Tag Archive for: startup

Entrepreneurship Bootcamp Series at WeWork Soho

Entrepreneurship Bootcamp Series on June 6th 6:30pm-8:30pm at WeWork Soho West. Join Asha Saxena, professor at Columbia University, entrepreneur in residence at the Eugene Lang Entrepreneurship Center, President and CEO of Future Technologies, Inc. and NJBIZ’s Best 50 Women in Business, as she presents her Business Model Canvas Walkthrough. Attorneys from MG+ will also lead a brief presentation on business formation and legal considerations for new ventures. Tickets are available through Eventbrite.

Benefit Corporations and Purpose-Driven Commerce

By: Jon Avidor

“Brands and consumers will continue to come together to form a more cohesive and fluid business ecosystem….The new era of business is about creating enterprises that work together in tandem to drive commerce that matters.”

– Billee Howard, We-Commerce

Entrepreneurs who seek to harness the power of business and innovation to address and implement solutions to critical social, cultural, and environmental issues are increasingly looking to social enterprise business structures, such as benefit corporations. In her book, We-Commerce: How to Create, Collaborate, and Succeed in the Sharing Economy, creative marketing consultant Billee Howard posits an economy of “we” built on “socialization, sharing, trust, purpose, passion, creativity, and collaboration,” and points to a shift in consumerism as the catalyst for this shift towards purpose-driven commerce. A growing number of innovative businesspeople and founders are foregoing traditional entities like partnerships, business corporations, and limited liability companies, and even not-for-profit corporations, in favor of new models that are designed for socially conscious businesses to commit to more than corporate philanthropy and for charities to pursue commercial activities with fewer restraints.

This article will discuss benefit corporations primarily, as well as social purpose corporations and low-profit limited liability companies, how they are different from traditional business corporations and not-for-profit corporations, and the meaning of the “certified B-Corp” distinction.

Benefit Corporations

A benefit corporation is a for-profit corporate entity, which according to model benefit corporation legislation commentary, “offers entrepreneurs and investors the option to build, and invest in, a business that operates with a corporate purpose broader than maximizing shareholder value and that consciously undertakes a responsibility to maximize the benefits of its operations for all stakeholders, not just shareholders.” Basically, a benefit corporation is a profit generating company that must also consider the impact of its decisions and business practices on its societal stakeholders and the environment, and not solely on its bottom line—referred to as the triple bottom line. Benefit corporations have a stated purpose of creating “general public benefit” and, at its shareholders’ election, one or more specific public benefits as identified in its articles of incorporation. This is a stark contrast from corporations, which exist to maximize shareholder value and whose board of directors could be liable to shareholders for pursuing courses of action that do not enhance corporate profits. See American Law Institute, Principles of Corporate Governance (1994).

Under New York corporate law, a general public benefit is an overall “material positive impact on society and the environment” created by a business and its operations. N.Y. Bus. Corp. § 1702(b). A benefit corporation may also set forth specific public benefits in its Certificate of Incorporation, including, but not limited to, providing goods or services to low-income or underserved individuals or communities, promoting economic opportunity beyond just job creation, protecting the environment, improving health and human services, promoting the arts, sciences, or education, and supporting other benefit corporations. N.Y. Bus. Corp. § 1702(e). California’s first benefit corporation, sustainable outdoor clothier Patagonia, Inc., included six specific benefit purposes in its Articles of Incorporation:

Patagonia Beneficial Purposes
Source:  Patagonia, Inc., Annual Benefit Corporation Report (2016)

For benefit corporations, meeting these public benefit commitments become part of the corporate management’s fiduciary duties and one way in which it’s held accountable. For example, under the model benefit corporation legislation, in addition to its regular obligations to shareholders under business corporation law, officers and directors must consider the effects of any action or inaction upon stakeholders, such as employees, subsidiaries, suppliers, customers, the community, and local and global government, as well as the sort and long term interests of the company, in meeting and best serving its beneficial commitments.

On the board of directors of a benefit corporation, a designated “benefit director” ensures compliance with the corporation’s beneficial purposes and preparing the annual compliance statement to shareholders. While a benefit corporation does not have to be accredited or certified under the model benefit corporation legislation, it must publish an annual benefit report to offer transparency between the corporation, its shareholders, and public beneficiaries, which is sent to shareholders, made available on its website, and sent to the Secretary of State of its state of incorporation. These annual reports must include a description of how the company pursued general public benefit and its specific public benefits and whether these benefits materialized or were hindered in some way, the third-party standard by which it defined and evaluated its social and environmental performance and the results of that overall assessment, and information about its directors, including the benefit director, and benefit officer, if any.

