New York Business

How to Start a Business in New York

Ah, the Empire State. Home to much more than just New York City, this state is the second-biggest producer of maple syrup (Vermont is first) and apples (Washington is first). Manufacturing, financial services, media, health care, and agriculture make up the leading areas of industry in New York.

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The state’s employment growth, at 1.0%, is less than the national average of 1.4%. Its population is not keeping up with annual growth, either. The state of New York’s population grew just 0.4% from 2010 to 2019 while the national population increased 6.3%. 

It’s a state that’s heavy on taxation and regulation, but it’s also an entrepreneurial challenge that draws millions. 

As Ol’ Blue Eyes crooned, “If you can make it there, you’ll make it anywhere.”

The cleaning industry is everywhere. Whether commercial janitorial services or in-home cleaning, chimney sweeps or post-disaster restoration, sooner or later everything in our society needs cleaning services. Let’s walk through the steps you’ll typically follow to open your cleaning business.

Benefits of Opening a Business in New York

Although there are some tax incentives for new businesses, the main benefit of opening a business in New York is the accomplishment. With more than 2 million small businesses operating there already, this is a tough environment for entrepreneurs and rising to that challenge proves your mettle. 

The state does provide a competitive and diverse workforce and entrepreneurial environment, as noted by the Small Business Administration (SBA). Also, you don’t necessarily have to operate in NYC to benefit from being near it. Sharone Ben-Harosh, founder and CEO of FlatRate Moving, told Business News Daily, “Location-wise, there’s a big opportunity in the Westchester area as a result of more people moving away from New York City.”

As with all entrepreneurs, opening your own business also gives you control over your life, time, and focus.

How to Start a Business in New York

Starting a business, especially in New York, can seem like an overwhelming task. Maybe think of it like eating an elephant. How do you do that? One bite at a time! The same is true for starting a business. You just need to know the bites. They include:

Checklist for Starting a Business in New York

  1. Create a Business Plan
  2. Choose a Business Structure
  3. Determine Your New York Business Costs
  4. Create a Name for Your New York Business
  5. Register Your Business and Open Financial Accounts
  6. Market Your New York Business

1: Create a Business Plan

Begin by writing a business plan. This will serve as your guide for both startup and growth in the Empire State. Investors, grantors, and loan officers will review this document to determine your business’s financial viability. When writing the business plan, flesh out the following:

  1. Executive summary: While this section comes first, you’ll write it last as it is a summary of all the other sections.
  2. Company description: Be specific when describing your business ideas. What problem does it address and what solution does it offer? In this section, set SMART goals (Specific, Measurable, Attainable, Realistic, and Timely).
  3. Market analysis: Who are your competitors? In New York, there are likely many! Do you have competitors in other areas of the country? How will your company succeed over theirs?
  4. Products and/or services: Explain exactly what you will be selling. How will you make it? If it’s a service, how are you uniquely suited to provide it?
  5. Management team: Who is working with you to bring your New York business to fruition? Are there multiple business owners? How does each team member’s background serve the overall goal of creating this particular business?
  6. Marketing plan: How will you ensure New Yorkers know about your product/service? 
  7. Financials: Count up the expected costs to start and run the business. How will it earn income? 

2: Select a Business Structure

To register your business in New York and with the IRS, you’ll first need to choose a business structure that best suits your tax and legal situation. The options are corporation, limited liability company (LLC), or sole proprietorship

Most small businesses begin as a limited liability company (LLC). This type of business entity gives your personal assets protection from the business’s liability while avoiding the double taxation of corporations. 

Corporations can be designated as S or C corps. In other states, an S corp is often the preferred corporate designation if a company is using the corporate structure. S corps, however, are not recognized in New York and are therefore subjected to an 8.85% general corporation tax. In contrast, an LLC structure is taxed a 4% unincorporated business tax in New York. 

You can file for your New York LLC online and choose to work with a registered agent compliance and business formation service such as ZenBusiness to handle a lot of the work for you. Keep in mind that the overall cost to cover all your bases can run up to $2,200, and that’s before any licenses or permits.

The New York State Department of Taxation and Finance can offer more information about the taxes due for each corporate structure. New York Business Express has an online wizard to help you decide which legal structure could work best for you. 

3: Determine Your New York Business Costs

It’s important to calculate your business costs before starting a business in New York as this is one of the more expensive places to do business. In a U.S. Bank study, poor cash flow management/understanding of cash flow contributed to a whopping 82% of business failures. An early step of creating healthy cash flow is accounting for every cost that will be accrued. Then you’ll be able to see what cash must remain on hand at all times, when cash will come in, when expenses will outstrip income, etc.  

As you create a list of projected costs, perhaps categorize them as fixed, ongoing, or one-time. 

  • Fixed costs don’t change regardless of your sales volume. Think insurance, attorneys, accountants, and rent. Fixed costs can be really high in New York, so be sure to account for them in your list. 
  • Ongoing expenses fluctuate with your sales volume. These include the costs to make your product or provide your service. 
  • One-time costs include what you’ll purchase just once, such as computers and office furniture.   

Unsure about whether you’re estimating the right amounts? The New York Small Business Development Center provides counselors free of charge who can help walk you through the process of listing your business costs. 

For starters, estimate the price to start a small business.

