Starting a business in New York City is exciting — and the tax side can feel overwhelming. Here's a clear first-year checklist so nothing important slips through the cracks.
1. Get Your EIN
An EIN (Employer Identification Number) is your business's tax ID. It's free from the IRS and you'll need it to open a business bank account, hire, and file. Get it early.
2. Choose — and Confirm — Your Entity
Sole prop, LLC, partnership, or corporation each has different tax consequences. If you formed an LLC, decide whether an S-corp election makes sense (often it doesn't in year one, but it's worth checking as profits grow).
3. Separate Your Money
Open a dedicated business bank account and never mix personal and business spending. This single habit saves enormous bookkeeping pain and protects your deductions if you're ever questioned.
4. Register for Sales Tax (If You Need To)
If you sell taxable goods or certain services in New York, you must register with the state and collect/remit sales tax. Getting this wrong is a common and costly first-year mistake.
5. Plan for Estimated Taxes
As a business owner, no one withholds taxes for you. You'll likely owe quarterly estimated taxes — set money aside from day one so April isn't a shock.
6. Start Bookkeeping Now (Not in April)
Track income and expenses from the first transaction. Clean books mean a cheaper, faster return and far more captured deductions. Behind books are the #1 thing that makes a first return expensive.
Don't Guess Your First Year
The choices you make in year one — entity, accounting method, how you track expenses — ripple for years. A short conversation with a CPA now can save you real money and headaches later. Li CPA Group helps NYC owners start right.