Do you own or operate a company in New York City? Here are some of the difficulties and possibilities that the state is now facing.
Businesses in New York must cope with hefty taxes as well as a complicated regulatory environment. Because of its close proximity to New York City, the region has good access to both finance and experienced labor. Both very good things for small business growth.
Within the state of New York, there are more than 2 million small enterprises that employ a total of 4 million people. These small firms account for 99.8 percent of all enterprises in the state and employ more than half of the state’s workers, according to the Small Business Administration. In 2018, the unemployment rate in New York was around 4.7 percent, which was somewhat higher than the national average but still considered healthy. The proportion of people employed by small firms demonstrates the importance of small businesses to the state’s economy: small businesses produced 113,528 net employment across the state in 2010.
In 2018, the state of New York had a gross domestic product (GDP) of $1.676 trillion, which placed it third in the country. In 2018, the state’s gross domestic product (GDP) increased by 2.1 percent, which was somewhat slower than the national growth rate of 2.9 percent. Finance, insurance, real estate, rental and leasing, professional and commercial services, government and government enterprise, educational services, healthcare and social assistance, and information are the top five industries in New York.
What is the impact of this economic environment on the fortunes of small enterprises throughout the state of California? And what particular difficulties do small company entrepreneurs in New York City face? In order to know the answers to these questions, Business News Daily reached out to some of the state’s most successful businesses.
Regulations that are difficult to understand
A diverse set of rules, many of which are progressive and aimed to benefit employees, are in place in New York State. While new rules are not necessarily harmful, they do need greater preparedness on the side of firms, which frequently results in increased legal expenses.
“[New York rules] are extremely difficult to navigate and necessitate the use of excellent legal counsel,” said Greg Peters, CEO and co-founder of BetterPT. “We made significant investments in resources from the beginning to guarantee that our objective is both feasible and scalable. In this ever-changing climate, we are always analyzing the regulatory landscape and making adjustments as needed.”
A number of company owners have discovered that collaborating with state authorities may help them navigate the regulatory maze and reduce their regulatory burden. When conducting business in New York, it is critical to have excellent working relationships with the key regulatory organizations that have an influence on your company.
“As a whole, the regulatory framework is easily discernible and reasonable to follow in general. Take, for example, our years of collaboration with the Department of Transportation, during which time we have never felt that our line of contact was overly invasive or delayed “Sharone Ben-Harosh, the founder and CEO of FlatRate Moving, shared her thoughts.
Taxes that are too high
The comparatively high taxes in New York state, according to some businesses we spoke with, was a significant hurdle. Despite the fact that taxes are an unavoidable part of doing business anyplace, New York State maintains a tax system that frequently defers to the most applicable calculation for enterprises in the state. There are various indicators that a business must use in order to determine its tax bill, which can make the process difficult at times.
According to Warren H. Cohn, CEO of HeraldPR and Emerald Digital, “New York’s business tax system is costly, making it difficult to conduct business as an entrepreneur.” “Taxes on small and medium-sized firms are exceedingly costly, and as a result, small businesses are frequently forced out of the cityscape.”
Therefore, Cohn stated that he is considering expanding in southern cities such as New Orleans or Miami, where he believes it is simpler and less expensive for enterprises to operate.
Both a corporate franchise tax, which applies to both C-Corps and S-Corps, as well as an LLC filing fee are maintained by the state of New York. As “pass-through entities,” limited liability companies (LLCs) are defined as businesses in which all revenue generated by the LLC “passes through” to the owner and is reported on the owner’s personal tax return.
6.5 percent is the base tax on company income in the state of New York, with a lower 5.5 percent rate available to some enterprises who meet specific requirements. In addition, firms may be liable to a capital base tax or a set dollar minimum tax depending on their circumstances. Corporations are normally required to pay the higher of the two amounts if required by state law.
“New York is well-known for having a corporate tax regime that is both difficult and expensive,” Peters explained. According to the report, “this is mostly due to the assessment of corporation taxes, which typically tends toward the most costly choice.”
Labor market that is competitive
A populous east coast state, New York is well-known for its cities and economic activity, as well as for its political and cultural diversity. As a result, there are a plethora of organizations eager to hire individuals with exceptional abilities. Although the unemployment rate is not exceedingly low, it is still below 5 percent, which contributes to a competitive environment for the most qualified job seekers. In order to face this issue, small firms are establishing more appealing salary packages and other incentives for their employees in an effort to better attract, hire, and retain the best and brightest individuals. This in turn will help small businesses succeed.