From the magical Boreal forests in the Adirondack Mountains to the bright lights of Broadway, east to Long Island’s Montauk Point, and the vast protected wilderness in between, New York State is a diverse and prosperous place for starting a business.
The Empire State’s economy is America’s 3rd strongest, larger than Canada, South Korea, Russia, and Australia. And NYC is the 10th largest globally!
It’s busy, too, the 4th most populous and 7th densely populated state, so there’s plenty of passing trade.
And entrepreneurial funding, NY ranked 2nd in 2022 for VC investments (29.3 billion US dollars).
Ready to learn how to start a business in New York?
And remember, “If you can make it here, you can make it anywhere!”
Here are the steps you need to follow to start your own business in New York, we’ll explain more about each step below:
New York (or NYC) may be where dreams are made, but you need a great business idea to make them a reality.
The first place to begin when developing your business idea is you.
Consider why you want to start a business in New York (sure, money), but other factors are equally important, such as your lifestyle and the time you can devote.
Next, add your interests, skills, availability, and resources to the mix.
Then consider the likelihood of your business idea succeeding in your chosen location.
For example, suppose you enter the retail or food industry. In that case, you’ll need a high footfall of passing trade, so NYC, Yonkers, Buffalo, Rochester, or Syracuse would all be a safe bet. In contrast, agriculture start-ups would flourish in the Finger Lakes region.
And finally, think about your community needs and ensure your business idea provides a viable solution.
Stuck for an idea? Don’t schvitz it; here are some to consider:
We know NYC for its booming financial, business, healthcare, education, and manufacturing services. If your idea is in one of those niches, odds are you’ll do well.
But 98% of NYC businesses are small businesses, and some are in high demand throughout NY state, such as
You can’t be frontin’ with your business idea, and that’s where validation comes into play:
Validation ensures your business idea is worth the investment by asking questions about your niche, such as:
A lot to consider, right?
And that’s why you create a business plan:
Starting an untested business idea is like “throwing spaghetti at the wall to see what sticks.” And if most hit the floor, you’re in trouble.
It makes sense to throw the spaghetti before you invest!
Your business plan ensures your idea sticks by researching your start-up costs, competitors, ideal clients, best marketing practices, and how and when you’ll make money.
And if you require funding, you`ll need a business plan to convince lenders to buy into your vision.
The process of evaluating your chosen market to determine its size and whether it’s growing or declining in popularity. Identifying your target audience, their needs, and where they shop for your products or services. And your competitors to confirm their number, strengths, and weaknesses.
Here’s where you’ll take all you’ve learned from your market research to create a marketing plan that contains the best marketing strategies for engaging and converting your target audience into loyal brand followers.
Your financial plan aims to ensure you choose a profitable business idea and convince lenders to invest in your start-up.
It includes the fixed and variable costs of starting and establishing your brand, like business formation, property rental, marketing strategies, staff wages, monthly utility bills, equipment, product costs, and profit forecasts.
Your start-up’s location depends on your business type, intended customers, and what you can afford.
For example, restaurateurs and retail entrepreneurs will need a high footfall of passing trade to succeed. Online product sellers could start from home or use an affordable lockup to reduce start-up costs.
Before choosing your location, you must confirm it suits your target audience and your budget, and if it does, ensure it’s allowable for your business type.
All states, counties, and cities have zoning laws controlling land and building use.
For example, you’ll need a general business license and local health and safety permits to start a commercial candle-making business.
Contact your chosen area’s planning or zoning department to learn more about local ordinances.
Creating an online business is one way to reduce your start-up costs and avoid some zoning laws.
For example, you could start a home-based catering business, ship orders, and expand to commercial property as your brand grows in popularity. But while that would remove rent from your start-up costs, you might still require a zoning permit to operate from home.
To start an online business, you’ll need:
Your business name is your most important choice when creating your start-up, as it’s the first thing customers see.
So, it must engage their attention, create curiosity, and resonate emotionally so they’re compelled to learn more about your business. And suit your brand’s personality, convey what you sell or provide, and allow market expansion.
When choosing your business name, you must also comply with New York and national-level naming rules; here’s what to look out for:
All business types can apply to use a Doing Business As (or fictitious name), allowing them to use a name different from their legal entity (LLCs and corporations) or personal name (sole proprietorships or general partnerships) via their county clerk’s office.
Structures represent the legal entities you use to establish your business; which you choose determines your legal rights and responsibilities, including how you register, file taxes, and your level of liability protection.
There are around 15 available business structures; the most popular for SMBs are.
An unincorporated entity (not separate from its owner). You don’t register a sole proprietorship, keep all profits and losses, and handle any debts or cases of litigation.
