investors (depending on the type of business structure you choose). But before you settle on any of these, make sure you also look at New York’s business grants and small business loans. The Empire State offers a number of incentives to support economic growth. You can learn more on the Empire State Development website, but here’s a breakdown:

• New York Ventures Direct Fund. ​This fund has $100 million of state money earmarked for entrepreneurs looking to set up startups that use technology to overcome challenges. At the time of writing, it’s still actively being deployed.
• Long Island Investment Fund. Aimed specifically at cultivating the economic development of Long Island, this fund is for industrial, manufacturing, warehousing, and distribution businesses. 
• Federal loan programs. Don’t forget to look at the many resources of the federal Small Business Administration (SBA). This agency offers starter loans, disaster relief, access to business coaching, and more.

3. Decide on your business structure 

Startups, local mom-and-pop shops, and multinational conglomerates all have one thing in common: When they were working on a business plan, the owners had to choose the right business structure. There are six business entity types you can set up in the state of New York. Below, we’ll go over the nuts and bolts of business formation.

4. Register your business in New York

Setting up a sole proprietorship? Sole proprietors don’t need to register with New York’s Department of State to get up and running and be in compliance. Similarly, general partnerships don’t need more than an operating agreement unless they’re using an assumed (DBA) name. However, all other business types need to register and pay a filing fee. Below, we’ll go over the registration forms and costs for each type of business.

5. Decide on a registered agent

The state of New York requires a registered agent to be assigned to every LLC, LLP, corporation, and limited partnership. You have the option of appointing an individual—either yourself or one of your company’s owners—or hiring a professional service. A registered agent makes it possible for state and local governments (and the public) to get ahold of your business. They also accept tax and legal documents on your behalf.

As long as you’re a New York state resident, you can be your own registered agent. Otherwise, a professional will cost you between $100 and $300 per year.

6. Apply for an Employer Identification Number

Before you can hire employees and pay them, you need to get a federal Employer Identification Number (EIN) from the IRS. This is true in New York and all 49 other states. An EIN is a federal tax ID that’s a unique nine-digit identifier for your company—similar to a Social Security number. You’ll use it if you apply for business loans, when you pay your taxes and employees, and on your business bank account. All you need to do to get one is submit Form SS-4 to the IRS. 

7. Get up to speed with Business Tax Credits

The state of New York is known for its high taxes and strict regulations, which can make tax filing a complex and daunting endeavor. To make up for that, the Empire State offers a variety of tax credits as incentives for small businesses to hire locally, register with the New York Department of State as opposed to another entity, and generally contribute to New York’s economy.

Reducing your tax burden will help you afford the high cost of running a business, especially if you’re located in New York City. You can learn more about tax credits on the Department of Taxation and Finance’s website. You’ll find programs like:

• The Welfare to Work Tax Credit, which encourages small businesses to hire welfare recipients. For each qualifying individual you hire and keep as an employee for a minimum of 400 hours, you’ll get a tax credit of $8,500 over two years. 
• The Workers with Disabilities Employment Tax Credit, which incentivizes the hiring of disabled employees. When you use it with the federal Work Opportunity Tax Credit, this state initiative gives small business owners a state tax credit of over $2,000 when they hire disabled workers who have received vocational rehabilitation services.

8. Stay on top of filing requirements and taxes

Want to stay in good standing with New York State? You need to regularly file the right tax documents with the Department of Taxation and Finance. The filing requirements differ based on your business type. You can learn more about filing your LLC, partnership, or corporate taxes on the state website. Below, we’ll briefly touch on some crucial things to know:

• Sole proprietorship: If you’re a sole proprietor, you and your business aren’t legally considered separate entities, so you should file your business income on your individual income tax return. 
• LLC: New York LLCs automatically receive pass-through treatment when it comes to taxes. In other words, your LLC won’t be taxed; you report your share of the revenue on your personal income tax return. 
• Partnerships: Partnerships are taxed the same way as LLCs in New York.

