How to Start a Business in New York

If you live in New York, you are in one of the world’s great business capitals. Many top investors and multinationals make their home in New York City or elsewhere in the state. You may have your own business idea, or maybe you just imagine running your own business in The Big Apple, the largest city in the United States by population.

Either way, getting your business off the ground will require a great deal of work. The key is gaining as much knowledge as possible and patiently moving through the development and launch process for a New York business, as outlined in our step-by-step guide below.

New York Business Profile Overview

• Number of Small Businesses – As of 2021, there were 2.3 million small businesses in New York((https://cdn.advocacy.sba.gov/wp-content/uploads/2022/08/30121328/Small-Business-Economic-Profile-NY.pdf)).
• Number of Small Business Employees – Small businesses in New York employed 4.1 million workers.
• Economy Growth Rate – The New York economic growth rate from 2020 to 2021((https://www.statista.com/statistics/306777/new-york-gdp-growth/)) in terms of real GDP was 5.7%
• Median Income – The median income for individuals self-employed at their own incorporated businesses was $52,490 in 2017((https://cdn.advocacy.sba.gov/wp-content/uploads/2019/04/23142654/2019-Small-Business-Profiles-NY.pdf)). For individuals self-employed at their own unincorporated firms, this figure was $26,356.

Biggest Industries in New York

By 2022 revenue((https://www.ibisworld.com/united-states/economic-profiles/new-york/))

• Commercial Banking -$137.5b
• Hospitals – $125.3b
• Portfolio Management – $115.2b
• Investment Banking & Securities Dealing – $113.3b
• Public Schools – $99.8b

Step 1: Choose a Business Idea

Choosing a business idea is of course the first step. You may have several ideas in mind that you can choose from, or you may not have gotten that far yet.

If you’re starting from scratch, there are a few ways to approach coming up with a business idea. You can:

1. Identify a persistent problem or gap in the market, then address it.
2. Follow your passion. What do you love or are very good at?
3. Look at what’s trending in New York. For example, it has huge financial services and real estate markets, along with fashion, media, and entertainment.

Once you have a few ideas in mind, it’s a good idea to do some homework before settling on a decision. Here are some things to consider when choosing a business idea:

• Capital requirements – How much do you need? Do you have access to adequate funds?
• Time requirements – How long will it take for you to start selling?
• Industry trends – Is the industry growing, or shrinking?
• Profit potential – How much money can you realistically make?
• Lifestyle factors – Running a business is hard work. Are you ready?

You can take a look at our guide to different business ideas if you need inspiration for your next great venture.

Step 2: Hone Your Idea

Once you have chosen a business idea, get more specific in your evaluation of the opportunity. Consider the why, what, how, and who.

Why? Identify an Opportunity

Consider if you have really identified an opportunity in the market. Is your idea going to provide value to customers? Will people want to buy it?

You can’t make assumptions about the viability of your idea. Research it and ask people you know what they think of your idea.

Look at companies that offer the same or similar products or services. Research what they are selling, their prices, and their sales totals. Is there real opportunity here?

What? Determine Your Products or Services

The next thing to do is define your offerings. Ask yourself:

• Will I offer products or services?
• Which specific products or services will I sell?
• How will I offer them?

If you’re selling one product, you may consider offering related products or services to increase the value you provide.

This step is going to define what your business will look like to customers and why they will buy, so take your time and be sure.

How Much Should You Charge?

Before deciding on your price list, you should benchmark your competitors: look for similar products and check their pricing.

If you have a direct competitor that offers similar products or services, it’s a good idea to select a competitive price point. You can do this by running the numbers to determine your break-even price, then decide your profit-generating mark-up from there.

You’ll also need to consider how to position your product. Are you going to offer a lower-priced alternative, a la Walmart, or are you going to position your product as a more expensive high-end item?

Once you’ve locked on a pricing system that works for you, you’ll need to test it to see if this is attractive to your target market.

Who? Identify Your Target Market

Knowing your target market is crucial to successful sales and marketing. This is where customer profiling comes in handy.

The first thing to do is to figure out whether you are selling to consumers (B2C) or businesses (B2B). If you are selling to consumers, determine what type of people are most likely to buy, by looking at:

• Demographics – Age, gender, income, location
• Psychographics – Attitudes, values, interests, tastes

Knowing your customers will allow you to shape your messaging, and to know where to place your marketing. For example, based on who your customers are and what they like, are they more likely to be on Facebook or TikTok?

If you are selling to businesses, you need to determine what kinds of companies need what you’re offering. Then you need to determine who within those companies will be the decision-maker. Will it be an IT manager? Sales manager? Then, adjust your marketing accordingly.