An unincorporated entity with 2 or more owners without registration requirements or liability protection. All profits and losses go to the partners relative to the partnership agreement.
LLCs are incorporated, require registration, and provide liability protection to their owners, known as members. 8 LLC types exist, but the most common for SMBs are single-member and multi-member.
Learn more about opening an LLC in New York here.
Corporations are, as the name suggests, incorporated structures. The 2 most common types of corporations are a C corp and an S corp. Owners of corporations are called shareholders who can buy and sell stocks, receive a wage, and enjoy liability protection.
The primary advantage of all the above structures (except a C corporation) is they use pass-through taxation, with profits and losses going to the owners who avoid corporation tax.
S corporations shareholders have an extra tax advantage as they can take a wage and receive tax-free payments called dividends.
The saying “Never mix business with pleasure” rings true regarding controlling your business finances, liability protection, and tax compliance.
Fortunately, all 3 are easy to do when you have the following:
A business bank account makes tracking your income and expenses more manageable, simplifying your bookkeeping and tax compliance. And for some business types, like LLCs and corporations, a separate bank account is essential to maintain liability protection.
Another way to avoid “mixing business with pleasure” is using a business credit card.
But credit cards can help your business in other ways, such as providing a handy cash line and building your business’s credit history, which can help with getting a loan.
All businesses need a solid bookkeeping strategy to track their cash flow, pay bills, comply with payroll obligations, and file accurate tax returns.
Business accounting often involves 2 things: an accountant to comply with NY tax requirements come tax season and accounting software that integrates with your credit and business bank accounts enabling you to track working hours, pay bills, and send invoices.
Over 80% of start-ups fail by year 5, and 82% of those fail because of insufficient cash flow (AKA funding).
That’s 80 out of every 100 start-ups and many broken dreams.
Many of us need funding to either start, run, or expand our businesses, and often that funding comes in different forms.
Let’s see what’s available:
New York State supports and encourages business growth with various loans, tax incentives, and grants.
The SBA provides Small Business Lending Programs to businesses through approved commercial lenders to start or expand, often at lower interest rates and longer repayment times than other lenders.
Here’s where individual investors (angels) or a group (VCs) fund your start-up for a percentage ownership. VCs take an active role, while angels often act as silent partners, letting you do your work.
New York is famous for innovation and capital funding, with VC and angel-funded start-ups raising $20.2 billion in 2021.
Two types of business insurance exist when you start a business in New York, mandatory and optional, and both depend on your niche and whether you have employees.
First, we’ll look at optional insurance policies:
Protects your business against claims regarding client property damage and injury. GLI is the most common business insurance policy.
Entrepreneurs who provide professional services, like financial advisors, accountancy, real estate, and consultancy firms, require PLI to cover negligence claims and inaccurate advice.
Provides financial support to cover lost income should illness or natural disaster interrupt your business.
Covers the expense of fires, vandalism, and theft of your business property.
Protects against 3rd party liability claims, vehicle loss or damage, and employee injury.
An optional insurance policy that covers any expenses your other policies do not.
Okay, now the insurance you must have when you start a business in New York:
Licenses come on 3 levels: state, local (your county or city), and federal.
NYS doesn’t have a general business license. Still, some businesses need an occupational license or local permit to operate, like regulatory licenses for restaurants, child care, and construction that cover health and safety.
You can see which state licenses or permits you’ll need using the New York state’s Business Wizard or by visiting their Business Express page.
For local general-business licenses, industry-specific licenses, and permits, contact your county or city’s relevant municipal departments, which you can find using the below links:
Next is tax, and it comes on several levels depending on your niche and location; here’s a quick breakdown of how it works:
Check the IRS Tax Guide for Small Business and Taxpayers Starting a Business for further tax information.
New York taxes most businesses, and to pay, you must register with New York’s Tax Department before starting a business in New York.
Other requirements include:
Note:
Check out the Department of Taxation and Finance for your tax obligations and to create your tax filing account.
Some entrepreneurs start their businesses and then hire employees; for others, finding the right team before starting is essential, which can be a daunting experience.
After all, you must balance your business’s cash flow and comply with legal requirements.
Fortunately, it doesn’t have to be stressful; here’s why:
From office managers, junior apprentices, and part-time freelancers, all employees are crucial to our business success.
They represent our brand, connect with our target audience, implement our strategies, and keep the wheels turning, and that’s why the right team is essential.
Today that has become easier to accomplish by hiring the best professionals when required, such as freelancers on a project-need basis or accountants on retainer.
But many of us need full-time, in-house employees, and those come with regulations; here’s what you must do:
In New York, you must take the following steps before and after you hire employees.
Start-up entrepreneurs not ready for full-time employees aren’t alone; you can hire contractors to help. And as you avoid unemployment insurance and payroll taxes, contractors are more cost-effective.
