An LLC has no rate of its own
New York taxes your LLC according to the federal classification you choose, so an LLC has no rate of its own. Pick the classification and you set the rate.
Key takeaways
Three layers, not one rate
You pay on three levels: a New York State filing fee or franchise tax, a New York City business tax, and your own personal return.
Publication comes before any of it
Before any of those, you pay to publish notice of the LLC in two newspapers within 120 days of forming it, which in New York City often costs over $1,000.
Have us price your structure both ways
Tell us what the LLC earns and how you have classified it, and we will show you the whole stack, and what it looks like classified differently. Call (212) 641-0673 or use the contact form. We reply within 24 hours, and we are available evenings and weekends. Confidential, and handled by a CPA or EA, not a call center.
How LLCs are taxed in New York
An LLC is a legal form, not a way of being taxed
An LLC is a legal form rather than a way of being taxed, so your federal classification sets the rate. Pick the classification and New York and the City follow it.
Your federal classification sets the starting point, and a federal S corporation needs a separate New York election on top of it. You then pay three charges rather than one rate.
The stack, at a glance
The three layers a New York City LLC pays on
Layer stack
Layer 1 — New York State
Annual filing fee or franchise tax
Layer 2 — New York City
UBT, GCT, or business corporation tax
Layer 3 — Your own return
State and City personal income tax
01Before the tax stack
What you pay to publish notice of your LLC
Within 120 days of forming your LLC, you publish notice of it in two newspapers, once a week for six successive weeks. The county clerk for the county where your LLC has its office designates both papers, one daily and one weekly. You cannot choose them.
- In New York City this often costs over $1,000. Manhattan rates are the highest in the state.
- You then file a Certificate of Publication with the Department of State, attaching an affidavit from each newspaper.
- Miss the 120 days and the state suspends your authority to do business. Your LLC still exists, you keep your existing contracts, and you can still defend an action. You may be unable to bring one.
- You can cure it late. File the certificate with both affidavits after day 120 and you end the suspension. Section 206 sets no fine for lateness.
02Layer one
The New York State filing fee
New York charges an annual filing fee that behaves unlike a tax, which is why owners who budget for tax alone come up short.
New York also requires a biennial statement, filed with the Department of State to keep the entity in good standing. That is a corporate filing rather than a tax one, and it takes no account of your income. You have to do both.
You pay the annual filing fee on the form it 204 ll in either of these cases:
- your LLC files a New York partnership return and has any income, gain, loss or deduction from New York sources
- your LLC is a single member LLC disregarded federally with New York source activity
You pay by band, on your New York source gross income from the preceding year.
Form IT-204-LL annual filing fee bands
| New York source gross income | Filing fee |
|---|---|
| $100,000 or less | $25 |
| Over $100,000 up to $250,000 | $50 |
| Over $250,000 up to $500,000 | $175 |
| Over $500,000 up to $1,000,000 | $500 |
| Over $1,000,000 up to $5,000,000 | $1,500 |
| Over $5,000,000 up to $25,000,000 | $3,000 |
| Over $25,000,000 | $4,500 |
You pay $25 in your first year whatever you earn. New York sets the band from the preceding tax year, and a new LLC has none.
An LLC treated as a disregarded entity federally pays $25 whatever it earned, as long as it has New York source income, gain, loss or deduction. An LLC with no New York source activity does not file this form and pays nothing.
Three features separate it from a tax:
- You pay on gross income, with no deduction for costs. New York source gross income is your members’ shares of federal gross income connected with New York sources, before any allowance for cost of goods sold. A business that lost money still pays.
- You get no extension. You can extend the return; you cannot extend the fee.
- Your profit does not change it. You pay the same in a break-even year and a strong one.
03Layer two
Which New York City business tax your LLC pays
You determine which New York City business tax your LLC pays when you choose its federal classification.
Not taxed as a corporation
New York City treats a disregarded single member LLC or an LLC taxed as a partnership as unincorporated, so it pays the unincorporated business tax.
Taxed as an S corporation
It pays the general corporation tax. Since 2015 New York City has charged that tax to S corporations alone, having moved C corporations to the business corporation tax.
Taxed as a C corporation
It pays the business corporation tax on Form NYC-2. Under economic nexus New York City can reach it on receipts alone, with no office or staff here.
04Layer three
What you pay on your own return
Where the LLC is not taxed as a corporation, you report the income on your own return and pay:
- New York State personal income tax, on your total income.
- New York City personal income tax, if you are a City resident, also on your total income.
Your own income, not the LLC’s, sets what you pay at this layer. It is the layer behind the phrase "pass through".
Self employment tax and the MCTMT
You pay self employment tax on your share of the LLC’s income where you are active in the business. That is the charge an S election is meant to reduce.
- Self employment tax is Social Security and Medicare on business income you take as an owner rather than as wages. An S election converts part of that income to wages, so you compare what you save in tax against what you spend on payroll.
- The metropolitan commuter transportation mobility tax applies to self-employed people above an earnings floor. You allocate your earnings by zone, and the five boroughs make up Zone 1, where you pay the higher rate.
- You pay it by estimate, net of anything the partnership paid for you, and you cannot use a New York credit against it.
The PTET election, for a multi member LLC
Under New York’s pass-through entity tax the LLC pays state tax at entity level, and you claim a credit for it on your own return. That works around the federal cap on deducting state and local taxes.
We have a page on how the election works, what it saves and when the deadline falls.
05What people get wrong
What you still pay after an S election
What people get wrong
The belief
Electing S corporation treatment is a federal decision about self employment tax and it does not change anything at state or city level.
What is true
- You leave the state filing fee behind when you elect S status.
- New York does not follow the federal election. Without Form CT-6 the state taxes the LLC as a C corporation, unless a mandatory New York S election applies.
- New York charges a fixed dollar minimum either way.
- New York City charges the general corporation tax.
Why it matters. You weigh an S election by comparing self employment tax against the cost of running payroll, and you have to add the New York State and City charges to that comparison.
You can owe both charges in a year with no profit. You pay the filing fee on last year’s New York source gross income, and the general corporation tax has a minimum.
06Related questions
We answer these on other pages
- Whether your LLC owes the unincorporated business tax, and what it comes to.
- Whether an S election pays, once you have both the federal and the New York picture.
- What the City charges a corporation, once you know which corporate tax it is in.
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From the record
On checking AI, and on what a CPA caught for a single member LLC
“Although AI can be used as a tool to take a look at your tax situation and come up with some ideas, you should always spot check them with an adviser. And even most AI models will tell you at the end of the answer that you should check this with an adviser, which you should.”
George Dimov, CPA
Founder, Dimov Tax
“Worked with the Dimov team this past tax season as a single member LLC. They were extremely helpful, and uncovered a ton of value I would have missed with TurboTax or other DIY solutions.”
Siraaj Dhru
Google review
See the whole stack on your numbers
Three layers, one of which is charged on last year’s gross income whether you profited or not. Worth seeing together before you decide anything. Call (212) 641-0673 or send the contact form. No charge for the conversation.
Price the LLC three ways before you decide
Have a CPA cost out the full stack for your LLC
Tell us what the LLC earns and how you have classified it, and we will show you the state filing fee, the City business tax, and what falls on your own return, and what changes if you classify it differently. Call (212) 641-0673 or send the contact form. No charge for the conversation.
Reviewed by George Dimov, CPA, New York, NY. Serving clients in all 50 states, 15+ years advising businesses on entity structure and New York City and State tax. President of George Dimov, CPA, a New York City firm serving clients across the five boroughs and nationwide.