Step 3: Choose a Business Name

Your company’s business name is often the first impression clients have of your brand. Do your best to make it unique and appealing.

You probably want a name that is short and easy to remember, since much of your business, and your initial business in particular, will come from word-of-mouth referrals.

Here are some suggestions for brainstorming your business name:

• Short, unique, and catchy names tend to stand out
• Names that are easy to say and spell tend to do better 
• The name should be relevant to your product or service offerings
• Ask around — family, friends, colleagues, social media — for name suggestions
• Including keywords in the name, such as “restaurant” or “tavern”, boosts SEO
• Choose a name that allows for expansion: “Jim’s Bakery” rather than “Jim’s Cookies”
• Avoid location-based names, as they may hinder future expansion
• Use online tools like the Step by Step business name generator

Once you’ve got a list of potential names, check the New York state website to see if the name is available to register in your state and check the availability of related domain names using Domain Name Checker tool. Using “.com” or “.org” sharply increases credibility, so it’s best to focus on these. If you plan to do business in other parts of the country, consider trademarking the name at the website of the US Patent and Trademark Office.

You should also check that the name you want to register conforms to New York’s LLC and Corporate naming rules. Once you’re sure that the name is all yours and meets the regulations, go ahead and register the name with your state. Here is the official New York website that provides their Name Reservation Request form. The completed application can be sent by mail or dropped off in person, together with the statutory filing fee of $20, at the following address: NYS Department of State, Division of Corporations, One Commerce Plaza, 99 Washington Avenue, Albany, NY 12231

Step 4: Create a Business Plan

Drawing up a business plan may seem a daunting task, but it is an essential step in creating a successful business.

Every business needs a plan, a rough outline that helps guide a startup through the launch process while maintaining focus on key goals. A business plan is also crucial for helping potential partners and investors understand your company and vision:

• Executive Summary: Brief overview of the entire business plan; should be written after the plan is complete.
• Business Overview: Overview of the company, vision, mission, ownership, and corporate goals.
• Product and Services: Describe your catering company’s services in detail.
• Market Analysis: Assess market trends such as variations in demand and prospects for growth, and do a SWOT analysis.
• Competitive Analysis: Analyze main competitors, assessing their strengths and weaknesses, and create a list of the advantages of your services.
• Sales and Marketing: Examine your companies’ unique selling propositions (USPs) and develop sales, marketing, and promotional strategies.
• Management Team: Overview of management team, detailing their roles and professional background, along with a corporate hierarchy.
• Operations Plan: Your company’s operational plan includes procurement, office location, key assets and equipment, and other logistical details.
• Financial Plan: Three years of financial planning, including startup costs, break-even analysis, profit and loss estimates, cash flow, and balance sheet.
• Appendix – Provide any supporting documents for the business plan.

Step 5: Register Your Business

Before you start selling you will need to ensure that your business is correctly registered with the relevant authorities. Get this right at the start and your business will run more smoothly and easily as you progress.

Your location and business structure will determine how your business should be registered, which varies from state to state. For most small businesses, the process is quick, easy, and cheap, requiring only that the business name be recorded with state and local governments.

Other than filing for a federal tax ID, most businesses do not need to register with the federal government to become a legal entity.

Choose Your Business Structure

The legal structure you choose for your business will impact your business registration requirements, how much you pay in taxes, and your personal liability.

The most popular types of business entities are outlined below.

Sole Proprietorship

Sole proprietorship is the most simple and straightforward structure, and therefore the most common for small businesses. It is an unincorporated business, with no legal distinction made between the business and the owner. This means that as a sole proprietor you get to keep all the profits, but are also personally liable for any debts, losses, or liabilities.

General Partnership

A general partnership is similar to sole proprietorship, but in this case two or more people form the company. Again, they keep the profits but are jointly liable for any losses or liabilities. In a general partnership, each partner is known as a general partner and has unlimited liability.

Limited Liability Partnership (LLP)

This business structure is popular with lawyers, accountants, and architects. It is more formal than a general partnership and allows each limited partner to limit their liabilities and share management responsibilities according to an agreement between the partners. This can be a good choice when one or more partners wants to invest in the business but have little or no management responsibility.

In New York, you can only form an LLP if you are a licensed professional and are licensed to perform your services independently.

Here are some resources:

• Certificate of Registration of a Limited Liability Partnership (LLP)– For an exhaustive guide into the potential certifications, permits, and regulations required to form your LLP in New York.

There is a $200 filing fee to register an LLP with the New York Department of State.