A Note on Certified B Corporations™

B Lab is a nonprofit organization that provides all business, not just corporations, with the resources and community to build socially-conscious ventures that create value for all stakeholders, not just shareholders. “Certified B Corp” designation is similar to Fair Trade USA’s “Fair Trade Certified” label that signals to consumers that the producer was audited and certified as complaint with international Fair Trade standards by this third-party nonprofit organization. “Certified B Corp” status is not a requirement for benefit corporations to secure or maintain benefit corporation status, but rather is B Lab’s endorsement of quality. A business becomes a “Certified B Corp” by meeting certain performance standards relating to governance and transparency, employee compensation and support, community engagement, and environmental sustainability on B Lab’s B Impact Assessment, as well as certain legal entity structure requirements regarding choice of entity and state of incorporation. If accepted for B Lab certification, the company must sign B Lab’s B Corp Declaration of Independence and B Corp Agreement, and pay an annual fee indexed to the business’ annual sales. Here is how benefit corporations relate to Certified B Corporations:

masur griffitts
Source: B Labs, Certified B Corps and Benefit Corporations

Benefit Corporations Compared to Not-for-Profit Entities

A benefit corporation straddles the profit generating goals of a traditional business corporation and the socially beneficial mission and objectives of a not-for-profit corporation, though a benefit corporation is an entity all its own. A not-for-profit entity dedicates its assets, and uses surplus revenue generated from its activities, to further the organization’s mission and objectives, and not for the pecuniary benefit of its members or management. This is distinctly different from a benefit corporation, which is owned by shareholders who receive economic value from their ownership interests, such as dividends and distributions upon dissolution. For that reason, benefit corporations are taxed under the Internal Revenue Code as business corporations—as either C corporations or S corporations—and are not exempted from paying income tax under Section 501 as are many (but not all) nonprofits, such as the well-known 501(c)(3) charitable organization.

Not-for-profit entities are restricted, both by corporate law and tax law, from engaging in certain activities that depart from its mission and, if applicable, its tax-exempt purpose, and often rely on external funding sources, such as patron donations, fundraising, and foundation or government grants. Benefit corporations are not restricted in that way and can pursue diverse revenue streams like a traditional business, but when appropriate, dedicate resources and funds and give consideration to social, charitable, environmental, educational, sustainable, and other public causes and issues like not-for-profits. It’s this balance that has popularized the benefit corporation among socially conscious businesses, and led many well-known and well-respected brands of varying corporate structure to become Certified B Corporations, including Kickstarter, Warby Parker, Ben and Jerry’s, and Etsy.

Other Social Enterprise Business Structures

There are new business models in addition to the benefit corporation, such as the social purpose corporation and the low-profit limited liability company (abbreviated as L3C), that allow founders and shareholders to use profit-generating activities to support chosen social causes. While many states have introduced or enacted benefit corporation legislation, fewer states have adopted the social purpose corporation and low-profit limited liability company entity structures.

masur griffitts

Source (State-by-State Status): Social Enterprise Law Tracker

Converting to a Benefit Corporation

The model benefit corporation legislation provides a statutory mechanism for converting between a business corporation and a benefit corporation structure since both are typically governed by a common set of corporate laws. This conversion typically involves an amendment to the corporation’s articles of incorporation to include the requisite commitment to a publicly beneficial corporate purpose. Both New York and Delaware have such conversion statutes.

However, it’s often not as easy to convert between a not-for-profit corporation and benefit corporation structure since states typically govern not-for-profits under a set of not-for-profit corporate laws distinct from business corporation law. In New York, not-for-profit corporations are not eligible for conversion because they are incorporated under the Not-for-Profit Corporation Law, and not the Business Corporation Law, so in order to make the transition, the not-for-profit would have to dissolve and reincorporate as a benefit corporation under the Business Corporation Law. So this entity change is certainly possible with just a few more steps.

What’s the Point of New York’s LLC Publication Requirement?

By: Steve Masur, Amanda Chiarello and Luca Turchini

Every new limited liability company (LLC) organized under the laws of the State of New York must announce its formation by publishing a notice in two newspapers for a period of six weeks, which could cost the LLC up to $2,000 depending on where in New York it principally conducts its business. Despite the continuous and loud outrage of lawyers, investors, and others that the cost of publication hinders new startups to do business in New York, and the fact that for some reason the same requirement does not apply to corporations, the New York State Legislature has consistently reaffirmed the requirement. Until lawmakers discontinue the publication requirement, it’s up to law firms to work with new ventures to dispel confusion and help our clients’ businesses succeed in New York.

The LLC Publication Requirement

Section 206 of the New York Limited Liability Company Law requires every limited liability company to give public notice its formation in two newspapers in the county in which the LLC is located, one newspaper of daily circulation and the other of weekly circulation, for a period of six consecutive weeks. Despite the information being readily available on the New York Department of State’s corporation and business entity database, the LLC must generally include in the notice its name, formation date, address of its principal place of business, registered agent’s name and address (if any), the date or event that would trigger its dissolution (if not perpetually existent), and business purpose. The county clerk of the LLC’s home county typically designates the two newspapers in which the new LLC must publish. Once completed, the newspapers will provide the LLC with affidavits of publication, which the LLC files with the Secretary of State along with a Certificate of Publication.

The most significant problem with the publication requirement is the cost of running the notices in the two newspapers, and since the county clerk typically assigns the newspapers from a (sometimes secret) master list instead of allowing the LLC to choose the two newspapers that charge the least, costs can vary wildly, especially in New York City counties. Depending on the county in which the LLC is located, and the periodicals specified by the county clerk, the total cost hovers between $1,500 and $2,000.

