A Comprehensive Tax Guide for NYC’s Businesses
Tax season can be intimidating, but with the right tax guide, it doesn’t have to be. Paying your taxes as a small business means looking into, understanding, and appropriately paying taxes to the federal government, state government, and local government. As one of the central locations for businesses, both small and large globally, New York City’s tax requirements are particularly important to understand.
If you’re preparing to file your taxes as a small business, consider reading on for some tips and important reminders about paying taxes in NYC.
Corporate Franchise Tax in NYC
Any corporation, no matter the size, must pay to the city a corporation franchise tax. When calculating the taxes for this part of your business, there are several different calculation methods you must use. These calculations are based on net income, business/investment capital, minimum taxable income, and fixed dollar amount on gross receipts. These can be complicated, so it’s important to consult a CPA firm, such as Tobin & Collins, to get the job done right.
Different Business Types
New York City will tax your business based on how it’s structured. S Corporations, in particular, must pay the aforementioned corporate franchise tax. Limited Liability Companies (LLCs) that are classified as corporations must pay the corporate franchise tax, where other regions see the business income taxed based on the owner’s personal taxes (after a filing fee). Partnerships similarly see taxes paid by owners’ personal taxes after applying a filing fee. In contrast, sole proprietorships do not pay corporate franchise taxes nor filing fees—they just pay personal income tax based on the income to the owner.
NYC Income Tax
First and foremost, income tax in New York City is critical to consider for all employees. The city income tax is in addition to the New York State income tax, with the exact rate charged varying each year and according to your respective income level. One important note is that New York City income tax does not allow for any deductions, though you should consult with a tax professional as some tax credits that can offset this income tax. As a small business, you’ll need to recognize and understand these city-specific income taxes for your employees.
NYC Property Tax
If your business owns property in New York City, you will receive a financial assessment of the property early in the year, which will feed into what property taxes you’ll owe for the year. As with the income tax, the NYC property tax will vary each year based on local government determinations, and these are actually due semi-annually or quarterly, rather than in one lump sum during tax season.
As with all matters of taxes, each year, the regulations are subject to change. It’s critical to consult a registered and certified tax expert to make sure you’re filing in a compliant manner that will keep your business in good standing. Contact Tobin & Collins today!