New York LLC Taxes
Ensuring your New York LLC complies with tax requirements demands a solid grasp of the various municipal, state, and federal tax regulations.
This guide delves into the primary New York LLC taxes and provides a detailed walkthrough for navigating the tax filing procedures for your LLC in the Empire State.
Recommended: Schedule a free consultation with an accountant to stay on top of your taxes.
How Is an LLC Taxed in New York?
Taxation in New York isn’t applied in the same way to all LLCs – instead, it varies depending on a number of factors, such as an LLC’s nature, locality, and tax election.
While LLCs typically benefit from pass-through taxation by default, they can also elect to be taxed as one of the following:
- C Corporations: The LLC is treated as a separate entity to its owners, paying corporate tax rates on its total profit while the owners also pay personal income taxes on any distributions they take.
- S Corporations: In return for paying owners a “reasonable salary,” the LLC’s remaining profits are distributed among members without a need to pay FICA or self-employment taxes on them.
The following sections go into the various tax responsibilities of your LLC at local, state, and federal levels in New York to help you ensure your LLC navigates them effectively.
New York Local Taxes
The local laws and tax regulations differ greatly between different localities in New York — where there are currently a number of unique taxes in place at a local level.
Below is a list of the main local taxes and permits found in New York.
Sales and Use Taxes
This is a group of taxes that are applied to the sale or use of goods and services. These taxes are generally calculated as a percentage of the price paid by the consumer and then collected by businesses at the point of sale in order to generate revenue for the local and state governments.
In addition to the statewide general sales tax of 4%, local areas in the state of New York are also able to impose their own additional tax rate. This applies on top of the 0.375% rate applied to taxable sales within the Metropolitan Commuter Transportation District (MCTD).
Note: Since the combined sales tax rate varies between localities, you’ll need to use the Department of Taxation and Finance's Lookup Tool in order to calculate how much your LLC owes.
If your LLC owns real property in New York, it will need to pay property taxes. In New York State, each jurisdiction determines its own tax rate based on its budgetary needs, minus revenues from other sources, and then divides that number by the total taxable assessed value of all properties within its boundaries.
For more information on how property tax works in your local area, you’ll need to get in contact with the relevant officials in your local area using the County Property Tax Directory on the New York Office of Real Property Tax Services website.
New York City Taxes
In addition to the general local taxes discussed above, there are certain city-specific taxes your business will need to pay if it’s based in New York City, including:
- New York City General Corporation Tax: A local franchise tax on S Corps and C Corps that applies on top of the statewide franchise tax present in New York State.
- Unincorporated Business Tax (UBT): A tax rate of 4% on the taxable income of individual entrepreneurs, partnerships, and limited liability companies (LLCs) involved in trades, professions, or certain other occupations within New York City.
Note: These taxes are administered by the City of New York Department of Finance, which requires you to file a distinct tax return for them.
Metropolitan Transportation Business Tax Surcharge
The Metropolitan Commuter Transportation Mobility Tax (MCTMT) is a tax applied to certain employers and self-employed individuals within the Metropolitan Commuter Transportation District (MCTD). This includes the following counties in the New York area:
- New York (Manhattan)
- Kings (Brooklyn)
- Richmond (Staten Island)
The MCTMT applies to employers and self-employed individuals as follows:
- Employers: MCTMT is required when the total payroll expenses of your employees working within the MCTD exceed $312,500 in any calendar quarter. This ranges from a rate of 0.11% to 0.34% depending on your total payroll expense
- Self-employed individuals: You’ll need to begin paying MCTMT when the net earnings from MCTD business activity exceed $50,000. It is levied at a flat rate of 0.34% on these earnings.
Recommended: Schedule a free consultation with 1-800Accountant to ensure your business remains legally compliant.
New York State Taxes
Every state has its own regulations and rules that dictate how it taxes individuals and businesses. Below, we’ve delved into the most relevant state-level taxes for LLCs in New York.
This group of taxes refers to the charges imposed by the state on the earnings of individuals and entities operating within New York. The way these state income taxes are applied in New York differs depending on your LLC’s business structure:
Sole Proprietorship or General Partnership
If your LLC is structured as a sole proprietorship or general partnership it will be subject to personal income tax — which ranges from 4% to 10.90%, depending on your LLC’s total net income.
Since the thresholds for these tax bands change each year, you’ll need to use this year’s NY tax table to calculate how much your LLC owes.