But you must classify any contractors correctly (you can’t say employees are contractors). The New York State independent contractor regulations determine the working relationship, not the employer and employee.
With your business structure, finances, team, and paperwork in place, you’re ready to start a business in New York; now it`s time to let NYS know you’re open.
Marketing for many new business owners can seem daunting, but it’s actually an opportunity to flex your brand’s creativity.
To begin with, use proven marketing strategies that build your online presence, engage your target audience, and grow your community.
Opt-in is a subscription marketing strategy that asks people to give their email addresses for something in return. Marketers use it to create promotional email lists and publish newsletters to build an interested community.
Opt-in marketing takes time (and might seem unnecessary when you start your business), but the sooner you collect your target audience’s emails, the quicker you’ll create a community that wants what you sell.
Your competitors have your target audience’s trust, so why should they shop with you?
One way to entice them is by providing extra value, such as special offers. After all, we all love a deal, right?
Strategies you can use:
When running promotions, track which ones make the most sales, then use those to attract new customers.
You have 2 competitors, direct (selling the same products to the same audience) and indirect (selling different products to the same audience).
Brand collaboration is when you join forces with indirect competitors and promote each other’s businesses to your existing customers.
It helps you in 3 ways. You gain your collaborator’s customers’ trust through association, broadening your target market, and increasing sales.
Your customers are your ultimate brand ambassadors; the better you treat them, the quicker they’ll spread the word.
Your mission with every transaction is to cultivate Word-of-Mouth-Marketing by going above and beyond your customer’s expectations so they want to share their positive experiences and promote your brand.
Reviews can make or break your business, and after 10 years of selling on Amazon and running a tourism business that depends on them, I know!
Your new business’s first 10 reviews are crucial, so you must encourage your first customers to leave reviews and ensure they’re 5 stars.
Here’s why:
Another way to build trust between you and your target audience is to provide free content that helps your audience solve problems.
You can use various mediums, like podcasts, videos, images, or blogs. And the key to success is the value your content gives your audience.
Use your content strategy to tell stories about real people and genuine issues because we all have them, and that’ll get folks talking about your brand.
Your last step in starting a business in New York is opening your physical or virtual doors and making your first sale.
Now you have 2 choices: sit back and wait for people to come to you or plan a launch event that engages your target audience’s attention.
A launch party introduces and kick-starts something new, like a fresh brand, product, place, or service.
During your launch event, you aim to showcase your brand’s values, expressing your beliefs and aspirations, all while revealing something new to local influential figures, potential brand collaborators, and your target audience.
Throwing a successful launch event can create excitement and positive feelings for your brand, but only if you do it right.
How to plan a launch event:
Your first sale is a historical moment in your entrepreneurial career. I remember mine in all my different businesses, and the feeling is always the same, pure joy and relief.
Joy because you’ve made it happen and relief because it confirms what you already knew.
Remember, when those first sales begin, contact your customers, thank them for choosing your brand, ask if your service met their requirements, and get those reviews.
And that’s how to start a business in New York.
Remember, the most essential steps in your journey are choosing a business idea you’ll love doing, day in, day out, validating it to ensure people need what you’re offering, and putting yourself in your customer’s place.
Good luck!
It depends on the type of business you want to start, the structure you choose, your location if you’ll lease, and the licenses and permit requirements.
Once you know those answers, you can figure out the costs.
You must register with federal and state departments. For example, sole proprietorships and general partners must file with their county, while LLCs file Articles of Organization with the state.
Depending on your circumstances, get your EIN, register as an NYS sales tax vendor, and apply for relevant licenses, permits, and insurance.
To file your LLC Articles of Organization in New York State costs $200.
And NYC requires all new LLCs to publish a notification of their registration in the local media, which costs between $300 and $1,200, plus $50 to submit your Certificate of Publication with the Department of State.
NYS has no general business license, so there isn’t a set fee. Nor does it charge for a sales certificate. But depending on your niche, you may need a state occupational license or a municipal permit to operate; these can cost $50 to $170.
New York is known for high taxes, making it difficult for businesses. Still, the state offers start-ups many tax benefits and incentives to encourage business growth in NYS.
Yes, because of high taxes, municipal charges, and lease costs.
Starting a business in New York is the same as in any state; fulfilling your entrepreneurial dreams requires funding, time, dedication, and personal and professional support.
This portion of our website is for informational purposes only. Tailor Brands is not a law firm, and none of the information on this website constitutes or is intended to convey legal advice. All statements, opinions, recommendations, and conclusions are solely the expression of the author and provided on an as-is basis. Accordingly, Tailor Brands is not responsible for the information and/or its accuracy or completeness.
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