New York is an important state for business in the United States. Many of the biggest corporations have locations in New York City as well. It’s an exciting place to be, but that doesn’t mean it’s easy for businesses. 

Business owners looking to establish a small business in New York will need to be aware of all the state taxes and regulations that come with setting up shop in New York. 

The federal income tax will be the same no matter where you go in the United States, but each state has its own tax policies as well. In New York, those policies will depend a lot on what kind of entity your business is.

Corporate Taxes

Many big corporations find ways to artificially keep their tax rate low, so New York’s state requires corporations to calculate their franchise tax four different ways and pay the highest of the four. This is intended to fairly assess your tax base and stop companies from exploiting loopholes, but it also makes the process more complicated and confusing for business owners. Here are the four options:

• Net income taxed at 7.1% (or 6.5%, depending on total net income)
• Business capital taxed at 0.15%
• Minimum taxable income taxed at 1.5%
• Fixed dollar minimum tax with flat rates on gross income. 

Multistate Taxes

If you work and earn wages in multiple states, you may need to file a tax return with multiple states as well, assuming that each of those states collects an income tax. You should pay taxes in each state according to the income you earned in that state. 

Whereas federal and state taxes effectively tax the same income, the same income cannot be taxed by multiple states at once. 

The New York state W-2 does not clearly separate wages and tax withholding by state, which means you will need to calculate yourself on your tax returns to figure out what you owe to each state..