Sunday, May 19, 2024

How to Start a Business in New York: Your Complete Guide

New York City is the Hollywood image of ambition, innovation, and endless opportunity. The city has a phenomenal startup scene with a record-breaking 476,000 small businesses fueling its economy, making it a superior launchpad for someone ready to open their New York business.

If you have a business idea that’s ready to contribute to New York’s $1.6 trillion GSP, read our comprehensive guide and gain the knowledge you need to start a business in New York.

From business structure and professional liability insurance to a complete business plan, and marketing strategies, we’ll assist in turning your New York business dream into a reality.

  • Employs around 11,526,239 people

  • Annual employment growth rate of 2396% in five years

  • A total of 2,671,093 businesses

  • The top three industries by revenue are commercial banking, portfolio management/investment advice, and public schools

Business Culture in New York

New Yorkers walk fast, talk fast, and think even faster.

Think of it like hailing a cub in rush hours – it takes speed, assertiveness, and knowing where you’re headed.

All of your initial interactions will revolve around direct and efficient communication. They strongly value their time, and this can often lead to making decisions with the information at hand. Connections will evolve over time, where exchanging pleasantries and giving each other ample time for decision making becomes normal.

It’s also difficult to act as a lone wolf in the New York business environment. Networking is commonplace, and attending large-scale events is a must for navigating this city’s interconnected structure. These events are also the perfect environment for the next common factor in New York’s business culture—showcasing accomplishments.

Don’t be boastful, but articulating successes and vision with confidence is a highly desirable look in this landscape. New York’s unique drive, ambition, and desire for success make a little bit of showing off a strategic play.

Keep in mind that it’s important to have a nonjudgmental outlook because of the city’s diverse and multicultural environment. Respecting different perspectives will help you understand how particular niches operate, and keep you aligned with trends.

Navigating Business Registration & Regulations in New York

Legal foundations are an essential step you will need to navigate before bringing your business idea to fruition. Determining your risk tolerance, longevity, and tax obligations and securing permits specific to your industry is a must for long-term success.

Select a Business Structure

A business structure affects everything.

Whether it’s how you are taxed or liability protection, everything varies when you change structures.

The most common ones in New York are:

  • Sole proprietorships

You won’t find a simpler or ‘default’ structure than sole proprietorships. They are ideal for freelancers, consultants, or small-scale side hustles (e.g., photography, portable car washing, etc.). In this scenario, your personal assets may be at risk, implying unlimited liability.

  • Partnerships

Perhaps you’re co-founding a marketing agency or an e-commerce store; in this scenario, we recommend establishing a partnership structure. Businesses founded on a partnership involve sharing costs, expertise, and decision-making, which can lighten the stress of being a solopreneur. Keep in mind that you are jointly liable for debts and run the risk of dealing with disagreements regarding company decisions.

  • Limited liability companies (LLC)

A popular choice for many small to medium-sized businesses, as it combines liability protection with tax advantages. Businesses considering significant growth and attracting investors should lean towards forming an LLC.

  • Corporations

A corporation structure is the best option if you’re seeking robust liability protection and the highest level of credibility. But you will need to compromise on dealing with high levels of administration and generally greater taxes. Consider this structure once your business is larger and established.

Each one has unique benefits and challenges. Hence, it’s important to select one that provides your small business the biggest advantage. This requires understanding the most common structures in your industry, potential growth plans, and once again, your risk tolerance.

We also recommend exploring general liability insurance to cover yourself and the benefits of having a business bank account.

Register with the State & Obtain an EIN

After finalising your business structure, the next step is formalising it with the New York Department of State. This process includes fees and unique forms, but it is a mandatory part of starting a business in New York.

All businesses except for some sole proprietorships will need an employer identification number for tax filing, hiring, and other essential processes.

Ensuring you are Industry Compliant

Selling prepared food? You’ll need permits from the NYC Department of Health. Establishing a bar? Licenses are compulsory.

