Gurmeet Answers · Business Tax · New York
What tax mistakes do New York business owners make most often?
New York has its own tax rules that layer on top of federal requirements, and many business owners — especially those who moved here or started a business without local guidance — are not aware of all of them.
From Gurmeet's desk
I work primarily with business owners in Queens and the broader New York City area, and the same mistakes come up repeatedly. Most of them are not about aggressive tax avoidance — they are about not knowing that a specific New York requirement exists. That is a fixable problem, but it is easier to fix before the liability accumulates than after.
Mistake 1: Not filing New York State and City returns separately
New York State and New York City have separate income taxes. Business owners who operate in New York City owe both. The City tax is not automatically included in the state return — it requires a separate calculation and filing.
Mistake 2: Ignoring the New York LLC filing fee
New York imposes an annual filing fee on LLCs based on gross income from New York sources. This fee is separate from income tax and applies even if the LLC had no net profit. Many LLC owners are unaware of this fee until they receive a notice from the state.
Mistake 3: Not registering for sales tax when required
New York has broad sales tax requirements. Many services that are not taxable in other states are taxable in New York. Operating without registration when it is required creates back liability, penalties, and interest.
Mistake 4: Treating New York estimated taxes the same as federal
New York State has its own estimated tax payment requirements with its own schedule and calculation rules. The federal safe harbor rules do not automatically apply to New York.
Mistake 5: Not accounting for the Metropolitan Commuter Transportation Mobility Tax
Self-employed individuals in the Metropolitan Commuter Transportation District — which includes New York City and several surrounding counties — owe the MCTMT on net earnings above a certain threshold. This is a separate tax that many self-employed business owners do not know about until they file their first New York return.
From Gurmeet's desk
The common thread in all of these mistakes is that New York does not give you a pass for not knowing the rules. The liability accrues whether or not you were aware of the requirement. The best approach is to work with someone who knows New York's specific rules from the beginning — not after you have received a notice.
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