Corporation

The next step up is a corporation, in which the company is a separate legal entity from its owners. In this structure, the owners are not personally liable for losses, but take their profits through shareholder dividends.

If you choose to create a New York corporation, you will also need to decide whether you want to form a C corporation or an S corporation.

Here are some resources:

• Certificate of Incorporation for forming a corporation in New York
• Online corporation formation form for New York

There is a $125 filing fee to file your Articles of Incorporation with the New York Department of State.

Limited Liability Company (LLC)

A limited liability company (LLC) combines the characteristics of corporations with those of sole proprietorships or partnerships. As the name suggests, the owners are not personally responsible for liabilities or debts.

The regulations for LLCs vary from state to state. Although they are more straightforward to set up than a corporation, Articles of Organization must be filed with the state for the LLC to become a legal entity.

Here are some resources:

• Articles of Organization – for forming an LLC in New York
• Online LLC formation form – for New York

There is a $200 filing fee to file your Articles of Organization with the New York Department of State.

You will also need to appoint a registered agent, also known as an agent for service of process. Your New York registered agent will be responsible for receiving all of the official paperwork sent from the New York Department of State. An easy and quick way to get a registered agent is to use ZenBusiness’s online registered agent service.

Nonprofit

Finally, you may be interested in a nonprofit if your business idea has a social purpose. A non-profit organization is a legal entity organized and operated for a public or social benefit, as opposed to a business formed to generate a profit for its owners.

Here are some resources:

• Articles of Incorporation – For forming a nonprofit in New York
• Additional resources for forming a not-for-profit in New York

There is a base fee of $75 for filing Articles of Incorporation for a nonprofit in New York.

Step 6: Register for Taxes

Taxes are inevitable, so you’ll want to get prepared for tax season. Do this by applying for an Employer Identification Number (EIN), which is like a social security number for your business. (If you choose sole proprietorship, you can use your social security number as your EIN.)

You’ll use your EIN for important steps to start and grow your business, like opening a bank account. You’ll also need it to pay taxes, hire employees, and register an LLC or corporation.

The process is quick and simple. Just head over to the IRS website and fill out their online form to obtain your number. Once you’re registered, make sure you understand your tax liabilities by researching which taxes apply to your new business.

You can visit the official site for the New York Department of Taxation and Finance to learn the necessary tax filings for businesses in the state. Some major taxes include:

• Franchise tax on general business corporations – based on the highest of three bases: 1) Business income, 2) Business capital, 3) Fixed dollar minimum tax
• S corporations – tax years beginning on or after January 1, 2015 – Under the corporation franchise tax (Article 9-A), you pay a fixed dollar minimum tax based on New York receipts.
• Property taxes – industry-specific and for businesses and homesteads
• See the Corporation tax resource center for more info on corporate tax requirements and potential filings.

There is also an annual fee for partnerships, LLCs, and LLPs registered in New York, based on their gross income in the preceding year. The minimum fee is $25 and can range into the thousands of dollars for businesses with an annual income of more than $1 million.

Step 7: Fund Your Business

Securing financing is your next step, and it’s a crucial one for a new business. There are plenty of ways to raise capital:

• Bank loans: This is the most common method, but getting approved requires a rock-solid business plan and strong credit history.
• SBA-guaranteed loans: The Small Business Administration can act as guarantor, helping gain that elusive bank approval via an SBA-guaranteed loan.
• Government grants: A handful of financial assistance programs help fund entrepreneurs. Visit Grants.gov to learn which might work for you.
• Venture capital: Offer potential investors an ownership stake in exchange for funds, keeping in mind that you would be sacrificing some control over your business.
• Crowdfunding: Websites like Kickstarter and Indiegogo offer an increasingly popular low-risk option, in which donors fund your vision. Entrepreneurial crowdfunding sites like Fundable and WeFunder enable multiple investors to fund your business.
• Personal: Self-fund your business via your savings, the sale of property or other assets, and support from family and friends.

Step 8: Apply for Licenses/Permits

You may need to obtain certain business licenses and permits to comply with New York law. These permits and licenses can vary based on the town or city where the business is located. If you sell or lease goods outside of a store in New York, you will need to obtain a General Vendor License. Additionally, as a seller, you may also need to register for New York sales tax.

Here are some further resources:

• SBA information on federal licenses and permits
• SBA guide to New York licenses, permits and registrations.
• New York licenses guide on NY.gov
• New York permits guide on NY Department of Transporation

Step 9: Open a Business Bank Account

Before you start selling, you’ll want to open a business banking account. Keeping your business’s financial transactions separate from your personal finances will enable you to more effectively manage the money side of your business, including filing your taxes and dealing with your accountant when the time comes.

