What Are the NYS Business Tax Requirements?

New York State (NYS) imposes various taxes determined by a company’s legal structure and commercial activities. The requirements range from annual income-based taxes to transactional and payroll-related liabilities, each with its own set of rules for registration, filing, and payment.

Determining Your Primary Business Tax Type

The legal structure of a business determines its core tax obligations in New York State, dictating which tax forms must be filed and how the state calculates the tax due.

Sole Proprietorships

Sole proprietors report business income and expenses on their personal state income tax returns. New York residents use Form IT-201, Resident Income Tax Return, to report business profits, which are subject to personal income tax rates. This structure means the owner’s personal assets are not legally separate from the business’s debts.

Partnerships

Partnerships are pass-through entities, meaning profits and losses are passed to the individual partners who report them on their personal tax returns. Partnerships in New York must file an annual information return, Form IT-204, Partnership Return. They are also required to pay an annual filing fee based on their gross income from the preceding tax year.

Limited Liability Companies (LLCs)

The tax treatment of a Limited Liability Company (LLC) in New York depends on its federal tax classification. By default, a single-member LLC is treated as a sole proprietorship, while a multi-member LLC is treated as a partnership. An LLC can also elect to be taxed as a corporation. Regardless of tax classification, LLCs and Limited Liability Partnerships (LLPs) must pay an annual filing fee based on their New York source gross income.

S Corporations

S corporations are pass-through entities where income flows to shareholders who report it on their personal returns. In New York, S corporations are subject to a fixed dollar minimum tax based on the corporation’s New York receipts. They must file Form CT-3-S, New York S Corporation Franchise Tax Return, to report their activity and calculate this tax.

C Corporations

C corporations are taxed as separate legal entities and are subject to the New York corporation franchise tax. The tax is calculated on either the corporation’s entire net income or a fixed dollar minimum tax, whichever is higher. The business income tax rate is 7.25%, but it is reduced to 6.5% for taxpayers with a business income base of $5 million or less. C corporations file Form CT-3, General Business Corporation Franchise Tax Return.

Common Taxes for NYS Businesses

Beyond the primary tax determined by legal structure, several other taxes may apply based on specific activities like selling goods or hiring employees.

Sales and Use Tax

Businesses selling taxable goods or services in New York must collect and remit sales tax. Before making any taxable sales, a business must obtain a Certificate of Authority from the state. The statewide sales tax rate is 4%, but local jurisdictions add their own rates, resulting in combined rates up to 8.875%.

A related use tax applies when a business purchases taxable items for use in New York without paying sales tax at the time of purchase. For example, if a company buys office equipment from an out-of-state seller who does not collect NYS sales tax, the business is responsible for paying an equivalent use tax directly to the state. The filing frequency for sales and use tax depends on the volume of taxable sales.

Payroll Taxes

Employers in New York have payroll tax responsibilities. They must withhold personal income tax from employee wages and pay state Unemployment Insurance (UI) taxes. UI contributions fund benefits for unemployed workers, and the tax rate for an employer is based on its claims history. Both withholding and UI taxes are reported together on Form NYS-45, Quarterly Combined Withholding, Wage Reporting, and Unemployment Insurance Return.

Metropolitan Commuter Transportation Mobility Tax (MCTMT)

The Metropolitan Commuter Transportation Mobility Tax (MCTMT) applies to certain employers and self-employed individuals within the Metropolitan Commuter Transportation District (MCTD). This district includes New York City and the counties of Nassau, Suffolk, Rockland, Westchester, Putnam, Dutchess, and Orange. The tax is imposed on employers with payroll expenses over $312,500 in a quarter within the MCTD, with tiered tax rates based on the amount of payroll expense. For self-employed individuals, the tax applies to net earnings exceeding $50,000 for the year from business in the district.

Information and Documents for Tax Registration

Businesses must register with the state before beginning operations, which can be done through the New York Business Express online portal. It is recommended to register at least 20 days before starting business. To complete the registration, you will need several pieces of information.

• A Federal Employer Identification Number (EIN) for most business types
• The legal name of the business and any “doing business as” (DBA) name
• The physical and mailing addresses for the business
• Names, addresses, and Social Security numbers of all owners or officers
• The business’s legal entity type (e.g., corporation, LLC)
• An estimated date for the first sale or first payroll
• A North American Industry Classification System (NAICS) code for the primary business activity

How to File and Pay NYS Business Taxes

Businesses must follow a regular schedule for filing returns and paying taxes, primarily through the NYS Tax Department’s Online Services portal. An authorized representative must create a Business Online Services account. This provides a secure platform to manage various tax obligations, including filing returns for sales tax, corporation tax, and withholding tax. The portal allows for direct entry of financial data and immediate payment via direct debit from a bank account.

Filing deadlines vary by tax type. Sales tax returns are generally due quarterly on March 20, June 20, September 20, and December 20. Annual corporation franchise tax returns for calendar-year filers are due on March 15. Withholding tax schedules depend on the amount of tax withheld, with some employers filing quarterly and others more frequently.

The NYS Pass-Through Entity Tax Election

The Pass-Through Entity Tax (PTET) is an optional annual tax for eligible partnerships and S corporations. It serves as a workaround to the $10,000 federal limitation on the state and local tax (SALT) deduction for individuals. The PTET allows the business to pay state tax on its income at the entity level. This payment is deductible by the business for federal tax purposes, which reduces the amount of income that flows through to the individual owners.

Partners or shareholders then receive a dollar-for-dollar credit on their personal NYS income tax returns for the PTET paid on their behalf. This mechanism effectively shifts the state tax payment from a limited individual deduction to a fully deductible business expense at the federal level.

Eligibility is limited to partnerships and New York S corporations; sole proprietorships and single-member LLCs are not eligible. The election to opt in is made annually by March 15 through the business’s Online Services account.

Elected businesses must make quarterly estimated PTET payments, due on March 15, June 15, September 15, and December 15. Owners claim their credit by filing Form IT-653, Pass-Through Entity Tax Credit, with their personal returns. A similar elective tax, the NYC PTET, is available for entities with New York City resident owners.