How do you managetax presence risk in New York.
Teamed employs your New York staff under its own entity, so payroll runs through Teamed's registration, not a new franchise-tax filing for you.
At a glance
New York tax presence, the short version
Hiring someone in New York without a registered entity can create a taxable presence for your company, even if you never open an office there. Once you do register, New York's Article 9-A franchise tax applies, with a minimum franchise tax of $25 assessed on a gross receipts basis. Teamed absorbs that registration and filing exposure by employing your team under its own entity, so you get New York staff without New York tax presence.
- Minimum franchise tax
- $25
- Franchise tax basis
- gross receipts
- Formation / registration fee
- $200
Permanent establishment risk
How hiring in New York can create a taxable presence
Permanent establishment risk shows up when a company has enough activity in a state that the state treats it as doing business there, whether or not the company ever intended that. Paying a New York-based employee directly, directing their work, and running payroll for them can all be read by tax authorities as evidence of a taxable presence, separate from whether you have an office or a warehouse.
This matters because the consequence is not just paperwork. Once a state decides you have a taxable presence, it can expect franchise tax filings, payroll tax registrations, and possibly back filings for periods you were already operating. Teamed avoids this by being the New York employer of record itself, so your company's own tax presence in the state never gets triggered.
Franchise tax exposure
What New York's franchise tax looks like once you have an entity
New York taxes corporations and many LLCs under Article 9-A, and the state's franchise tax uses gross receipts as its basis. Even a company with modest activity in New York owes a minimum franchise tax of $25 under this structure, simply for having a taxable presence there.
That $25 minimum is not the ceiling for every business, it is the floor, and it applies regardless of profitability. If you form your own entity to hire in New York, this filing becomes a recurring obligation, not a one-time cost.
Formation cost
The cost of registering your own New York entity
Setting up a domestic LLC in New York means filing Articles of Organization with the New York Department of State, which carries a $200 registration fee. That fee is separate from, and in addition to, the ongoing franchise tax obligation that follows once the entity exists.
Neither of these figures is large on its own, but together they represent a standing administrative relationship with New York State that persists for as long as the entity is active, whether you are hiring one person or twenty.
When entity risk actually bites
Payroll, timing, and the practical trigger points
Whether an EOR arrangement makes more sense than your own New York entity depends heavily on how many people you hire, what they earn, and how long you plan to keep a presence in the state. There is no fixed headcount where the answer flips from one to the other, and anyone who tells you otherwise is guessing.
The honest way to work this out is to run your actual numbers. Use the crossover calculator to see where entity costs and EOR fees intersect for your specific situation, rather than relying on a rule of thumb.
Before you commit
Sometimes an employer of record is the better fit
An employer of record is sometimes the better answer, and that is not a consolation prize, it is a fair alternative for a small or still-changing team, or while you are testing whether New York is a market worth a permanent commitment. Talk to a member of the team about your specific plans, and run the crossover calculator if you want the numbers rather than a general steer.
Contractors, employer of record and your own entity all run on one platform at Teamed, so moving between them later does not mean changing provider or re-onboarding anybody. Real HR and legal experts handle the work rather than a ticket queue.
Talk to a member of the team and we will tell you plainly which one suits where you are. If you would rather look at the numbers yourself first, the crossover calculator models it on local salaries and employer costs rather than on a headcount rule of thumb.
Who carries it
Your own entity, when it's time. We set it up, migrate you in, and hand it back intact.
Global Entity and Employment Operations, which we call GEMO, is how Teamed forms your company, registers it for tax and payroll, runs it month to month and keeps its filings current, across 100+ countries. You stay the employer. We do the work behind it.
In New York, that means Teamed handles the registration, the Article 9-A franchise tax filings, and the ongoing state compliance while your team is small. We then transfer a fully compliant entity to you, with the $200 formation cost and the $25 minimum franchise tax already accounted for, not a surprise waiting on the other side.
They set up our EU entity and moved hires across without missing a payroll.
Questions
New York tax presence questions
Does hiring one employee in New York create a permanent establishment?
It can, depending on what that employee does and how much authority or activity they carry on your company's behalf. New York does not require a physical office for you to have a taxable presence. Using an employer of record removes this risk because the EOR, not your company, is the New York employer.
What is New York's minimum franchise tax and who pays it?
New York applies a minimum franchise tax of $25 under Article 9-A, assessed on a gross receipts basis, to entities with a taxable presence in the state. This applies once you have your own registered entity there. Teamed's employer-of-record structure means this obligation sits with Teamed, not your company.
How much does it cost to register an entity in New York?
Filing Articles of Organization for a domestic LLC with the New York Department of State carries a $200 fee. That is a one-time formation cost, separate from the recurring franchise tax obligations that follow once the entity exists.
When should I switch from an EOR to my own New York entity?
There is no single headcount or revenue point where this makes sense for everyone, it depends on your salaries, growth plans, and how long you intend to keep staff in New York. Run the crossover calculator with your real numbers, or talk to a member of the team, rather than guessing at a threshold.
Can Teamed help me set up my own New York entity later?
Yes, through Teamed's Global Entity and Employment Operations service, which we call GEMO. Teamed sets up the entity, migrates your employed staff into it, and hands it back to you fully intact and compliant.
Where these figures come from
Sources
Figures on this page come from the New York State Department of Taxation and Finance and the New York Department of State.
Looking for a job in Permanent Establishment Risk yourself? Teamed does not hire people directly. Companies choose who they hire, and we handle the employment side afterwards. Here is why we cannot help with your search.