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Disadvantage: State and local taxes. For example, in New York City, an S-corp would be subject to the city's 8.85% business tax, on top of state and federal taxes. This could potentially increase the S-corp tax bill significantly and essentially wipe out the other tax advantages offered by this entity structure.
Form CT-6 Election by a Federal S Corporation to be Treated As a New York S Corporation Revised 12/20. Page 1. Department of Taxation and Finance. Election by a Federal S Corporation. to be Treated As a New York S Corporation.
New York State's S Corporation Rules Although New York state's S corporation treatment is generally voluntary and requires a separate state election, under certain circumstances New York state S corporation treatment is required regardless of whether the state election was made.
Keep in mind that \u201cS corporation\u201d is a tax designation, not a business entity type. You can't 'incorporate' as an S corporation. To become one, you have to apply to the IRS. S corps report their income to the IRS on Form 1120S.
Most states follow the federal government in recognizing the S election. However, Arkansas, New Jersey and New York require a separate state S election.

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Some jurisdictions\u2014the District of Columbia, Louisiana, New Hampshire, New York City, Tennessee, and Texas\u2014do not recognize the federal S corporation election and, for the most part, tax S corporations like other business corporations.
There are ten steps you'll complete to start an S-Corp in New York. Step 1: Choose a Business Name. ... Step 2: Obtain EIN. ... Step 3: Certificate of Incorporation. ... Step 4: Registered Agent. ... Step 5: Corporate Bylaws. ... Step 6: Directors and Meeting Requirements. ... Step 7: Stock Requirements. ... Step 8: Biennial Statement.
How to Create a New York S Corporation Choose a name. Choose a registered agent. File Articles of Organization. Create an operating agreement. Apply for an EIN. Meet the New York LLC publication requirement. File the form to apply for S corp election.
New York State's S Corporation Rules Although New York state's S corporation treatment is generally voluntary and requires a separate state election, under certain circumstances New York state S corporation treatment is required regardless of whether the state election was made.
Creating a New York State S Corp The total charge for creating a New York corporation is about $195. Even if you've already elected S corp status at the federal level, you also have to make this election for New York State. You must file Form CT-6 to receive approval from the state.

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