It will also be useful to get a business credit card to make purchasing goods and services easier. Banks offer a wide range of business accounts nowadays, so be sure to talk to your local branch to find the account that works best for you and your new business.

Step 10: Get Insurance

Your business will likely require significant investment, and it makes sense to protect that investment with business insurance. Here are a few options you may wish to consider:

• General liability: The most comprehensive type of insurance, acting as a catch-all for many business elements that require coverage. If you get just one kind of insurance, this is it. It even protects against bodily injury and property damage.
• Business Property: Provides coverage for your equipment and supplies.
• Equipment Breakdown Insurance: Covers the cost of replacing or repairing equipment that has broken due to mechanical issues.
• Worker’s compensation: Provides compensation to employees injured on the job.
• Property: Covers your physical space, whether it is a cart, storefront, or office.
• Commercial auto: Protection for your company-owned vehicle.
• Professional liability: Protects against claims from a client who says they suffered a loss due to an error or omission in your work.
• Business owner’s policy (BOP): This is an insurance plan that acts as an all-in-one insurance policy, a combination of any of the above insurance types.

Step 11: Prepare to Launch

Information technology is an essential part of doing business in the modern world. From marketing to managing the accounts, IT can help you get ahead of your competition.

Website

Many customers won’t consider using a business that doesn’t have a website. Whether you have a brick-and-mortar shopfront or not, your website is your shop window for the world. Therefore, it is a good idea to spend some time ensuring that your website is the best possible advertisement for your business.

Create a homepage that is welcoming and easy to navigate. It should explain to your client what problem you can solve for them, and what services you offer.

Include a contact page so potential clients can easily get in touch with you.

Pictures can help lift the look of a website and make your business more approachable. Use quality photographs of your store or service, or of employees.

Nowadays, a good quality website can be built in just a few hours using a website builder service such as Wordpress and Wix.

Marketing

Once you have your website up and running, you’ll want to connect your social media accounts.

Social media is an essential marketing tool nowadays. Once your website is built and your branding finalized, set up social media accounts with the same branding to create consistency across the board, and to help potential clients find you more easily.

Social media can be quite time-consuming. It may be better to pick one or two of the most popular platforms, such as Facebook, Twitter, or Instagram, rather than spreading yourself too thinly across a number of social media accounts.

Catch the eye of potential clients by using a social media content creator such as Canva or Ripl to create professional-looking content.

Essential Software and Tools, Equipment

Be sure to get everything that you need to physically and digitally run your business. Once it’s all ready to go, make sure that you know how to properly use everything. Technical issues can bring your business to a halt quickly.

Step 12: Build Your Team

You will probably need employees to help you run your business. First, you will need to determine what roles will be essential. This will come down to which essential functions you can’t do or won’t have time to do.

Then you need to determine how the team will be structured. What levels of management and employees will you have? Then you need to determine what your pay structure and ranges will be.

When you’re just starting, cash may be an issue but you need to make sure that you pay enough to get people with the right skills and experience.

Finally, create a hiring plan. Determine who you need to hire first in order to launch, and then plan what future hires you will need to make as the business gets going. Be cautious and selective when hiring people for any role. 

The official New York tax site features a guide on what you may need to do as your hire employees. It also features a New Hire Online Reporting Center where you can learn how to report new hires to the state.

Step 13: Start Making Money

With everything in place, you’re now ready to throw open the doors on opening day! When you do, you’ll want some customers coming in. Here’s how to find them.

Focus on Your Unique Selling Points

What is unique about your product or service? Your potential clients likely already know why they want your services, your job is now to convince them to pick you over a competitor.

Here are some potential selling points to help you stand out from the crowd:

• Highest quality
• Best value
• Easy to use
• Convenient
• Best for “target market”

Understand Your Sales Channels

Make sure you’re selling through the right channels. You know your target customers by now – where and how are they most likely to buy? What are their preferred prices?

If you don’t have a store, you can find partner stores where your products can be sold.

You can sell both online and directly but focus your efforts on the channel that matches your target market’s buying behavior.

If you’re selling to businesses, your sales channels may be online or they may involve direct sales calls. Again, understand the buying behavior of the decision-maker within the business.

Initiate Marketing

Help clients find you more easily by placing your marketing where they are likely to find it. The following options are a good start:

• Eye-catching signage on your store that clearly advertises your services.
• Advertise near establishments where your target customers go.
• SEO-optimize your website.
• Add a listing on Google My Business to drive customer engagement.
• Place ads on social media sites your target customers use.
• Create a press release.