Taxes have always been the bane of existence for taxpayers as the changing laws and regulations can make the tricky subject even more challenging to track, but the difficulty rises higher for moguls running their own business. We’ll be spotlighting small business owners in New York as it’s one of the most complex states due to the multiple taxes charged, making the big apple one of the more complicated states for paying taxes.
The Epicenter of the World’s Economy: Taxes for Small Businesses in New York
New York is vibrant and electric, but it also involves keeping up with different tax payments—from paying federal taxes to the IRS, completing New York State taxes to the Department of Taxation and Finance, to New York State income taxes for pass-through entities, and city-specific taxes to top all the tax burdens off with its several layers of liability.
With all that in mind, there’s no denying that the fiscal outlook for small business owners in New York may seem bleak at first glance, but it often targets C corporations with the highest tax bill. That means smaller businesses can still get a solid foothold in the tax game, though it can still be a time-consuming process as corporate franchise tax must be calculated in three ways:
- Tax on Business Income
- Tax on Capital
- Fixed Dollar Minimum Tax
Different Ways and Metrics to Calculate Taxes in New York
The most straightforward way to calculate taxes is based on the company’s net income, equal to the federal taxable income. Businesses in New York can expect the taxes to reach 6.5 percent as the standard rate.
Corporations will also need to undergo taxes depending on the type of business and its investment capital, though the liabilities won’t be included in the calculation. In that regard, the average tax rate is typically at 0.025 percent with a cap of five million dollars.
The fixed minimum involves taxing corporations based on their gross receipts, which should range from $25 for $100,000 to $200,000 worth of gross receipts.
The Bottom Line: The Intricacy of Taxes in New York
Taxes in New York are one of the tightest processes in the world as the state strives to close as many loopholes as possible to mitigate tax-saving strategies, plus the fact that paying multiple taxes using different calculations and methods can make tax filing a nightmare even for seasoned business owners.
Keep in mind that there are also different tax calculations for various business types—from C corporations, S corporations, limited liability companies, partnerships to sole proprietors. To that end, it’s important to work with professional accountants in New York who can help you navigate through the complexities and ensure you’re on track with your tax obligations.
Do You Need Help with Your Accounting and Bookkeeping?
If you’re looking for bookkeepers and accountants in Rochester, we’re here to help simplify your books and ensure you’re on top of your financial health in more ways than one. Bianchi & Associates has been providing exceptional accounting services since 1945.
We are the leading financial partners in Rochester, NY, offering accounting, tax, bookkeeping, and financial planning needs. Get in touch with us at (585) 254-4485 and learn more about how we can help you with all your financial needs.