Wednesday, February 20th, 2013

What Exactly Does New York City Offer Tech Startups Besides High Taxes?

To be fair, there are a thousand reasons to be based in New York City: it's great, the talent is great, it's magical, all that jazz. Don't like living or working anywhere else. Plus, there's a Starbucks everywhere for when you have a cruddy office with no conference room. That is A+. Oh but wait, why would you support a non-NYC startup with coffee money? Take that meeting to, say, Gregory's Coffee. But what has the City done for you lately, besides offering terrific mass transit service and a lack of affordable rent? Mayor Bloombucks has gone on the charm offensive once more about tech startups: "New York Mayor Michael Bloomberg has launched 'We Are Made in NY,' an initiative which aims to support the local tech scene by providing 'resources and programs' that help startups grow, highlighting job openings at tech startups, and helping to introduce 'novices' to the growing industry…. This program, which was announced at BuzzFeed’s NY HQ, will tap the city’s existing Made in NY Digital Map, but will take the form of a campaign rather than a set of tools."

So yeah, this happened at BuzzFeeᴅ, which is a reasonable choice. (One great thing about BuzzFeeᴅ is that it's created a real ton of jobs in New York City! I am very pro that. Also that is possible because they have about $32 million (really random outside estimate) in investment money in their bank account.) Anyway, so: "Resources and programs" is in quotes; then this program… will "take the form of a campaign." Oh! It's right there: This program is a campaign. Basically you can apply for a "Made in NY" certification. Neato. Guess what! We are a small independent job-creating tech business that pays an inordinate and unholy amount of taxes to the City of New York, so we are just going to call ourselves certified as Made In New York already.

But okay so, these "resources, benefits and programs to help startups grow in New York City": ooh, go on?

• Some industry-specific incubator spaces, and some generalist ones, most of which are not actually that affordable for a non-venture-backed company. (Our current rent would be at least tripled if we took the desks we needed at an incubator. Recently we were contacted by a new incubator, that is raising seed money. Our rent would go up five-fold if we moved in there.)

• There's NYC Seed, which is a great idea, providing seed money to startups—up to $200K, which is reasonable. Here's their portfolio. Honestly? It's so-so, but we're pro.

• They have a link to the "fully searchable database of procurement notices" for the City. So get ready to start searching that to figure out how to get some City contracts.

• There seems to be a good bit of money in grants for staff training, which is actually very cool, if all outside what most people think of as tech startups. People getting certified for HVAC installation, that kind of thing. (Although past trainings are almost all software training; or, one home health-care agency used their "award to advance 10 home care workers into supervisory and administrative roles.")

• There seems to a be a pro bono lawyer referral system if you call a case manager somewhere?

• There's a competition to pay people to move to Lower Manhattan, basically. Just like Goldman Sachs! :)

• And there's support for business run by immigrants, and then minority and women-owned certification systems, which of course pre-date this campaign, which are good things.

And that's about it. What's there for a small business, making it and hiring and hustling in New York City? Honestly, not much. We'd be better off near-shoring all our infrastructure and workforce to say, Hungary, or New Jersey and Utah. (Right, just like Goldman Sachs!)

Enough negativity! What would I want?

• Structured pooling of professional resources, like payroll. Small independent businesses use up a lot of their time doing their own bookkeeping and doing their own payroll. Would I happily share a payroll person with a team of other startups? Yesssss.

• Assistance with small-team health insurance. That's the big nightmare.

• Tax credits for hiring in New York City, or credits for new businesses, or credits for businesses with other criteria that reflect their being part of the City's ecosystem.

• Assistance with the various kinds of business insurance, including things like life insurance for business partners.

• Man, toss us a reduced Metrocard once in a while!

• Assistance to local banks and credit unions to provide better small business services. Most local businesses end up using large national fee-heavy banks because the online services are better, therefore not supporting NYC's small financial-services companies.

And now, I am going for a physical with a real actual doctor for the first time in eight years.

21 Comments / Post A Comment

jolie (#16)

1. I love it, so don't take my questioning as an attack of any sort: where did Choire's 'small caps d in BuzzFeed' affectation come from? I feel like I missed class that day?
2. Heh, good luck insuring Balk. Oh my God actually? I'm going to go spend the rest of the day tittering at that thought.
3. That's good about the doctor and stuff. Seriously. More going to the doctor for all of us please.

@jolie re:1 … Maybe this isn't quite the question you're asking! But the Buzzfeed logo, which is based on the typeface Gotham I think, it is an insane amalgam of camel-casing. Capital B, small cap U, Z, Z, capital F, lowercase e, e, small cap D. For my part I laugh every single time Choire does it, as I do when Tom Scocca persistently says "The Politico," though they're not quite analogous.

jolie (#16)

@Tom McGeveran Ahhh. Anyway, regardless of the reason I adore it.

Lockheed Ventura (#5,536)

What about a City subsidized kegerator and a used ping pong table for that hip start-up office?

jolie (#16)

@Lockheed Ventura Related to this: Can there be some sort of system by which businesses must prove that they pay their contributors in order to qualify for these tax breaks. It sends me into fits when I learn that places that shell out money to bring llama's into the office for Friday Funsies are also not paying some portion of their people.

Sean Lai (#14,158)

When I read the title I was all, "uh oh, Choire is going to use the RAW POLITICAL CLOUT OF THE AWL to get a bunch of subsidies!" but these are some good ideas, especially on pooling payroll services, various insurance services and helping administer health care. That would probably keep costs down and make everyone's life easier.

