This guide will walk you through the steps to legally establish your business in New York state, from choosing a business structure to obtaining necessary permits and licenses.
1. Register Your Business with the State Tax Agency
To comply with state tax regulations, your business must be registered with the New York State Tax Agency before hiring employees. This registration ensures proper handling of both business and employee tax obligations.
For detailed information, visit the official New York State Business Express website.
Let’s Register with the NY Tax Agency
You should get your account numbers and unemployment rate(s) 7–10 business days after registering online.
- Click here for the New York Department of Taxation and Finance – income tax withholding
- Click here for the New York Department of Labor – unemployment tax
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Click here for the New York PrompTax – required to pay and file your taxes
- You'll need to register for PrompTax if you withheld $100,000 or more in taxes during the previous year. The New York Department of Taxation and Finance will notify you if electronic payment through PrompTax is required.
Local taxes are paid to the state of New York.
- New York City: Local taxes are based on where employees live.
- Yonkers: Local taxes are based on where employees live and work.
Metropolitan Commuter Transportation Mobility Tax (MCTMT)
The MCTMT is a tax imposed on certain employers, self-employed individuals, and partnerships conducting business within the Metropolitan Commuter Transportation District (MCTD) in New York State. The MCTMT is used to support and fund the public transportation system in the region, including the Metropolitan Transportation Authority (MTA).
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Applicable Region: The tax applies to businesses operating in the MCTD, which includes the following counties:
- New York City (all five boroughs: Manhattan, Bronx, Brooklyn, Queens, and Staten Island)
- Nassau County
- Suffolk County
- Rockland County
- Westchester County
- Orange County
- Dutchess County
- Putnam County
Insurance requirements in New York—disability, family leave, and workers' comp
- State Disability Insurance (SDI)
New York state law requires employers to provide disability insurance coverage for employees who become injured or ill outside of work. This coverage can be obtained through theNew York State Insurance Fund (NYSIF).
b. State Family Leave Insurance (SFLI)
Employers in New York must provide Paid Family Leave Insurance (SFLI) coverage through their SDI carrier, allowing employees to take paid time off for qualifying family matters. To set this up, reach out to your SDI insurance provider about adding Paid Family Leave coverage to your policy.
c. Workers’ Compensation
New York State requires Workers' Compensation insurance for businesses with one or more employees. Workers' compensation coverage can be obtained through two main channels:
- Private Insurance Carriers: Most employers choose this option, working with authorized insurers in New York. Insurance agents can help find suitable policies.
- New York State Insurance Fund (NYSIF): This public option provides an alternative source for workers' compensation coverage. Applications can be submitted through their website.
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