Starting a Business in New York

Even though New York is known to be very bureaucratic due to its extremely complex regulatory environment (onerous procedures and business licenses) and high tax burden, it does try to incentivize new business start-ups as well as business relocation. New York has approximately 1,780,000 small businesses with about 478,000 employing workers. It is also home to some of the nation’s best Universities which ultimately contribute to a highly educated and skilled workforce. The largest industries in New York include Health Services, Manufacturing, Professional Services, Education, and of course Financial Services which propel the global economy. There are many incentive programs which are available in the form of business grants, corporate income tax exemptions, tax credits, and Sales Tax Exemptions.

STEPS TO STARTING A BUSINESS IN NEW YORK

Once you have completed a corporation search and established a New York company, you can register online for an Employer Identification Number. If you have decided that New York is the right place for starting a business, there are some other actions that can be taken. You can find a New York sales tax rate or pay New York sales tax, seek office space for operations, apply for business credit, and see how to get the correct Business Licenses you need. If you are looking to start a new business or expand your existing business, here are some of the incentives programs that are offered in New York:

• New York has two entertainment tax credit programs which are the Musical and Theatrical Production Tax Credit and the Motion Picture Production Tax Credit. The Musical tax credit offers a 25% credit towards eligible production and transportation expenditures. The Motion Picture Tax Credit is given for eligible production expenditures incurred while filming movies or television shows. The credits are based off qualified production costs.

• New York State has established a tax free zone program offered to qualified companies who are located within designated areas of certain public and private educational institutions such as universities and technical schools. Qualified start-up businesses and those that relocate to a designated area and can take a corporate income tax exemption for up to 10 years. The program offers Sales and Use Tax Exemptions against purchases of tangible personal property and certain taxable services. Employees that work for a qualified business may also receive an exemption on their personal income taxes for the first 5 years of employment.

• New York offers a Sales and Use Tax Exemption to companies that have a qualified data center. Exemptions are given to qualified data center equipment or services related to that equipment.

Eligible data center equipment includes:

1. Hardware such as servers and routers
2. Power generators
3. Pre-written computer software
4. Cages or racks used to house servers
5. Climate control equipment such as air conditioning equipment used to maintain server integrity

Qualified services include any required activities used to:

1. Repair, service, or clean real property
2. Service, install, alter, or repair tangible equipment
3. Protect or secure equipment such as security services

When purchasing qualified equipment or services, data center owners should use resale certificates (tax exemption certificates).

• New York also offers additional Sales and Use Tax Exemptions to companies that are in certain industries or situations. They are given for equipment, machinery, and building materials that are used in Research & Development. Additionally, a Sales Tax Exemption is available for any energy utilities (electricity or fuel) related expenses used in the manufacturing process or Research & Development.

• New York has workforce expansion programs designed to assist businesses that can create quality jobs. Two well-known programs are the Employee Training Program and the Workers with Disabilities Tax Credit.

• The Employee Training Program gives a tax credit to employers that retrain, advance, or enhance their employees’ productivity. The credit is equivalent to 50% of qualified training costs per employee up to a cap of $10,000 per year.

• The Workers with Disabilities Tax Credit is offered to businesses that create jobs for individuals with disabilities. It can be taken as a direct credit against payroll tax (up to 10 % for each new job created) or as a job training grant for ongoing skills training and education to their current workforce. Funds can be used for materials and equipment as well as other training related expenses.