What Taxes Do I Have to Pay as a Business Owner in Albany?

Taxes shape almost every early business decision, from the entity you form to where you open your doors. Below is an overview of the main obligations for a business based in Albany. It is general information, not tax advice. The details depend on your facts, which is why we work alongside your CPA.

Sales Tax: 8 Percent in Albany County

If you sell taxable goods or services, you must collect sales tax. The combined rate in Albany County is 8 percent: 4 percent state and 4 percent county. You must register with the New York State Department of Taxation and Finance for a Certificate of Authority at least 20 days before you begin making taxable sales (Tax Law § 1134).

Treat the sales tax you collect as the state’s money, not yours. The people responsible for collecting and paying it over can be held personally liable if it is not remitted, even when the business is an LLC or corporation.

Income Tax Depends on Your Entity

How your profits are taxed depends on the form of your business:

• Sole proprietors and single-member LLCs: profit flows to your personal return and is subject to federal and New York income tax plus federal self-employment tax.
• Partnerships and multi-member LLCs: the business files an information return, and profits pass through to the owners’ personal returns.
• S corporations: profits generally pass through, and owners who work in the business take a reasonable salary, which can reduce self-employment tax.
• C corporations: the company pays New York’s corporate franchise tax (Tax Law Article 9-A) and federal corporate tax, and shareholders pay tax again on dividends.

LLCs and LLPs with New York-source income also owe an annual filing fee on Form IT-204-LL, scaled to gross income. Owners of pass-through businesses can consider New York’s optional pass-through entity tax, or PTET (Tax Law Article 24-A). The business elects each year to pay tax at the entity level, which can create a federal deduction for the owners. Whether it helps depends on your numbers, so review it with your CPA every year.

Payroll Taxes and Employer Obligations

Once you hire, you take on:

• Federal and New York income tax withholding
• Social Security and Medicare taxes and federal unemployment tax
• New York State unemployment insurance contributions
• Workers’ compensation coverage
• Disability and Paid Family Leave coverage

Albany sits outside the Metropolitan Commuter Transportation District, so the MCTMT payroll tax generally does not apply to Albany-based businesses. Treating workers as independent contractors when they are legally employees is one of the costliest payroll mistakes, because back taxes, penalties, and wage claims can pile up together.

Property and Local Taxes

If you own your building, you pay real property taxes to the city or town, the county, and the school district. If you lease, you probably pay them too, through a net lease pass-through. Depending on your industry, you may also need local licenses or permits that carry fees.

Incentives Worth Asking About

Incentive programs change and their eligibility rules are specific, but two are worth asking about. Empire State Development’s Excelsior Jobs Program offers tax credits for qualifying job creation and investment. Local industrial development agencies, including the City of Albany IDA and the Albany County IDA, may offer tax benefits for qualifying projects. Ask early, since many programs require you to apply before you commit to the project.

How Seraj Law Can Help

This page is general information, not tax advice, and we work alongside your CPA on entity choice and tax elections. To see why structure matters, read our corporate structuring FAQ and our answer on whether you need a lawyer if you already have an accountant. Contact us to set up your business the right way from the start.