Securing the right business licenses in New York is an essential step to starting your new business on the right foot. There are both state licenses and local licenses given out by your county, city, town, or village. You may have to work with both the State of New York and your local governments to make sure you have the right professional licensing for your business.
In this article, we go over why you should start a business in New York, what a business license is, and how to get a business license in New York.
Why Start a Business in New York?
New York State is familiar with small business — over 99% of all New York businesses were small businesses as of 2021. One reason for this is that, as a small business owner in New York, you’re close to New York City. NYC may provide a huge potential customer base with disposable income, better skilled employees, and more access to capital.
There are also many programs that help small businesses get established and grow in the state. For example, the Business Mentor Program is a state-run program that offers pro-bono mentoring to entrepreneurs and small businesses. More information can be found on the Empire State Development site. Furthermore, there are tax incentives if you operate near a campus or university in the state.
However, there are some difficulties you’ll likely encounter when you open a small business in New York, like that taxes tend to be on the higher end of the spectrum and regulations can be confusing and complicated.
What Is a Business License?
Business licenses get approved by the government — state or local — and allow your business to operate within the law. Having the right business licenses is necessary to make sure you’re doing business legally. Whether you operate a sole proprietorship, partnership, limited liability company (LLC), or another business entity, you may need one or more business licenses.
State business licenses are issued by the Department of State or other departments within the state government.
Who Needs a Business License?
Entrepreneurs and new business owners want to make sure they’re starting their ventures off on the right foot by getting the right business licenses. There are many different industries that usually require business licenses, in New York and elsewhere, including:
- Alcohol making or sales
- Real estate
- Notary public
- Home inspection
You’ll also need to register as an employer with the state no matter what industry you work in if you have employees.
What Licenses Are Required to Start a Business In New York?
There is no general New York State license for business entities, so you may not need a general business license to get your company going. However, if you plan to sell goods and certain services, the Department of Taxation and Finance requires you to file a Certificate of Authority. This certificate allows you to collect sales tax from your customer sales, and you’ll need to file it at least 20 days before your sales begin.
You may be required to have other business licenses or permits specific to your industry or location. Use the New York Business Express portal (also called the Business Wizard) to enter your business information and receive a customized checklist with all the licenses you will need. (If you live in NYC, you can use the NYC Business portal to receive a license checklist). To create your custom business checklist, you’ll need to include information about:
- Whether you’re a new business or existing business
- Your business category
- The county or counties you’ll operate in
- Your legal structure
- Whether or not you will have employees
After entering these details, you’ll receive your personalized checklist that will show which licenses you’ll need to apply for (including county licenses). For local licenses and permits, you can also contact your county clerk or city officials to confirm what you’ll need.
What Are the Costs to Register a Small Business in New York?
To establish a business entity in New York, you’ll pay a fee depending on the type of business you open (sole proprietors don’t pay to establish their business). You’ll pay $5 each time you search for a business name in the database to make sure it’s not already in use. Once you choose the assumed name, or a Doing Business As (DBA) name, that you’ll operate under, you’ll file your articles of incorporation or articles of organization and pay a filing fee. LLCs pay $200 to file while corporations pay $125.
Then you’ll pay for each business license you need, if any. The cost of business licenses varies drastically, but can start at $20 and go up from there. How much you end up paying will depend on the kind of business license you need and how many you have to get.
Check out your nearest Small Business Development Center in New York for more help.
What Are the Pros of Starting a Business in New York?
- Most businesses in the state are small businesses
- Quick and easy to register using the online portal provided by the state
- Large pool of potential employees
- Access to many airports throughout the state
- Specific tax incentives for small businesses
Does New York Require LLCs to Pay Income Taxes?
In New York, most LLC owners only pay their personal income taxes to the IRS since they operate as “pass-through entities.” This means the income passes through to the owner and isn’t considered separate under state law. However, LLCs do have to make an annual filing that costs $25 if they make less than $100,000 in income.
If you have a sales tax certificate, you’ll need to file a sales tax return for your LLC every year. Filing late can bring about a fine, so mark the date in your calendar.
Why a Business License is Essential for Business Loans
If you plan to apply for small business loans, you’ll need to make sure you’re operating legally. Business lenders require detailed information on your business like an Employer Identification Number (EIN), your Social Security number, and a business plan that outlines your business structure. If your local business operates in an industry that requires a New York business license, the lender will also want proof that you have it before they’ll be willing to lend to your business.
Why a Business License is Essential for Business Credit
Staying up-to-date on your business licenses will also allow you to establish business credit. Your business licenses are public information and may be viewed by a commercial credit agency before they are willing to give your business a credit profile. For more on business credit, see our guide on how to establish business credit written by Nav’s experts. Turn to Nav for all things business credit and funding. We can help you with anything from getting business credit cards to finding the right small business financing for you. Create a free Nav account and enter your business details to get personalized options instantly.