New York is a state that’s heavy on taxation and regulation, but it’s also an entrepreneurial challenge that draws millions. Starting a business in New York, can seem like an overwhelming task, especially in the Big Apple. We’ve put together a step-by-step guide to help you turn your business ideas into a reality.

Step 1: Create a business plan for your New York company

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.

What to Include in a Business Plan

When writing the business plan, flesh out the following:

1. Executive summary: While this section comes first, you’ll write it last. That’s because 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 business expenses and costs to start and run your company. How will it earn income? 

Step 2: Choose 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. Two of the most commonly chosen structures are sole proprietorship and LLC.

Sole Proprietorship

A sole proprietorship is the simplest business structure to create. It’s not registered with the state, is free to set up, and designates all profits to the sole owner. 

Limited Liability Company (LLC)

An LLC is incorporated with the state, costs money to create, and offers liability protection. These liability protections safeguard the owner’s assets (like home and car) if the company is sued or ends up in debt. 

Corporation

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. 

New York LLC Online Formation and Registered Agent Services

If you choose LLC for your business entity type, you’ll file New York Articles of Organization to legally form your business. Working with a professional formation, registered agent, and compliance service like ZenBusiness can help you keep things simple.

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

Step 3: Determine startup costs for your New York business

It’s important to calculate your business costs before starting a business in New York.  

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.   

More Tips for Estimating Business Expenses

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.

Costs can also depend on your industry

Consider your industry and target market. For instance, if you’re running a cleaning business: 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 markets, such as a preference for environmentally-friendly cleaners, or additional sanitation requirements due to the COVID-19 pandemic.

Other Considerations

• 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 from $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.

Estimate your marketing expenses

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.

Step 4: Name your New York business

Ready to name this beautiful business idea of yours? It’s a crowded professional 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! 

Business Naming Tips

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

Check name availability

Once you have a list of possibilities, check to see which names are available with the NY Department of State. (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 online, 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 presence.

Step 5: Register your business in New York

Using the structure and name you selected, register the business with the state of New York.

Get an EIN

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).

Open a business bank account

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 affect the liability protection afforded to your personal assets and wreak havoc when it comes time to file taxes. 

Acquire any necessary business licenses or permits

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

Get business insurance

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 a must.

Step 6: Market your 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. 

SEO, Social Media, and Physical Advertising

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. 

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. Rising to that challenge proves your mettle. 

You don’t have to be in NYC to thrive

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.

Examples of good businesses to start in New York

New York State has a wide variety of industries 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).

Top Companies in New York

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.

Ready to form your New York business? Reach out to us today! From formation to registered agent services to compliance, we’ve got your back.

More on starting a business in New York

• How to Open Your New York Construction Business
• 23 Business Ideas in New York City
• How to Start a Bakery in New York
• Start a Home Business in New York