Opening A Business In New York – Complicated Regulations High Taxes Competitive Job Market Cost of Living for New York City Small Business Resources in New York Industries to Watch and Avoid Frequently Asked Questions
According to the US Attorney’s Office of the Small Business Administration (SBA), there are 2.3 million small businesses in New York State, employing a total of 4.1 million people. These small businesses account for 99.8% of all businesses in the state and employ nearly half of the state’s workforce.
Opening A Business In New York
As of April 2022, New York’s unemployment rate was about 4.5%, slightly higher than the national average but still healthy. However, New York City’s unemployment rate was 6.4 percent, reflecting the city’s struggle to recover from COVID-19. The state lost 1.9 million private-sector jobs in April and May 2020, with about half of them regained in November. Employment in the state will not reach pre-Covid-19 levels until 2025.
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In the year New York’s GDP in 2021 was $1.705 trillion, ranking third nationally. The state’s gross domestic product is expected to grow by 5 percent in 2021, though much of that is likely due to recovery and recovery from the pandemic. The top six industries in New York are financial services, health care, business and professional services, retail, manufacturing, and educational services.
How is this economic landscape affecting small business wealth in the state? And what unique challenges do New York small business owners face? Business News Daily spoke to some of the state’s entrepreneurs to find out.
New York State has extensive regulations that tend to be progressive and designed to support workers. Although not negative, more regulation means more preparation on the part of companies, which often includes more legal costs.
“[New York regulations] are very challenging and require great legal counsel,” said Greg Peters, CEO and founder of BetterHealthcare (formerly BetterPT). “We have invested resources very early on to ensure our vision is achievable and scalable. In this ever-changing environment, we are constantly reassessing the regulatory landscape.”
How To Start A Business In New York State
Some business owners have found that working with government agencies can pave the way to compliance and reduce regulatory burdens. When operating in New York, it is imperative to build strong relationships with the relevant regulators that affect your business.
“In general, the regulatory landscape is visible and reasonable to follow. For example, we’ve worked with the Department of Transportation for years, and it’s never felt like our lines of communication were overly intrusive or slow,” said Sharon Ben-Harosh, founder and CEO of FlatRate Moving.
Tip: If you want to run a business in New York, be prepared to spend significant resources on regulatory compliance.
A key challenge cited by several entrepreneurs is the relatively high taxes in New York State. While taxes are a necessary expense of doing business anywhere, New York State has a tax code that often indicates the most relevant calculation for businesses. It also involves multiple parameters that a company must use to calculate its tax bill, making the process confusing at times.
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“New York’s corporate tax laws are onerous, making it difficult for an entrepreneur to run a business,” said Warren H. Cohn, CEO of HeraldPR and Emerald Digital. “Taxes for small and medium-sized businesses are very high, which often drives small businesses out of the city.”
As a result, Kohn said he would like to expand to southern areas like New Orleans or Miami, where he thinks it’s easier and cheaper for companies to do business.
New York imposes both a corporate franchise tax, which is levied on C corps and S corps, and LLC filing fees. LLCs are known as “pass-through corporations,” which means that all income from the LLC “passes through” to the owner and is included on the personal income tax return.
The basic corporate income tax in New York State is 6.5%, although the state offers differential tax rates for qualified manufacturers (0.0%) and emerging technology companies (4.875%) to encourage them to locate in the state. In addition, corporations may be subject to a capital base tax or a fixed dollar minimum tax. State laws typically require companies to pay the maximum amount available.
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“New York is known for having a very complicated and expensive corporate tax code,” Peters said.
Summary: Although high taxes have long been a concern in New York, some manufacturing and emerging technology companies may pay lower tax rates.
New York is a populous East Coast state known for its cities and economic activity. As a result, there are many companies that are hungry for talented employees. The unemployment rate is not very low, but the statewide rate is significantly lower than New York City, which has not fully recovered from the pandemic’s damage to the tourism and commercial real estate industries.
Businesses nationwide are facing competition for the best job applicants, and many believe New York City is well on its way to fully recovering from the damage the pandemic has done to the economy, creating a similarly competitive environment there. To overcome this challenge, small businesses are developing more attractive compensation packages and other employee benefits to better attract, hire and retain top talent.
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“Because of (the competitive labor market), we invest additional resources in recruiting and benefits to ensure we have enough employees year-round,” Ben-Harosh said.
Fortunately, New York is home to many top colleges and a diverse workforce, which means that when skilled workers are in high demand, there is a large pool of workers to hire.
“In addition to students, there’s a lot of talent immigrating here from other countries,” said Matt Lebris, CEO of 1B Branding.
A major advantage of doing business in upstate New York is its proximity to New York City, especially for companies in the southern region. The economic activity generated by global trade capital generally spills over into neighboring areas, allowing businesses to reach more customers and provide services that support urban businesses.
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“Location-wise, there’s a huge opportunity in the Westchester area as more people move out of New York City,” Ben Harosh said. “This is especially true for people with higher incomes who need quality mobility services.”
Did you know?: New York businesses can connect with international markets through the New York City International Center. New York companies They exported goods worth 62.4 billion dollars in 2019. Of those exporters, 93.3 percent were small businesses, according to the SBA’s Office of Advocacy.
In general, the cost of living in New York State is high, which means workers need high compensation to live. It means that the cost of doing business is higher because the cost of goods and services is much higher than elsewhere. Nowhere is the cost of living higher than in New York City. However, regionally, New York is more expensive than the national average for food, housing, transportation, and health care.
The state is in the process of gradually increasing the minimum wage. The minimum wage in New York City is $15 an hour. Nassau, Suffolk and Westchester counties have the same minimum wage rate of $14 as of December 31, 2022. In the rest of the state, the minimum wage is currently $12.50 and will increase to $13.20 on December 31, 2022. Additionally, all fast food workers in the state are eligible for the $15 minimum wage.
Doing Business In New York
Although Silicon Valley may always be America’s biggest tech hub, in recent years New York has established itself in both New York City and cities like Rochester and Buffalo. Entrepreneurs who want to start a technology company in the state can find fertile ground. New York has room to grow by 70 percent in tourism by 2022, according to a New York & Co. report, and has opened half a dozen new resorts in the Catskills and Hudson Valley areas.
Although New York City’s commercial real estate and the industries that support it, such as hospitality and parking, are typically recession-proof, working from home has created challenges in these industries. Elected officials have been pushing for the staff to return to the office full time, but it’s unclear if and when that will happen. Entrepreneurs may want to eliminate these industries in the short term or prioritize residential areas over primarily industrial areas.
These questions are often asked when starting a business in New York. The answers will help you submit the necessary documents, pay the appropriate fees and understand the basics of opening a business
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