New York has extensive regulations depending on your business activities. These regulations seem daunting, but they ensure you are operating in a safe environment that values business owners and consumers. The NYC Business Express portal is an invaluable resource that we recommend using before launching.

Tip: Still unsure or concerned regarding structures and regulations? Speak to an accountant or attorney to ensure your business is compliant and avoid future hassles.

Financing your Business in New York

If you already have ample funding or don’t require significant capital to start your business, then skip this section. But it’s always a good idea to have a safety net of income in case everything falls through and you’re not entirely reliant on personal funding.

Luckily, there are several options for you to consider and test your luck.

Tip: Your finance eligibility depends on your chosen business structure and creditworthiness. We recommend calculating New York’s high cost of living into your startup costs.

Bootstrapping

A simple yet extremely common method for starting a business is using personal savings. Generally, operations are quite lean, and budgets for business functions like marketing are often not even considered.

Risk is marginally higher and your focus revolves around early profitability.

Small Business Loans

There are many lenders in New York, and it’s important to find one that focuses on businesses to guarantee better terms. Startups can reach out to banks, credit unions, online lenders, and the Small Business Administration for accessible loans.

Make sure you are committed to launching a business before seeking out a loan.

Government Grants & Incentives

Hundreds of grants and incentives are offered every day to support entrepreneurs in New York City and the State. Many target specific industries or businesses located in certain geographic areas; this support is invaluable.

Whether your business is in the entertainment, farming, manufacturing, research or many other industries, there are incentives that you can apply for.

Crowdfunding

Everyone has heard success stories of a phenomenal product idea on a crowdfunding platform spiralling off into something bigger. This works particularly well in NYC, as consumers love a compelling story or standout product.

Your story must be authentic or the innovative product must offer something genuinely unique to excel on these platforms. Consumers are becoming exceedingly aware of unoriginal companies producing the same product with a different spin – it simply won’t work in NYC.

Indiegogo and Kickstarter are great platforms for reaching a wide audience. Combine it with social media outreach and other organic efforts for the best possible outcome.

Angel Investors & Venture Capitalists

There is an abundance of established investors who attend industry events, accelerator programs, or networking events. Such events are an opportunity for high-growth potential ideas to find substantial funding or increase your visibility to these investors.

As with any funding, it will take a solid business plan that demonstrates a believable and perceivably successful idea. Combining multiple funding sources, such as bootstrapping and crowdfunding, is a common method for kickstarting your business.

Securing Office Space in New York

An office space goes beyond the physical components and can speak volumes about your credibility. However, the practical and strategic reasons become harder to justify with sky-high real estate costs. Finding a solution that suits your budget, and reflects your brand can still be accomplished through flexible workspaces.

Commercial Office Space vs Serviced Offices

Traditional office space offers the most control over design, branding, and personal preferences.

But this freedom comes at a significant cost.

The average asking rent for office space in New York is $93.47 per square foot, and will quickly eat into a startup’s operating budget. Commercial real estate is also in a state of flux, where constant variations in occupancy rates and cost of living are drastically affecting rental rates.

It can be challenging committing to longer lease commitments while accommodating overhead costs like furniture and utilities. How often do you plan on using the office space? Can your business be run hybrid? Is a minimum five-year lease feasible for your startup?

Take these factors into consideration.

Serviced offices provide flexibility and a built community and include all the services a startup needs at a fraction of the price tag. They are the closest alternative to traditional office space and can give businesses a presence in prestigious areas like 17 State Street, Avenue of the Americas, or even One World Trade Center.

Learn more about serviced offices in New York.

Virtual Offices & Coworking Spaces

Not every business needs physical office space, and many solopreneurs may consider operating from home. For example, dropshipping businesses or e-commerce stores operate remotely but lack trust symbols such as a credible address, business phone number, and team support.

A virtual office in New York can equip your business with all of these services at a low cost. They provide maximum flexibility, with leases spanning from one to twelve months, along with scalable services.