LLCs structured as an S corp must pay corporate franchise tax based on their New York receipts according to the following fixed dollar minimum fee schedule:
|New York Receipts
|Fixed Dollar Minimum Tax Amount
|$100,000 or less
|$100,001 but not over $250,000
|$250,001 but not over $500,000
|$500,001 but not over $1,000,000
|$1,000,001 but not over $5,000,000
|$5,000,001 but not over $25,000,000
An LLC that is formed as a C Corp will be subject to corporation franchise tax. Unlike S corps, this franchise tax is calculated based on whichever of the following is the highest (in addition to the MTA surcharge, if applicable):
- Business income: This refers to a C Corp’s federal taxable income after state-approved deductions that are recognized by New York State but not the IRS.
- Business capital: This represents the sum of a C Corp’s wealth, which is reached by calculating its total capital within New York and deducting any debts connected to its assets.
- Fixed dollar minimum tax: This is a fee C Corps must pay that varies according to their total New York State receipts.
It’s up to your business to run the numbers for each of these bases and then pay whichever one is the highest.
In New York, a sales tax rate is applied at a flat rate of 4% that’s added to the price of tangible goods and services sold within the state and paid by consumers. The combination of your local area’s rate and the statewide rate will determine the total your LLC must pay in sales tax.
Most physical goods (i.e., personal property such as clothes, electronics, and furniture) are taxable – though there are some sales tax exemptions, including prescription drugs and prepared food.
In addition to this general sales tax, there are a number of special taxes and fees that are applied to the sale of specific products sold in New York, including:
- Adult-Use Cannabis Products Tax
- Alcoholic Beverages Tax
- Cigarette and Tobacco Products Tax
- Real Estate Transfer Tax
Note: You can find a full list of these special state taxes, as well as more information on how they work in practice, on the New York State Department of Taxation and Finance website.
Regardless of where your business is located, if you run an LLC in the US, there are a number of federal taxes you’ll need to pay. Below, we’ve explored some of the main types your LLC may be required to pay for federal tax purposes:
By default, the IRS will not treat single and multi-member LLCs as separate entities from you and your partners for federal income tax purposes. What this means is that you’ll need to report your share of your LLC’s profits on your individual tax returns and pay federal income tax on them at the personal rate of your tax bracket.
Having said that, keep in mind that LLCs can also elect to be taxed as C corps or S corps, which changes how these taxes are levied in different ways.
In addition to income tax, members of single- and multi-member LLCs are responsible for paying self-employment tax on the share of the business’s profits that they report on their personal tax return at the end of the year.
This tax is levied at a flat rate of 15.3% against businesses with net earnings that exceed $400, though it is applied slightly differently to LLCs that have elected to be taxed as S corps or C corps.
If your LLC hires any employees, it will need to withhold a portion of their salaries to cover various types of taxes on your employees’ behalf – including Social Security, Medicare (FICA), and payroll taxes.
Furthermore, the members of any LLCs that have elected to be taxed as an S corp will be required to pay employment taxes on their salaries. However, in return for this, the remainder of the business’s profit after these salaries have been distributed will be safe from both self-employment and FICA taxes.
If your LLC engages in certain types of business (such as the sale of alcohol and tobacco or operating a heavy highway vehicle, among others), it may need to pay federal excise taxes in order to do so legally. Each excise tax comes with its own set of rules, rates, and filing obligations you’ll need to be aware of.
Understanding and fulfilling these federal tax obligations is crucial for keeping your LLC compliant and avoiding unnecessary financial penalties and/or fines.
How to File LLC Taxes in New York
Below, we’ve outlined the general process an LLC in New York will need to follow in order to file their tax return correctly. Note that the specificities of each step will vary slightly depending on how your LLC is organized and the specific locality it’s based in.
Step 1: Gather Your Documentation
To ensure accurate tax filing, thorough record-keeping is essential. Begin by collecting your personal information, including:
- You and your partner’s Social Security number, date of birth, and residential address
- The previous year’s tax returns
- Your LLC’s Employer Identification Number (EIN)
Then, you’ll need to gather all documentation related to your business’s income, such as:
- Invoices you’ve issued
- Sales transaction logs
- Electronic payment reports from services like PayPal or Stripe
Lastly, assemble all records pertaining to your business expenses, which should cover:
- Lease receipts for your business premises
- Bills for utilities
- Records of office supplies purchases
- Documentation of business-related travel
- Payroll records for employees
Note: Depending on how your LLC is organized and its tax election, you may need different information for your tax return.
Step 2: Find The Right Tax Forms
Once you've gathered all necessary documents, the next step is to select the correct tax forms for your LLC based on its organization:
- Single-Member LLCs: The business’s total income and expenses are reported on a Schedule C form, which is attached to the owner’s personal tax return and due by April 15 or the following business day if it lands on a weekend or holiday.