What are your fixed costs? Fixed costs may change over time but are stable for set periods, such as an annual lease. They include insurance, utilities, leases, and mortgages.

What are your variable costs? These recurring costs fluctuate and can cover payroll, taxes, supplies, cleaning products, and fuel.

Choose your target market: Residential cleaning will have different costs, requirements, and expectations than commercial cleaning. Specialty niches, such as carpet cleaning or chimney sweeping, will also have their own niche considerations. Other factors may affect the costs you have for servicing your target market, such as a preference for environmentally-friendly cleaners, or additional sanitation requirements due to the COVID-19 pandemic.

Also consider:

  • Costs for transportation, supplies, and equipment. Account for how you’ll budget for maintenance, re-supply, replacements, and upgrades.
  • How will you charge clients? Cleaning businesses use a variety of cost structures, including all-inclusive packages, time and materials, and flat fees per service.
  • Finalize costs and pricing. Use your understanding of business costs to set your pricing and make sure it works with what your market accepts.

To give you a general idea of the costs you may face, here are common startup expenses for a low-cost cleaning business:

  • Business license and permits: $100 to $500 to register as an LLC
  • Insurance: May be $500 to $3,500 annually, depending on number of employees

Your cleaning equipment and products may range $300 to $600. High-quality, commercial-quality vacuum cleaners can cost hundreds of dollars, but all-purpose cleaning solutions can be as low as $10. Brooms, mops, and other basic dusting supplies can be procured for less than $50.

Don’t neglect advertising, marketing, and labor costs either. Expect to invest up to $200 for print and online marketing, such as printing business cards and setting up a basic website. Typical cleaning job labor costs start at an hourly rate of $12 per employee. Adjust depending on prevailing rates in your area.

4: Create a Name for Your New York Business

Ready to name this beautiful business brainchild of yours? It’s a crowded business landscape in New York, so try to come up with a business name that is memorable, easy to understand, and not yet in use. Yes, that’s a tall order in New York, but you can do it! 

Think about words that are used in your industry or to describe your product(s)/service(s). Maybe incorporate your own name into the business name, or a play off of your initials. 

Once you have a list of possibilities, check to see which ones aren’t already in use in New York. (You definitely don’t want to get sued by a business that’s already using the name!) After you’ve checked the real world, check the online world, too! Are the website address and social media presences for your business name available? 

When you land on a name that meets all these criteria, register the domain and social media presences.

5: Register Your Business and Open Financial Accounts

Using the structure and name you selected, register the business with the state of New York. Also, obtain a federal employer identification number (EIN) from the IRS if you’re operating as anything other than a sole prop (for which you can just use your social security number, if you prefer). You’ll need paperwork from both of these actions to then open a business bank account. It can be tempting to just run the business money through your existing personal accounts, but it’s not a good idea. This can pierce the corporate veil (affecting the liability protection afforded to your personal assets) and wreak havoc when it comes time to do the taxes. 

Check with the state of New York Division of Licensing and your local municipality to determine whether you need permits or business licenses. 

Finally, learn about business insurance in New York and which type(s) you may need. If you intend to have any employees as part of your LLC or corporation, workers’ compensation insurance and disability benefits insurance are required.

6: Market Your New York Business

Marketing a business in New York can be tough. You’ll need to break through a lot of noise to reach the intended eyeballs. Optimize your website for search engines, and create a social media strategy that you’ll execute faithfully — or hire someone to handle that for you. Think Twitter, LinkedIn, Facebook, TikTok, Snapchat, Pinterest, and the like. 

Register the business location with Google My Business so people can find you. Make your signage as noticeable as allowed (if you have a physical location), and don’t be shy with the business cards or flyer postings. 

Empire State Development can help connect you to other companies that might expand your market, bring in new customers, and offer growth opportunities.

Examples of Good Businesses to Start in New York

New York State has a wide variety of industry both in its most well-known city and the rest of the state. It’s home to agriculture (dairy, apples, cattle and calves, greenhouse and nursery products, and hay), manufacturing (pharmaceuticals, photographic chemicals, industrial equipment), mining (limestone, salt, sand, garnets, zinc), and service providers (finance, insurance, real estate).

IBM, Deloitte, PepsiCo, JPMorgan Chase, and PricewaterhouseCoopers are the top businesses in the state. The best small businesses to work for include Giant Machines, Eden Health, 7Park Data, adMarketplace, Alloy, and Catalyst Software. Consider starting up a New York company that serves those businesses or competes with them. Auto repair shops, consultancies, food trucks, coffee shops, and boutiques are all good businesses to start in the state.

Bottom Line

The bottom line is that New York is a competitive place to start a business. Its taxes, filing fees, and regulation are expensive and not as easy to navigate as those of other states. At the same time, it’s the ultimate proving ground for entrepreneurs. NYC alone offers an enormous workforce and customer pool for businesses, and headquartering anywhere in the state puts you in proximity to the most well-known city for business in the United States.

New York Business FAQs

  1. What is a good city to start a business in New York?

    Obviously, New York City offers an incredibly large and diverse workforce. Other cities in the state to consider include its capital, Albany, as well as Syracuse, Buffalo, and Rochester.

  2. What business and tax regulations are compulsory for an LLC business in New York?

    New York’s Department of Taxation and Finance can assist with determining which taxes and regulations apply to your specific business.

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