Welcome to the guide on taxes for Limited Liability Companies (LLCs) in New York! If you are a business owner looking to start an LLC in the Empire State, it’s important to understand the various taxes that your company may be subject to. From income taxes to franchise taxes, this article will break down the different taxes that an LLC must pay in New York to help you navigate the tax landscape with ease.
What Taxes Does An LLC Pay In New York?
If you are a business owner in New York operating as a Limited Liability Company (LLC), you may be wondering about the various taxes your business will be responsible for paying. In this article, we will break down the different taxes that an LLC pays in New York, helping you understand your tax obligations as a business owner.
State Taxes for New York LLCs
When it comes to state taxes, LLCs in New York are subject to a couple of important taxes that need to be considered. The main state taxes that an LLC in New York will need to pay are the New York State filing fee, the New York State franchise tax, and the Metropolitan Commuter Transportation Mobility Tax (MCTMT).
New York State Filing Fee
As an LLC in New York, you are required to pay an annual filing fee to the state. This fee is separate from any taxes and is paid to maintain your LLC in the state’s records. The filing fee for an LLC in New York is $200 per year, and it must be paid by the end of the month in which your LLC was formed.
New York State Franchise Tax
In addition to the filing fee, LLCs in New York are also subject to the state franchise tax. The amount of this tax is based on the LLC’s income sourced to New York and is calculated using a sliding scale based on the company’s income. The minimum franchise tax amount for an LLC in New York is $25 for companies with no income.
Metropolitan Commuter Transportation Mobility Tax (MCTMT)
LLCs in New York City and the surrounding counties are also subject to the Metropolitan Commuter Transportation Mobility Tax (MCTMT). This tax is based on the payroll expense of the business and is paid quarterly. The MCTMT rate is 0.34% of payroll expense exceeding $312,500.
Federal Taxes for New York LLCs
In addition to state taxes, LLCs in New York are also subject to federal taxes. The main federal taxes that an LLC in New York will need to pay are the federal income tax, the self-employment tax, and the Federal Unemployment Tax Act (FUTA) tax.
Federal Income Tax
LLCs in New York are taxed as pass-through entities, meaning that the profits and losses of the business are passed through to the owners, who report them on their personal tax returns. LLCs do not pay federal income tax at the business level, but the owners are responsible for reporting and paying taxes on their share of the income.
Self-Employment Tax
If you are a member of an LLC in New York and are actively involved in the business, you may be subject to self-employment tax. This tax is similar to Social Security and Medicare taxes paid by employees and is calculated based on your share of the profits from the business.
Federal Unemployment Tax Act (FUTA) Tax
LLCs in New York with employees are also responsible for paying the Federal Unemployment Tax Act (FUTA) tax. This tax is separate from state unemployment taxes and is paid by the employer, not the employee. The FUTA tax rate is 6% on the first $7,000 of each employee’s wages.
Sales Tax for New York LLCs
If your LLC in New York sells goods or certain services, you may also be responsible for collecting and remitting sales tax to the state. The sales tax rate in New York varies by location, with the state rate currently set at 4% and local rates ranging from 3% to 4.875%. It is important to understand your sales tax obligations and register with the state’s Department of Taxation and Finance to ensure compliance.
Payroll Taxes for New York LLCs
If your LLC in New York has employees, you will need to withhold federal and state payroll taxes from their wages. This includes income tax withholding, Social Security tax, and Medicare tax. You are also responsible for paying a portion of the Social Security and Medicare taxes on behalf of your employees.
Property Tax for New York LLCs
LLCs in New York that own real property are also subject to property taxes on their holdings. The amount of property tax owed is based on the value of the property and the tax rate set by the local government where the property is located. It is important to stay current on property tax payments to avoid penalties and interest.
Conclusion
In conclusion, LLCs in New York are subject to a variety of taxes at the state, federal, and local levels. Understanding your tax obligations as an LLC owner is important to avoid penalties and ensure compliance with the law. By being aware of the different taxes your business may be responsible for paying, you can better plan for your tax liabilities and avoid any surprises come tax time. If you have any questions or need assistance with your LLC’s tax obligations, it is recommended to consult with a qualified tax professional.