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After you start a New York LLC, there are two main types of ongoing filings. The first is the Biennial Statement with the state, and the other is taxes.
Paying taxes is an important part of running a business, but figuring out which taxes you need to pay can be a pain.
This lesson will provide you with general resources and the basics of New York LLC tax filing requirements.
What taxes does a Limited Liability Company pay in New York?
Each LLC has a different tax situation, so the taxes paid for a New York LLC varies.
The amount of taxes owed for your LLC depends on rules like:
- how your LLC is taxed
- state and local tax rules
- any sales and use tax requirements, or
- whether you have employees
Additionally, some business types are required to register for industry-specific taxes.
Pro Tip: We recommend hiring an accountant to ensure your LLC meets all of its tax obligations.
We also recommend getting an EIN Number for your LLC. An EIN is also called a Federal Tax Identification Number. They mean the same thing.
Not only will an EIN number be used to open an LLC bank account, but it will also be used for filing taxes with the local, state, and federal governments.
LLC pass-through taxation (Who pays the taxes?)
By default, LLCs don’t pay taxes.
Instead, the LLC Members are responsible for reporting the income (or losses) on their personal 1040 tax return. The Members pay taxes on any LLC profits. This is because of LLC pass-through taxation.
Simply put, pass-through taxation means the responsibility for reporting tax information from an LLC “passes through” the LLC to the LLC Members.
How are LLCs taxed in New York?
By default, a New York LLC is taxed by the Internal Revenue Service (IRS) based on the number of Members the LLC has. Then the New York Department of Taxation and Finance honors this and taxes your LLC the same way at the state level.
An LLC with 1 owner (Single-Member LLC) is taxed like a Sole Proprietorship.
An LLC with 2 or more owners (Multi-Member LLC) is taxed like a Partnership.
The above are referred to as the “default status“. Meaning, they are automatically applied based on the number of LLC Members.
Alternatively, you have the option of requesting an “elective status” for your LLC. This is done by filing an extra form with the IRS. Once granted, this elective status means the IRS will treat your LLC as a Corporation (either an S-Corporation or C-Corporation) for tax purposes.
Note: Your New York LLC Operating Agreement should also include information about how your LLC is taxed.
Federal Income Taxes
There are several different options for how the IRS can treat your LLC for tax purposes.
Single-Member LLC taxes (default status)
The IRS treats all Single-Member LLCs as Disregarded Entities for tax purposes. This just means that the IRS doesn’t expect the LLC to file its own federal income tax return.
Instead, the owner of the Single-Member LLC files the return (and pays the federal income taxes).
How the LLC pays federal income tax is determined by who owns the LLC:
- If the LLC is owned by an individual, the LLC is taxed like a Sole Proprietorship.
- If the LLC is owned by another company, the LLC is taxed as a branch/division of the parent company.
Multi-Member LLC taxes (default status)
If an LLC has two or more owners, the LLC is taxed like a Partnership.
The LLC needs to file a 1065 Partnership Return and issue a Schedule K-1 to the LLC owners.
The K-1s report each owner’s distributive share of profits. And the K-1 income “flows through” to the owners. The income taxes are then paid by each owner on their personal income tax return (Form 1040).
Husband and Wife LLC taxes
You may have heard that in some states, a husband and wife LLC has the option to file taxes as a Single-Member LLC (aka Qualified Joint Venture) instead of a Multi-Member LLC.
This is true for community property states (like Texas). That said, New York isn’t a community property state, which means Qualified Joint Ventures are not available in this state.
Electing to have your LLC taxed as a Corporation
Instead of the default statuses above, a Limited Liability Company (LLC) can be taxed like a Corporation.
Note: We recommend speaking with an accountant before making a corporate election.
There are two types of corporate elections:
- S-Corporation
- C-Corporation
LLC taxed as an S-Corporation (elective status)
By filing Form 2553 with the IRS, your LLC can request to be taxed like an S-Corporation.
Being taxed as an S-Corp can help businesses (with established profits) save money on self-employment taxes.
Tip: There are additional expenses to having your LLC taxed as an S-Corporation Most new business owners shouldn’t make this tax election until their business is established and revenue is consistent. Once there is at least $70,000 in annual net income per LLC Member, we recommend speaking to your accountant about this option.
LLC taxed as an C-Corporation (elective status)
By filing Form 8832 with the IRS, your LLC can request to be taxed like a C-Corporation.
Being taxed as a C-Corp can help large employers save money on healthcare fringe benefits.
Note: This election is not common. Most of our readers don’t choose to have their LLC taxed as a C-Corporation.
New York State Income Tax for New York LLCs
Single-Member LLCs in New York: The LLC itself usually doesn’t file a state-level return. However, the owner files a personal state-level return that includes the LLC’s profits or losses.
Multi-Member LLCs in New York: The LLC itself may need to file a Partnership return at the state-level. And the owners file a personal state-level return that include the LLC’s profits or losses.
Pass-through Entity Tax
New York also allows LLCs to be taxed at the entity level. This option is called the Pass-through Entity Tax (PTET).
