New York ranked number three in our top states for business 2021 in terms of employee onboards by our international clients. The quality and quantity of talent and the number of clients who base their US operations are reasons why it continues to rank highly as one of our most popular states for business. But is it a good place for business expansion? Let's look at some of the pros and cons of doing business in New York.

Pros of Doing Business in New York

1) Large economy = Large Profit Potential

The Big Apple comes with a big economy. According to BEA, the Real Gross Domestic Product (GDP) of New York in 2021 amounted to $1.5 trillion chained 2012 US dollars. The state of New York also boasts the third largest US economy in the US sitting among the top contributors to the United States GDP.

To emphasize just how large New York’s economy is, if the state was a nation, it would rank as the 10th largest global economy. This economic ranking is higher than Australia, Ireland, and the United Arab Emirates, to name a few.

As a business, GDP figures matter as they reflect the economic health of an area when doing business. On that account, New York’s globally competitive economy will provide you with access to greater profit opportunities, talent, and business networks.

2) A Connected Location for International Business

If you find yourself asking the question, ‘Is New York Good for Business Expansion?, the abundance of European and UK-based businesses that also have a presence in New York may be the first thing that comes to mind. Why would so many businesses be based in a state that isn’t good for business?

The reason many international companies choose to have a base in New York is that it is one of the more straightforward locations to get to in the US from Europe. It is only a 7-hour flight and the general time difference from European countries is 5 hours. These workable timeframes make a huge difference when managing a US office from the UK or Europe.

Additionally, the 3 major airports in New York not only connect you internationally but provide plenty of choices for domestic US travel. Likewise, New York City’s subway system is one of the largest transportation systems in the world, connecting businesses to all 472 stations spread across 5 boroughs. Whether you need to be strategically connected for business travel, access to talent, or leisure, you’re sure to get there when located in New York.

3) Worldwide Influence on Industry Trends

Did you know New York's global influence on sectors is why so many businesses have a presence there? New York City is generally acknowledged as the financial capital of the world anchored by Wall Street's influence on the stock market.

Business leaders can monitor and forecast industry trends when based in NYC as it often sets the scene for global trends. Keeping a pulse on these trends can help inform your strategic plans to outperform your competitors. The city has a significant worldwide influence on almost every industry, with the standouts being:

Technology
Finance
Media and entertainment
Politics
Fashion

Whichever sector you operate in, by doing business in NYC, you’re almost guaranteed to establish the right industry connections and the brightest talent through networking.

4) Ambitious Professionals Determined to ‘Make it’ in New York

People come from all over the world to 'make it’ in New York City. The state of New York is:

The most highly populated city in the US with over 8.8 million people.
One of the world's largest and most diverse skilled labor pools with immigrants making up over 28% of the workforce.
Home to over 2.99 million Bachelor's degree holders, 2.39 million graduate or professional degree holders, and 3.29 high school graduates, according to Statista.

New York City provides employers with access to millions of graduates from some of America’s most esteemed academic institutions. With over 200+ colleges to select from, no matter what industry you’re operating in, you are sure to find the type of talent you’re looking for. New York City’s buzzing environment attracts the best and brightest talent, so you're never short of options when it comes to filling positions within your company.

5) Make an International Impact With a New York Presence

Having a business presence in New York can establish your business as a global player. The prestige and image of operating an office in NYC often set businesses apart in the world market. New York has a certain energy and charm that is universally recognized around the world. It’s iconic.

New York is home to many of the world’s largest companies with 51 Fortune 500 companies headquartered in the state. New York was only recently knocked off the top spot of the nation's most Fortune 500 companies by Texas which has 53. Some of the internationally recognized employers based in New York include:

IBS
PepsiCo
American Express
JPMorgan Chase

These big names help lure ambitious graduates and professionals to the state every year, adding to the large, diverse, and educated talent pool you can tap into.

5) Business incentives in New York

Whether you’re expanding your business to the US or relocating within, you’ll be happy to know if you choose New York as your next destination, it offers numerous resources to help organizations prosper. Below is a summary of some of the business incentives available to ease the burden of doing business in New York.

START-UP NY - An incentive program for new or expanding companies to locate on or near universities in New York to operate tax-free.