  • Prestigious business address

  • Local phone number

  • A dedicated receptionist to answer calls as per your instructions

  • Virtual assistance

  • 60 hours/month coworking space usage

  • Access to bookable meeting rooms and boardrooms

We recommend opting for a virtual office for a remote business looking for lean operations, flexibility, and trustworthiness.

Coworking spaces are also a great alternative for businesses that require a physical presence in the city. Instead of hefty deposits, long-term leases, and the cost of outfitting an office, you have access to a professional workspace with included amenities for a simple monthly fee.

Need to expand or downsize quickly? Coworking memberships are flexible, allowing you to scale your space in sync with your team’s growth, a true advantage in NYC’s fast-paced business environment.

They are also secure locations in desirable neighbourhoods with 24/7 access. Shared workspaces are also rich with networking opportunities, and these are beneficial for startups or small businesses to gain valuable connections.

Marketing Your Business in New York

New York is a saturated market, but this doesn’t mean a clear-cut strategic approach won’t work.

The average New Yorker is bombarded by thousands of marketing messages every day. Whether it’s through TV, billboards, or logos present in every square meter of their vision, there are plenty! The good news is, that more than 99% of businesses in New York are small, which means the playing field is equal.

Understand The Consumers

The level of diverse consumers is an advantage that your business can play off of. The variations in age, income, neighbourhoods, cultural backgrounds, and interests are dramatic, enabling all types of niche businesses a shot at success.

The city is also known for its culture of early adoption. Whether it be a fashion trend or a quirky piece of technology, it is at the forefront of aligning itself with what’s new. Needless to say, your marketing efforts must be digital and mobile-optimised.

New York’s mobile usage is higher than the national average, and their social media consumption is large. This presents opportunities for leveraging experienced individuals from influencer collaborations to pop-up events – you need an amalgamation of complimenting methods to break through the clutter.

Navigating Different Channels

Print and radio are still viable options, but might be out of reach for startups.

Focus your initial efforts on digital tools.

  • Search engine optimisation:

Creating a website that ranks high amongst a competition of millions is no easy feat, but can be accomplished through niche terms. For example, if you’re launching an accounting firm that specialises in assisting lawyers in Brooklyn, it would be beneficial to include these specific elements within your webpage.

Instead of attempting to rank for “Accounting firm New York,” leverage your niche and rank for the terms “Accounting firm for lawyers Brooklyn” – your chances of early success will be dramatically greater.

  • Targeted online advertising:

Paid search, such as Google Ads and social media advertising platforms, can be used to target highly specific segments of your target audience. From the ideal age range to geographic location in New York, search engine marketing is your best bet as a small business looking to increase visibility.

Business Resources for Success in New York

We have compiled a list of government agencies and programs at the city and state levels to support your entrepreneurial goals. Many of these can make a monumental difference in your early stages, so ensure to give them a look.

  • NYC SBS: The New York City Department of Small Business Services should be your first stop for checklists, free counselling, workshops, financing resources, and much more.

         https://www1.nyc.gov/site/sbs/index.page

  • ESD: Empire State Development offers assistance tailored to certain industries or disadvantaged business owners. On its website, you can find funding opportunities and tax credits, among other helpful resources.

          https://dol.ny.gov/

  • NYS Taxation & Finance: New York’s Department of Taxation is a compulsory resource for registering your business for tax purposes. It also allows you to file returns and explore potential tax exemptions.

        https://www.tax.ny.gov/bus/

  • Legal Help: Lawyers are always expensive, especially when personalised for business purposes. The New York Bar Association can be a starting point for low-cost solutions while helping you navigate your legal complications.

        https://www.nycbar.org/

Your New York City Business Begins

Millions of people have considered this exciting yet undeniably challenging endeavour. Starting a business in New York is rarely a straight line, and it will serve you well to embrace the unpredictable nature of the city’s business landscape.

Find opportunities to connect with fellow entrepreneurs, tap into industry events at coworking spaces, explore various funding methods, and seek guidance along the way. And remember, long-term success only comes from learning and celebrating – even the small milestones.

Thinking of going global? Read our guide on How to Start a Business in London.

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