If you choose to have your LLC income taxed this way, you may be eligible for a tax credit on your New York state income tax returns.
You can read more about the Pass-through Entity Tax from the New York Department of Taxation and Finance.
There are also other types of New York business tax that apply to certain industries and types of businesses.
We recommend hiring an accountant to prepare and file your state income taxes.
You can also contact the New York Department of Taxation and Finance for more information about New York state taxes.
Local Income Tax for New York LLCs
You and/or your LLC may need to file and pay income taxes with your local municipality (town, city, county, etc.).
We recommend hiring an accountant to prepare and file your local income taxes.
You can also contact your municipality to check on their requirements.
New York Sales Tax
If you sell products to consumers in New York, you may need to collect sales tax and get a Seller’s Permit.
A Seller’s Permit is the license that allows you to collect sales tax on retail sales in the state where you do business. It’s sometimes also called a:
- resale license
- wholesale license
- sales tax permit/license
- reseller permit
They all mean the same thing and we may use these terms interchangeably. And you can get a Seller’s Permit online from the New York Department of Taxation and Finance (DTF) using the Sales Tax Web File.
You can read more information about New York sales tax from these New York DTF resources:
For more information on permits, read New York Business Licenses and Permits.
And if you have any questions about whether you need a Seller’s Permit, you can contact the New York Department of Taxation and Finance at 518-485-2889.
Tip: Save time by hiring an expert. We recommend using TaxJar. They'll help you register for, collect, and pay sales tax.
New York LLC Payroll Taxes
If your New York LLC will have employees, you must submit payroll taxes. Payroll taxes are essentially a group of taxes and filings, including:
- Federal income tax withholding
- State income tax withholding
- Social Security tax
- Medicare tax
- Federal unemployment taxes (FUTA)
- State unemployment taxes (SUTA)
- Local/county deductions
- Employee deductions
As an employer in New York, you need to set up payroll, withhold payroll taxes from employees’ paychecks, and then submit those filings and taxes to various state and government agencies.
Although you can file payroll taxes yourself, the calculations can be burdensome and very complex. And if done improperly can lead to penalties and fines. Most people hire a payroll company or ask their accountant for help.
Our favorite payroll company is Gusto Payroll. They’ll automate and take care of your payroll taxes.
For more New York payroll tax resources, please see the references section at the bottom of this page.
Managing your books & staying organized
You can keep track of income and expenses using Microsoft Excel or Google Sheets. Or you can use software to help automate things and save time.
The accounting software we recommend is Quickbooks Online.
Working with an accountant
As you can see, figuring out the different types of taxes you owe can be complicated, let alone how to properly fill out all the forms. And doing taxes improperly or missing deadlines can be harmful to your business
We strongly recommend working with an experienced accountant in New York to help make sure you file your federal, state, and local taxes correctly.
Check out our guide on how to find an accountant.
New York Department of Taxation and Finance Contact Information
There are other types of New York business tax that apply to certain industries and types of businesses.
You can contact the New York Department of Taxation and Finance at 518-457-5181 for more information about New York state taxes.
New York LLC Taxes FAQs
Do I have to pay an annual fee for my LLC in New York?
Sort of. All New York LLCs have to pay a biennial fee by filing a New York LLC Biennial Statement every 2 years. This is separate from the federal, state, and local taxes that you pay.
The LLC Biennial Statement is filed with the New York Department of State. It is not a tax paid to the New York Department of Taxation and Finance.
The Biennial Statement for New York LLCs costs $9. This is paid every 2 years for the life of your LLC.
How much is an LLC in New York?
New York LLC Costs include:
$200 to form your New York LLC (to file your LLC Articles of Organization).
$300 – $1,000 in one-time fees to publish newspaper notices (to fulfill your Publication Requirement).
$50 in one-time fees (to file your LLC Certificate of Publication).
$9 in fees every 2 years (to file your LLC Biennial Statement).
Do I need to file a New York state tax return for my LLC?
Maybe – it depends on what type of LLC you have.
Single-Member LLC taxed as a Sole Proprietorship: No. You only need to file your personal tax return (Federal Form 1040 and New York Form IT-201 for full-time residents) and include your LLC profits on the return.
Multi-Member LLC taxed as a Partnership: Yes. Your LLC must file an IRS Form 1065 and a New York Partnership Return (Form IT-204).
LLC taxed as a Corporation: Yes. Your LLC must file tax returns with the IRS and the New York Department of Taxation and Finance to pay your New York income tax. Check with your accountant to make sure you file all the correct documents.
How do I know my LLC tax classification?
You can tell your LLC’s tax classification by looking at how many Members are in your LLC.
This is because LLCs receive their tax classification from the IRS based on the number of Members (owners) your LLC has.
If you have one Member, your LLC is taxed as a Sole Proprietorship.
If your LLC has more than one Member, your LLC is taxed as a Partnership.
This is called being taxed in your default status. Meaning, you don’t have to file any paperwork to let the IRS know that’s how your LLC will be taxed because they tax LLCs that way by default.