Excelsior Jobs Program - This program entitles businesses operating in strategic industries to tax credits if they deliver on the required job and investment commitments when expanding in or relocating to New York.
Employment incentive credit (EIC) - Gain credit if you qualify for the investment tax credit and have increased your average number of employees in New York state to at least 101% of your original number in the state during your base year.

Helpful organizations also exist to help you navigate doing business in New York:

PGC Group - Engages US employees on behalf of businesses; managing payroll, benefits, compliance, and insurance. If you’re not ready to establish an office presence or operations yet in New York and want to hire a salesperson first to build your brand, using an employer of record may be the perfect solution for you.
NYC Small Business Services - Helps businesses start, operate, and grow in New York by offering entrepreneurs advice on regulations, how to apply for funding and compete for contracts, and offers connections to free training and legal resources.

The New York Small Business Development Center - Provides small business owners in New York with confidential business counseling, training, and business research at no cost.

Cons of Doing Business in New York

All the above perks of doing business in New York surely come with a price? Yes, like all states, New York has its drawbacks. Depending on your business needs it might not be the correct option when expanding to the US. Let’s explore the cons of doing business in New York.

1) New York is a High Tax State

Starting a business in New York can make a dent in your corporate profits due to the expensive taxes to operate in the state. New York taxes are among the highest in the US.

If you are doing business in New York, you can expect to pay the following state taxes:

Corporate Income Tax – 6.5% - 8.85% (NYC)
Income tax for top bracket of earners – 10.9%

To put New York’s high tax rates into perspective, let’s look at the taxes charged by some more business-friendly states.

North Carolina - 3% corporate income tax and 5.25% flat rate tax that applies to all incomes.
Florida - 5.5% corporate income tax and 0% personal income tax.
Texas - 0% corporate income tax and 0% personal income tax. However, Texas does charge a franchise tax of 0.75% for non-retail and wholesale businesses. This tax is based on a company’s profit for all entities with revenue above $1.23 million.

The map below shows the top marginal income tax rates charged per state for high earners. As an entrepreneur based in New York, you may not only be dramatically decreasing your take-home salary but deter senior-level talent from working for your organization in New York. Senior talent with a higher taxable salary may instead favor more income tax-friendly states in the age of remote work.

Note: The map shows the top marginal income tax rates: the maximum statutory in each state. It doesn’t include local income taxes. Before relocating to a state you should not only research the income tax rates but the cost of living and taxes charged by local and state governments in the form of local city income tax, real estate taxes, corporate taxes, etc.

2) Highest Cost of Living in the US

The most significant con you cannot escape when starting a business in New York is the cost of living. The state’s cost of living is far above the national average of 100, scoring a staggering 168.8 on the cost of living index. While more business-friendly states like Texas (93.9) and North Carolina (90.6), offer both you and your employees more disposable income if you do business there.

The high price tag associated with living in New York has a knock-on effect on businesses located in the area. You’ll need an expandable budget to cover higher wages, office rent, home costs and overhead expenses.

3) Fierce Business Competition

A pitfall to the pro of New York being the second most popular home in the US for Fortune 500 companies, is the competition this creates. It may become difficult to compete with companies with limited budgets and benefit offerings when seeking candidates for your job roles. As demand for talent increases, price tags rise, so expect high-quality talent to request larger wages to match market demand.

Ready to Start a Business in New York?

After reading through the pros and cons, we hope you have a clearer answer on whether New York is a good place to start a business or not. Your final decision depends on your business objectives, budget, and the sector you are operating in. The renowned reputation of New York, talent pool, and connectivity to destinations within and outside the US may outweigh the cons. But the perks of doing business in New York do not come cheap.

No matter what you decide, PGC can help you with your US business expansion plans. We can help you hire employees in any US state with or without a US entity. If you have your heart set on New York, but can’t afford the high wages, have you considered hiring and payrolling remote employees in other states? We can compliantly employ your workers for you so you can focus on building connections in New York. If New York isn’t the right state for your business, you can learn more about the top states our international clients operated from in 2021.

Disclaimer: All information written here is for general informational purposes only and is not intended to be a substitute for professional and/or legal services.

Is New York Good for Business Expansion? Pros and Cons