9. Find a payroll solution

If you’re planning on hiring employees or contractors to work at your small business, you’ll have to make sure you comply with New York’s strict employment laws. The state of New York is known for being progressive when it comes to worker protections, and if you’re operating in certain municipalities, like NYC, you need to be aware of the city-specific laws as well. 

Among other considerations, you need to make sure that when you hire employees or contractors, you’re classifying them correctly. This is essential to avoid incurring costly fines and penalties. Additionally, remember minimum wage rates differ depending on where you are. The New York Department of Labor set the minimum wage at $16.00 per hour for employers in NYC, Westchester County, and Long Island; employers throughout the rest of the state must pay $15.00 per hour. 

Keeping track of all of that can be tough. You’ll need payroll software to ensure your team members are paid accurately and on time. Rippling makes running payroll simple. This easy-to-use system automates tedious manual tasks for you and helps keep you compliant with the differing minimum wage laws no matter where your workers live. With Rippling Time & Attendance, you can automatically track employees’ hours and receive notifications when someone is reaching their overtime threshold. Approved hours sync seamlessly to payroll. All you have to do for Rippling to calculate net pay and taxes is click “submit” once—and it’s done in seconds.

If you’re planning on extending your talent pool and hiring globally, Rippling can take care of that for you, too. With Rippling, you can:

• Manage all of your people, systems, and data around the world in one place.
• Pay your team in a single pay run, even if they’re spread across different tax jurisdictions and need to be paid in different currencies. 
• Include hourly and salaried employees, as well as contractors.

10. Support and scale your growing business with Rippling

The best way to support your growing business—right from the start—is with an HRIS (Human Resource Information System): software that streamlines HR tasks like running payroll, administering benefits, recruiting, onboarding and offboarding employees, and much more. 

And if you start using an HRIS right away, it’ll be that much easier to scale. This is especially true if you have plans to grow your business globally. Once you’re ready to expand your team, Rippling has everything you need to run your global workforce—in a single system. With Rippling, you can perform the following tasks effortlessly:

• Hire, pay, and manage your employees and independent contractors no matter where in the world they call home. 
• Bring all benefits—from health insurance and 401(k) plans to commuter benefits and more—into one system. Rippling also automates the busy work, like enrolling new hires, administering COBRA, and updating deductions.
• Keep all your recruiting data up to date—from open headcount to new hires without lifting a finger—and automate every step of the hiring lifecycle. 
• Maintain local, state, and federal compliance and avoid infractions—with a plan of action for each one.
• Have a single source of truth for HR analytics, policies, and more.

FAQs about setting up a business in New York

Do I need a business license in New York?

While the Empire State doesn’t require a general business license, you may need one to operate in certain municipalities or in specific industries. You can check the varying licensing requirements for your business type and location around New York State by county using the state’s website.

Do I need a business bank account when launching a business in New York?

The short answer is it depends on the type of business you’re running. If you’re a sole proprietor, you don’t need a business bank account, but if you’re the owner of an LLC, you’re legally required to keep business funds in a bank account that’s separate from your personal one. In general, the IRS recommends all business owners open a separate business bank account and a business credit card. Not only will you need a business account to process payroll if you have employees, but keeping your finances separate will make it easier to keep track of everything.

Do I need to get business insurance?

In the state of New York, business owners who hire employees are legally required to carry workers’ compensation insurance and provide disability benefits to their workers.

What are New York’s state payroll taxes?

There are four state payroll taxes in New York:

• Unemployment Insurance (UI) — employer contributions
• Re-employment  — employer contributions
• State Disability Insurance (SDI) — withheld from employee wages
• Personal Income Tax (PIT) — withheld from employee wages

Rippling and its affiliates do not provide tax, accounting, or legal advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for tax, legal, or accounting advice. You should consult your own tax, legal, and accounting advisors before engaging in any related activities or transactions.