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Initial Taxes and Fees in New York

April 13, 2006

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If you're going to operate your business in New York, when you start up you're likely to incur filing fees and licensing fees depending on the type of business you run (hairdresser, lawyer, etc.) and the business form you operate your business as — are you a corporation, sole proprietorship, partnership, or limited liability company (LLC)?

Corporations. Let's say you're starting your business in New York state and you want to operate it as a corporation. To begin with, you should know that New York taxes domestic corporations (corporations incorporated in New York) on their capital stock (the total amount of stock authorized for issue by a corporation). As a domestic corporation you must pay this initial tax upon organization. The amount is .05 percent of the par value (face value) of all authorized shares. If your corporation has shares that do not have a par value, the tax rate is five cents on each authorized share of stock. The minimum organization tax under this provision is $10.

If you're a foreign corporation (a corporation organized in a state other than New York), but you want to do business in New York, you will also have to pay this organization tax. Your foreign corporation is required to pay .05 percent of the face value of issued capital stock employed in the state for par value shares, plus five cents on each share without par value. The minimum organization tax under this provision is $10.

Did You Know? It is common for closely held corporations formed in New York to have an initial authorized capital of 200 shares of no par common stock since this is the largest number of no par shares that can produce the minimum organization tax of $10. This is something you may want to consider if you are forming a closely held corporation.

As a corporation, you don't compute and report the fees on capital structure when you organize — this is done by the Secretary of State. No forms are filed for this tax.

Warning Neither the Secretary of State nor any county clerk may file a certificate of incorporation unless the tax on capital structure is paid. This is the tax that must be paid to get your business started as a corporation in New York.

If you're doing business as a domestic corporation in New York you will also be subject to the following fees. These are payable to the New York Department of State:

If you're a foreign corporation (a corporation that's incorporated somewhere other than New York), but you want to do business in New York, you too will incur fees:

Limited liability companies (LLCs). In New York, an LLC is formed by filing articles of organization with the Department of State. LLCs are subject to an annual filing fee of $50 per member, with a minimum of $325 and a maximum of $10,000, and a biennial statement filing fee of $9.

The following fees are imposed in connection with the formation of a LLC:

Foreign LLCs may apply for authority to do business in New York. New York's laws provide that the laws of the formation state of a foreign LLC will govern the outcome of issues regarding the LLC's internal affairs and issues regarding the liability of its members and managers.

Business licensing fees. Suppose you don't operate your business as a corporation? Let's say you're a sole proprietor. You may not be off the hook for startup fees — New York imposes miscellaneous license fees for doing business in the state. For this reason, we recommend that you check with the state to make sure you are complying with the licensing requirements, if there are any, for your particular profession.

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