New York LLC Tax Requirements

Filing fee: $200 (Articles of Organization)

Processing time: 7 business days standard; expedited options available

State agency: New York Department of State, Division of Corporations

Annual report due: Biennial statement due every 2 years; IT-204-LL filing fee due by April 15 each year

State tax rate: IT-204-LL filing fee based on NY-source gross income (minimum $25); personal income tax rates 4%–10.9%

A New York LLC pays taxes at multiple levels: a state filing fee based on gross income, personal income tax on profits passed through to members, sales tax on taxable goods and services, and federal self-employment tax. New York doesn't impose a separate entity-level income tax on most LLCs, but the state's IT-204-LL filing fee applies to nearly every LLC doing business in the state.

New York has more moving parts than most states when it comes to LLC taxes — the IT-204-LL fee alone catches a lot of first-time owners off guard.

• IT-204-LL annual filing fee (state-level, based on NY-source gross income)
• Personal income tax on your share of LLC profits
• Sales tax if you sell taxable goods or services
• Self-employment tax on net earnings (federal)
• Payroll taxes if you have employees

New York LLCs file and pay taxes through the NYS Department of Taxation and Finance. The 2 main obligations are the IT-204-LL filing fee and personal income tax on profits. Most LLCs aren't subject to the corporate franchise tax, but if your LLC elects to be taxed as a corporation, that changes.

IT-204-LL annual filing fee

Every LLC doing business in New York must file Form IT-204-LL and pay an annual filing fee. The fee is based on your LLC's New York-source gross income from the prior year. The minimum fee is $25 (for gross income under $100,000). The fee scales up from there, reaching $4,500 for LLCs with $25 million or more in NY-source gross income. The return is due by April 15 for calendar-year filers.

• Under $100,000 in NY-source gross income: $25
• $100,000–$249,999: $50
• $250,000–$499,999: $175
• $500,000–$999,999: $500
• $1,000,000–$4,999,999: $1,500
• $5,000,000–$24,999,999: $3,000
• $25,000,000 or more: $4,500

New York personal income tax

Because most LLCs are pass-through entities, you don't pay income tax at the LLC level. Instead, your share of the LLC's profits flows to your personal New York state tax return. New York personal income tax rates run from 4% to 10.9%, depending on your income. New York City residents pay an additional city income tax on top of the state rate.

New York sales tax

New York's statewide sales tax rate is 4%. Most counties and cities add their own local rate on top of that. In New York City, the combined rate is 8.875%. If your LLC sells taxable goods or services, you need to register for a Certificate of Authority with the NYS Department of Taxation and Finance before you start collecting sales tax. A tax professional can help you figure out which of your products or services are taxable under New York law.

New York corporate franchise tax

Most LLCs taxed as partnerships or disregarded entities don't pay the New York corporate franchise tax. If your LLC elects to be taxed as a C Corporation or S Corporation, it becomes subject to New York's corporate franchise tax under Article 9-A. LLCs operating in New York City may also be subject to the NYC Business Corporation Tax. Talk to a tax professional before making a corporate election — the tax implications are significant.

At the federal level, most LLCs don't pay income tax as an entity. Profits and losses pass through to the members, who report them on their personal federal returns. The IRS classifies a single-member LLC as a disregarded entity and a multi-member LLC as a partnership by default — unless the LLC elects a different classification.

Self-employment tax

If you're an active member of your LLC, you owe self-employment tax on your share of net earnings. The self-employment tax rate is 15.3% — covering Social Security (12.4%) and Medicare (2.9%). You report and pay this on your federal return using Schedule SE. You can deduct half of the self-employment tax you pay when calculating your adjusted gross income.

Federal income tax — pass-through reporting

A multi-member LLC files federal Form 1065 (the partnership return) and issues a Schedule K-1 to each member showing their share of income, deductions, and credits. Each member then reports that K-1 income on their personal federal return. A single-member LLC reports business income directly on Schedule C of the owner's Form 1040.

Estimated taxes

LLC members don't have taxes withheld from their income the way employees do. If you expect to owe $1,000 or more in federal taxes for the year, you need to make quarterly estimated tax payments to the IRS. New York state has the same requirement — if you expect to owe $300 or more in state tax, quarterly estimated payments are due. Missing these payments can mean an underpayment penalty at both the federal and state level.

If your LLC has employees, you take on payroll tax obligations at both the federal and state level. This is a separate layer of tax responsibility from what you pay as an owner — and it applies from the first paycheck you issue.

Federal payroll taxes

As an employer, your LLC withholds federal income tax, Social Security, and Medicare from employee wages and matches the Social Security and Medicare contributions. You also pay Federal Unemployment Tax (FUTA) on the first $7,000 of each employee's wages. You'll need an Employer Identification Number (EIN) to handle payroll — apply for one at irs.gov.

New York state payroll taxes

New York employers withhold state income tax from employee wages and pay New York State Unemployment Insurance (UI) tax. New York also requires employers to carry workers' compensation insurance and disability benefits insurance. New York City employers may have additional withholding obligations. A payroll provider or tax professional can help you stay on top of the deposit schedules and filing deadlines.