- Multi-Member LLCs: File an information return using Form 1065. Members must fill out a Schedule K-1 showing their individual earnings or losses by March 15 or the next business day.
- C Corporations: File a corporate tax return using Form 1120 by the April 15 deadline or on the next business day if it's a weekend or holiday.
- S Corporations: Use Form 1120-S for the corporate tax return and distribute Schedule K-1 forms to shareholders for reporting their shares of profits or losses. The filing deadline is March 15 or the following business day.
Since state and local taxes will have their own individual forms and requirements, we recommend contacting your municipality or hiring an accountant for guidance.
With the appropriate documentation gathered and the correct tax forms for your business entity on hand, you’ll be ready to fill them out and submit them.
Step 3: File Your Taxes
The majority of businesses choose electronic filing for its speed, enhanced security, and reliability compared to paper filing, which can be slower and more prone to errors. Here’s how it works:
- Federal Tax Returns: The IRS provides two electronic services for tax submission: Free File for businesses with an AGI below $72,000 and Free Fillable Forms for those above the threshold.
- State Tax Returns: Submit your taxes online by creating an Online Services account with the New York State Tax Department.
- Local Tax Returns: The filing requirements can vary depending on the specific tax, so be sure to contact the local governing agency in your locality for more information.
Note: These electronic filing tools are best suited for those who are already confident in handling their LLC taxes as if filling out a paper form.
For new business owners, we recommend opting for the expertise of a tax professional in order to ensure both accuracy and compliance in your tax filings.
Recommended: Schedule a free consultation with 1-800Accountant to stay on top of your taxes.
Keep Your New York LLC Compliant
While LLCs are generally easier to maintain than corporations, there are certain state and local formalities your LLC must satisfy in order to remain compliant.
Annual Filing Fee
Instead of corporation franchise tax, partnerships, LLCs and LLPs based in the State of New York must pay an annual filing fee to keep themselves in good standing. The fee your business needs to pay is determined by its gross income from the previous year according to the following rules:
- For all entities: If no gross income was generated in the previous year from New York business activity, an annual fee of $25 must be paid.
- For disregarded entities: LLCs treated as disregarded entities for federal income tax purposes must pay an annual fee of $25.
- For partnerships: The annual fee for LLCs treated as general partnerships varies according to the following fee schedule:
|Gross Income for the Preceding Tax Year
|$0 but no more than $100,000
|$100,000 but no more than $250,000
|$250,000 but no more than $500,000
|$500,000 but no more than $1,000,000
|$1,000,000 but no more than $5,000,000
|$5,000,000 but no more than $25,000,000
Note: This annual fee must be filed using Form IT-204-LL on or before the 15th day of the third month following the close of the tax year.
Licensure and Tax Requirements
In New York, almost all businesses are required to obtain various licenses and permits at the local, state, and federal levels. Below we’ve broken down three of the most common types your LLC may need:
- Sales Tax Permits: For conducting business involving the sale of tangible items or certain services, securing a Sales Tax Certificate of Authority through the New York State Department of Taxation and Finance is mandatory.
- Professional Licenses: Launching a venture within regulated fields such as architecture, healthcare, or engineering necessitates acquiring the appropriate professional accreditation from the Office of the Professions under the New York State Education Department.
- Health Department Permits: Businesses engaging in activities with potential public health implications must procure relevant permits. For instance, a facility featuring a swimming pool is required to have a “Bathing Establishment With Pool” license, obtainable from the New York City Department of Health and Mental Hygiene.
Note: For more information on the specific licenses and permits your LLC may need, you’ll need to fill out the application on the New York State Business Express website’s Business Wizard portal.
New York LLC Taxes FAQs
An LLC in New York City is taxed based on its income, with options to be treated as a disregarded entity, partnership, or corporation. In addition to this, it is subject to a number of state and federal requirements.
To see what statewide taxes your NYC LLC may need to pay, see the state taxes section above.
Yes, on top of the requirement to pay taxes, LLCs in New York State must pay an annual filing fee that ranges from $25 to $4,500 depending on the gross income they generated from business activities in the State of New York from the prior year.
To find out more about this topic, see our LLC Taxes article.
An LLC is commonly taxed as a pass-through entity, meaning the profits and losses pass through to the individual members' tax returns, avoiding double taxation. However, it can elect to pay corporation tax as either a C Corporation or an S Corporation.
To find out how you can get started today, see our New York LLC Formation article.
In New York, business tax rates are not flat; they depend on a company's structure and income. For LLCs, the tax rate can vary from 4% to 10.9% for the New York state income tax, with additional taxes like a 4% statewide sales and use tax, federal income taxes, and potentially the MCTMT for businesses within the MCTD, further adding to this.