How to Start an S Corp in New York

Is a New York S Corporation the Best Strategy for Your Business?

For help with choosing the right structure for your business, visit ourChoosing a Business Structureguide.

S Corporation Requirements and Restrictions

The following are IRS S corprequirementsand restrictions:

• Limited tooneclass of stock
• Must be domestic LLCs or corporations
• 100 shareholders
• Shareholders must:
• All agree to electing S corp status
• BeU.S. citizensorpermanent resident aliens
• Maynotbe partnerships, corporations or non-resident alien shareholders
• Filebiennial reporton the month of incorporation and every other year with the Department of State’s Division of Corporations (cost: $9, failure to file may result in loss of good standing status in the state of New York and even dissolution). You may fileonline.

Are S Corp Tax Advantages Right for You?

An S corporation is a tax designation that can be elected by a limited liability company (LLC) or corporation. With an S corp, business owners are considered employees of the company and must receive areasonable salary. Since all S corps technically have employees, the s corp must run payroll.

In order to benefit from a New York S corp tax designation, your business needs to make enough money to offset payroll expenses. Furthermore, S corps are beneficial for business owners who take large分布sin addition to their salary.

To learn more about the tax advantages of an S corp, read ourLLC vs. S corpguide and take a look at ourS Corp tax calculator.

Steps for Forming an LLC and Electing S Corp Status in New York

Starting a New York LLC and electing S corp tax status is easy. You can use our guides to start an LLC with the S corp status yourself, or you can hire a service provider likeNorthwestto guide you through this process.

There are six basic steps to start an LLC and elect S corp status:

Step 1:Name Your LLC

Step 2:Choose a Registered Agent

Step 3:File the Articles of Organization

Step 4:Complete Publication Requirement

步骤5:Create an Operating Agreement

Step 6:Get an EIN, File Form 2553 to Elect S Corp Tax Status, and File Form CT-6

Step 1: Name Your LLC

Choosing a company name is the first and most important step in starting your LLC in New York.

Be sure to choose a name that complies with New York naming requirements and is easily searchable by potential clients.

1. Follow the naming guidelines for a New York LLC:

• Your namemustinclude the phrase “limited liability company” or one of its abbreviations (LLCorL.L.C.).
• Your namecannotinclude words that could confuse your LLC with agovernment agency(FBI, Treasury, State Department, etc.).
• You must receive approval and/or meet certain conditions to include certainrestricted or prohibited words.
• Your namemust be distinguishablefrom any existing business in the state. This includes New York reserved names.

You can also read theNew York state statuteabout LLC naming guidelines for more information.

2. Is the name available in New York?Make sure the name you want is available by searching the business entity database on theNew York Department of Statewebsite.

3. Is the URL available?We recommend checking to see if your business name is available as a网络域. Even if you don't plan to create a business website today, you may want to buy the URL in order to prevent others from acquiring it.

New York S Corp Biennial Report

New York requires business corporations and LLCs tofile a biennial statement— also known as a biennial report — with the New York Department of State’s Division of Corporations. While your business may be taxed as an S corp, this state still considers it an LLC. That means your business must file a biennial report.

申请截止日期是每两年s on the anniversary of when you formed your S corp. While there’s no late fee, your business will lose its “good standing” status with the state if you fail to file on time. That could result in the dissolution of your business.

Visit ourNew York Biennial Statementguide for a step-by-step overview of the filing process.

New York S Corp Taxes

S corporations benefit from pass-through taxation, meaning the business’s profits pass-through to S corp owners’ individual tax returns. S corp owners make money from theirreasonable salaryand分布s, and New York S corp owners can expect to pay the following taxes:

Federal Self-Employment Taxes

Self-employment taxes cover social security and medicare. The self-employment tax rate is 15.3%, and money you take as salary will be subjected to the self-employment tax. However, distributions are not subjected to this tax.

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. Both your salary and distributions are subjected to federal income tax.

New York Income Taxes

The state of New York has structured income tax brackets that range from 4% to 10.9%. In most states, S corps benefit from “pass-through” taxation. Pass-through taxation allows a business’s income to pass through to its owners, enabling them to pay personal income tax on those earnings on their individual tax returns.

Unlike most other states, New York requires S corps to pay the corporation franchise tax using the gross receipts method. This results in lower tax rates than for a traditional corporation. In addition, New York City and Yonkers residents have their own income tax rates. You can learn more at New York State’sDepartment of Taxation and Financewebsite.

New York Sales and Use Tax

The state of New York applies a sales tax to retail sales of certain tangible property and services. The state’s use tax applies if you purchase property and services to use within New York State. The sales tax rate is a total of 8.875%, which includes a city sales tax of 4.5%, a use tax of 4%, and a Metropolitan Commuter Transportation District surcharge of 0.375%.

Additional State Taxes

Additional taxes may apply to your New York business. New York State’s Department of Taxation and Finance provides details on these state-specific taxes. Some examples include:

• Alcoholic Beverages Tax
• Cigarette and Tobacco Products Tax
• Petroleum Business Tax
• Metropolitan Commuter Transportation Mobility Tax
• Gasoline and Similar Motor Fuel Tax

Visit New York State’sDepartment of Taxation and Financewebsite for more information.

New York Local Taxes

Businesses across New York State can, for the most part, expect the same taxes — except those operating in New York City and Yonkers. Check with your local municipality to make sure you understand any tax obligations that apply to your business.