However, in order for your LLC to be taxed as a Corporation, you or your accountant would have to file paperwork with the IRS letting them know you’ve chosen to be taxed as a Corporation.
And then the IRS would mail you an Approval Letter to confirm you’ve chosen the Corporate tax election for your LLC.
Note: Being taxed as a Corporation is rare for LLCs, so most people don’t need to worry about this.
And if you’re still unsure about how your LLC is taxed, we recommend calling your accountant or the IRS (1-800-829-4933). To speak to a live person at the IRS, press option 1, option 1 again, and then option 3.
How to start an LLC in New York?
Here are the steps for starting an LLC in New York:
- Choose an LLC name and make sure it’s available
- Choose who will be your New York Registered Agent
- File the New York LLC Articles of Organization
- Complete and sign an LLC Operating Agreement
- Get a Tax ID Number (EIN) from the IRS
- Open an LLC bank account
- Check whether you need a business or sales tax license in New York
References
IRS: Tax Information for Businesses
New York DTF: Withholding Tax
New York DTF: Income Tax Forms
New York DTF: Partnership and LLC/LLP Tax Forms
New York DTF: Withholding Tax Filing Requirements
New York Department of Labor: Unemployment Insurance Rate Information
New York Department of Labor: Unemployment Insurance Information for Employers
Matt holds a Bachelor's Degree in business from Drexel University with a concentration in business law. He performs extensive research and analysis to convert state laws into simple instructions anyone can follow to form their LLC - all for free! Read more about Matt Horwitz and LLC University.
NEW YORK LLC GUIDE
Follow the lessons below to form your New York LLC.
Hi Matt,
This is a great website and so helpful!
Should I use my registered agent address (Northwest) or physical address (Queens) for all the tax documents including 1099-MISC?
Thank you in advance!
Thanks Mal! I’d use the physical address for all tax-related documents.
What happens if my business is formed but not yet making any money. Neither is losing any money. What happens if it’s not up and running? Do I still have to file taxes?
Hi Dee, if you have Single-Member LLC (taxed as a Sole Proprietorship), federally, if you have no expenses to write off or other deductions or claims, federally, there is nothing to file. If you have a Multi-Member LLC (taxed as a Partnership), the LLC needs to file Form 1065 regardless of activity. If the LLC is taxed like an S-Corporation or C-Corporation, federally, the LLC has to file regardless of activity. You’ll want to speak with an accountant in New York if there are state filings that must be made.
Hi, I need to file for Certificate of Authority (NYS Sales Tax ID) and the application requires I provide a business physical address (location of business operations) and a mailing address. Since I used the northwest registered agent (Albany), should I use their address as the business physical address, although my business is based in Queens?
Hi Myda, for items like this, you’ll want to use the actual address where the business is located. Hope that helps.
Hi Matt,
Just want to say THANK YOU. This has been my go to for starting my new LLC. When I met with my tax advisor he was impressed with how much I knew about getting started. I owe that to you and this web page! Thanks again for all the information. Best of all for making it easy to follow and free. Everyone nickels and dimes everything these days and it’s hard enough starting a business with all the little costs and needs!
Hey Ashley, this is such an awesome comment! Thank you! And we’re so glad to hear. I think self-education is quite powerful ;)
My business will be buying goods from a wholesaler and distributing that brand under my own company. I need to obtain a sales tax id in order to purchase from the wholesaler. I realize that this is different from the EIN but do I need to go through all the steps first and then obtain the Sales Tax id?
Hi Katherine, yes, if you’re forming an LLC, you’ll want to do that first and get the EIN. Then you’d register for state taxes and get the sales tax ID. Hope that helps.
Great lessons Matt…
Q. I do NOT want my LLC and personal taxes combined. I want to file separately. I am a smllc and I want to set up immediately to be taxed only as a corporation. How is this done in the first steps? Thank you, peggy
Hi Peggy, there are two different types of an “LLC being taxed as a Corporation”. There is an LLC being taxed as a C-Corporation or an LLC being taxed as an S-Corporation. An LLC elects to be taxed as a C-Corporation via IRS Form 8832 and an LLC elects to be taxed as an S-Corporation via IRS Form 2553. However, you’ll most certainly want to speak with an accountant (or a few) since these types of taxation are usually only best once your business is earning a certain amount of net income. We have two related articles which I recommend checking out: how are LLCs taxed and LLC taxed as S-Corporation (we don’t have an LLC taxed as C-Corporation article yet). Hope that helps.
Dear Matt,
I hope this email finds you safe as I think you are in South Florida. Praying for all Floridians.
Wanted to send a BIG THANK YOU for the LLC University information. It made my life so easy to learn and get the LLC done in my state of NYC. I can’t say it enough how clear you make it to learn LLC’s. Each tutorial and step is honestly the best I have ever seen and used. My LLC is complete and have done all the steps…
thank you for being so generous and giving us this free resource. I am absolutely recommending you even more.
Donna McGovern
Empowering Services Group LLC
Hi Donna! Thank you for the lovely comment and positive wishes. We’re so very happy to hear your positive review and we’re happy we could help you on your entrepreneurial journey. I hope all is well with you :)