Here’s a breakdown of the likely taxes and fees you’ll incur when you start and run a corporation in New York.
The way that S Corporations and C Corporations pay tax is different. We’ll take each one separately.
If you employ others, you will need to pay insurance and taxes to the state for each employee. Here’s how to register for the various employee taxes, insurance and other costs.
Federal income tax on earnings, dividends and distributions: You will also need to pay regular federal income tax when you file your tax return every year. Note that you will be able to apply your standard deduction, personal exemption and business expenses to this tax.
Because your New York corporation income flows through to your personal tax return, you must pay self-employment tax (also known as FICA, Social Security or Medicare tax) on your earnings. This is typically at a rate of 15.3 percent. You will be able to deduct your business expenses from your income when working out how much self-employment tax you owe.
In some cases, part of the income from an S Corporation can be paid as a “distribution” rather than “salary” so it would not be subject to self-employment tax. Find out how this can save you money.
Taxes Payable by NY C Corporations
Unlike a Limited Liability Company or an S Corporation, a C Corporation is required to file a corporate tax return and pay corporation taxes on any profits. When those taxed profits are paid to shareholders as dividends, they will also be subject to taxation on that individual’s tax return.
This is known as “double taxation.” The income of the C Corporation is taxed at the corporate level and then again at the shareholder level.
A C Corporation may pay shareholders dividends as a share of the profits of the company. The value of dividends that each shareholder is entitled to depends on how many shares they own.
Dividends that are distributed to shareholders are taxed twice: first at the corporate level as profit (on the corporation’s form 1120) and again at the individual level as stock dividends (on the shareholder's form 1040).
Incfile provides a cost-effective service to help you create your New York corporation. We guide you through the process and handle most of the administrative steps, such as filing the Certificate of Incorporation on your behalf. Our basic package also provides a free Registered Agent service for the first year.
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|State Fee||State Filing Time||Expedited Filing Time|
|$130||5 Business Days||1 Business Day|
This report is mandatory and must be filed within the specified time frame in order for the entity to remain in good standing with the state. Failure to file this report can lead to the company being revoked or administratively dissolved.
Due Date: During anniversary month of organization.
Filing Fee: $9
Important: Section 206 of the New York State Limited Liability Company Law requires that within 120 days after the effectiveness of the initial articles of organization, a limited liability company (LLC) must publish in two newspapers a copy of the articles of organization or a notice related to the formation of the LLC. The newspapers must be designated by the county clerk of the county in which the office of the LLC is located, as stated in the articles of organization. After publication, the printer or publisher of each newspaper will provide you with an affidavit of publication. A Certificate of Publication, with the affidavits of publication of the newspapers attached, must be submitted to the New York Department of State, Division of Corporations, One Commerce Plaza, 99 Washington Avenue, Albany, NY 12231. The fee for filing the Certificate of Publication is $50.
(We do not assist in the filing of the Publication Requirement)
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