Supposedly once the dread Obamacare exchange is up and running, it should make administering health care for your employees way easier. We'll see.

24-hour-a-day public libraries with great wiFi and lounges to have phone calls/ Skype.

NinetyNine (#98)

You need to fire your accountant. What taxes is NYC making you pay? Rent tax got phased out in the 90s. S or C corp tax is like $500 a year if you show no profit (you should be paying out any corporate profit in the form of salary to the owners, or profit sharing, or, you know, 'contributors'). Unemployment taxes are paid to the state. NYC City tax comes out of the employee end (which is a deduction against revenue anyway). Any sales tax should be charged off to person writing you a check.

I ran a profitable small business for six years in NYC and literally cannot remember a single instance where I had to write a tax check that would not have required in any other locale in the country.

Do you need some help with the math?

lurk (#241,787)

@NinetyNine What about metro commuter tax, which is basically setup to screw over freelancers, for which I paid 5k last year (or that other one, name escaped me, that assumes you ordered x amount on non-taxed internet purchases and charges you a fee, and if you don't accept it it all but triggers an audit. It's like 60 bucks, but it's a BS tax.)

NinetyNine (#98)

@lurk If you made $1.34MM last year ("Your MCTMT due is .34% (.0034) of your total net earnings from self-employment allocated to the MCTD for the tax year.") you probably should be set up as a C-Corp.

The other tax you are referring to is a Sales Tax for purchases. Some of which are legitimately due, though at this point, you can pretty confidently check off no tax due since almost all vendors shipping to NY addresses charge sales tax.

There is also the Unincorporated NYC tax, which yeah, sucks (still a deduction against your fed, tho). But per the title of this post, does not affect incorporated businesses.

Aside from running a business, I also reported as a sole proprietor for several years. The two worst hits were self-employment tax (which is a Federal issue) and the incorporated tax, which does suck. But once you make over $175K a year, the costs of organizing (S-Corp fees, acct, etc.) provide enough benefit (including self-employment tax) to eat the cost. It's about 2-4K a year in costs to run your life as a S-Corp as a freelancer, but worth it.

Unless of course you are going to dredge up some usenet thread about how Unkie Same took every self employed libertarian programmer asshole to the woodshed in 1997 blah blah blah.

NinetyNine (#98)

>Structured pooling of professional resources, like payroll.

Um, isn't this just ADP? $7 a month per full time employee? How much more help do you want? Expense is deductible against revenue.

>Assistance with small-team health insurance.

This is a national, not local issue. Try insuring your team in a state that doesn't require coverage of everyone and allows individual underwriting. It's much worse. Also 100% deductible against revenue.

You really want tax help with key man insurance? I guess maybe if you would sign on to paying for 100% of your labor costs I could get behind this, but you want the city of New York to help you get a $1 million when Balk's well advertised smoking and drinking habits to catch up to him so you can continue to not pay people for their labor?

brianvan (#149)

Maybe The Awl ought to have a small-business vertical where we can write and discuss this stuff.

It's fun to kick this conversation off with a snipe toward Bloomberg (I agree, the "small business help" here helps with problems that are hardly relevant in comparison to the need for sufficient capital) but this is something where the web lacks a solid collection of resource documents for this specific thing. Most small business journalism is best filed under "entertainment" for practical purposes because it's almost always written by some career-writer with limited perspective on what it's like to run a business. This is more on-point than any of that stuff, but it would be disappointing to see this conversation merely end with, "and that's what's wrong with everything now."

Matt (#26)

The Awl needs a payroll service?

davidwatts (#72)

I think this is more of a "Thick of It" proposal than a "West Wing" proposal, if you know what I mean.

mishaps (#5,779)

I like how we've determined that this piece is basically Choire's cry for help. How excited he will be when he returns from the doctor!

OMG the doctor was amazing. You guys should try it.

jolie (#16)

@Choire Sicha Show us on the Balk Dollie where he touched you.

BadUncle (#153)

Oh, this is all well and good for the Tech Sector. But what about the made-in-NY artisinal mayonaise sector?

You can’t overestimate the value of culture. My startup nearly got destroyed because we tried to get it rolling in a shithole that nobody wanted to live in. Things turned around the very minute we relocated to NYC.

One could just as easily ask, "why does *anyone* live in NYC when it’s cheaper to be [anyplace else]?” But nobody asks that question, because everybody knows the answer.

jolie (#16)

HOLY CRAP. Has anyone looked at the "Jobs Map"? This is the dumbest fucking thing. The ONLY search function, as far as I can see, is for jobs by company, rather than by role. Which is not an actually helpful way to look for work unless you're like, "I want to work for a made-in-NY artisinal mayonaise company and can train myself to fit whatever role they might have open!"

Just for S&Gs, I clicked on 20×200, which took me to a page where I could click to see open jobs on the 20×200 site. Now I'm on that site, but I have to dig to find the jobs page because it linked me to their homepage rather than directly to their career page. So that's at least 4 clicks to find out the jobs they have open aren't relevant to my experience. (This is theoretical, obvs. My experience is in cleaning toilets.)

Except actually the 20×200 site is under construction so there is actually no careers page at all. Way to go, everyone involved in this. Way to go.

BadUncle (#153)

@jolie I Gogoled (fnar) the name, and landed on a list of companies. I started clicking on those with the parenthetical "hiring" after the names. In all but one case, the linked pages were either no longer in existence, under construction, or had a note to go to some other company and look under careers.

Seems it could use some work. Funny thing, so could I.

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