Many LLCs see no immediate utility in publishing an expensive announcement that no one reads and simply ignore the requirement, allocating this money to more pressing areas of their new businesses. However, an LLC that does not comply with the publication requirement within 120 days of filing its articles of organization with the State forfeits its right “to carry on, conduct or transact any business” in New York. Practically, this means that the LLC loses standing to bring a lawsuit in New York, for example, to enforce a contract against a non-paying customer or supplier, and that the LLC would not be able to obtain a perfect Certificate of Status (also referred to as a Certificate of Good Standing or Certificate of Existence), which could be required to register in other states and even obtain a loan. However, noncompliance does not prevent an LLC from entering into valid contracts or forfeit the liability shield of its members, managers, or agents to the extent such liability may be limited by law. An LLC may reinstate its authority to carry on, conduct, or transact business in good status by completing the publication requirement as if it were just organized in New York. Thus, a noncompliant LLC wishing to sue, for example, would simply publish, file its Certificate of Publication with the State, and then file its complaint in court, or publish simultaneously with initiating its lawsuit and come into compliance prior to opposing counsel’s motion to dismiss for lack of standing.

The practical effect of the penalty language is seemingly nothing more than intimidation since there have been no visible enforcement actions against LLCs that lack the legal authority to do business in New York. Based on the Department of State’s inaction, it seems unlikely (but not impossible) that the Secretary of State maintains a record of noncompliant LLCs, further reducing any real liability for failing to publish. Today, LLCs still face the possibility of sudden enforcement of this requirement, and therefore, risk-averse attorneys would advise new ventures intent on an LLC structure to either comply with the publication requirement or simply organize elsewhere.

Intent versus Impact

In a 2006 letter to Governor George Pataki and legislative leadership, the New York County Lawyers Association cited consumer protectionism as the original legislative intent of the “antiquated” publication requirement, observing, “publication of the notice of formation ostensibly serves to put the public on notice that an entity has been formed to do business…within a corporate structure that shields its owners from personal liability for the debts, obligations and liabilities of the business entity.” But if this is the true purpose of the requirement, then it’s surely a holdover from a prior age, given the public’s easy ability to obtain the same information from Department of State’s corporation and business entity database for free. Furthermore, the commitment to print media and averseness to a more accessible and less expensive electronic format gives further pause. It is unlikely the statute achieved its stated goal of causing more LLCs to publish their existence. Instead, it seems clear that well-advised new businesses will use a different entity structure in New York, or will organize in a different state, as long as it can avoid filing an Application For Authority required for a foreign LLC to properly do business in New York.

So Why Have the LLC Publication Requirement at All?

Given the clear discrepancy between the stated purpose and actual consequences of the publication requirement, there must be some valid reason the New York State Legislature continues to preserve this requirement. It’s long been suspected and alleged that the powerful newspaper and print industries, which benefit from being on the short list of newspapers kept by county clerks across the State, have a vested interest in requiring the thousands of LLCs that form each year in New York to publish their notices.

Section 206 has strict requirements for publishing the notice in print, and not electronically. In addition, the county clerks maintain a short list of newspapers that fit the statute’s strict circulation and publication frequency requirements, and these approved newspapers can charge a premium for publishing the notices of formation. In Kings County (Brooklyn), the county clerk will not even release the full list to the public, further adding to the mystery of the cabal. Consequently, the publication requirement forces an LLC choosing to do business in New York to pay what amounts to a state mandated formation tax to a private publication, of an amount arbitrarily set by that publication. Like a Mario Puzo novel, an LLC wanting to do business in New York is given “an offer it can’t refuse” since its only other option is to willfully ignore the law. Some have even argued that the statute’s formatting requirements are “quasi-judicial” and will create a controlled market that is likely to further increase this premium.

An examination of the 2006 legislative history adds credence to this theory. The original Chapter 767 amendment scaled the publication period back to four weeks, but at the eleventh hour, the period was increased back up to six weeks. Two more weeks does not meaningfully increase the public’s chance of becoming aware of an LLC. The public already enjoys unfettered, 24-hour access to a database containing information about every New York business. The only beneficiaries are the periodicals that New York LLCs must pay to publish a fourteen-line ad, which get two more weeks of revenue.

New York or Bust

Many new LLCs avoid organizing in New York to bypass the publication requirement, or make the judgment to either not comply or chose another form. Section 206 additionally applies to foreign LLCs with sufficient contacts in New York to warrant filing for authority to do business within the State. Yet New York is the crossroads of the world, a global hub for business, technology, innovation, media, and culture. It’s unlikely that LLCs can avoid doing business in New York, so what are they to do?

Almost any business starting in New York would wish to spend its money more strategically and avoid the risk of having the LLC be declared invalid. As long as the New York State Senate and Assembly continue to overlook the negative effect that the publication requirement has on new ventures and the larger industries integral to business innovation and growth, businesses with a choice will form LLCs elsewhere, while those with no choice will choose a different form or buckle to the extortion.

Attorneys Counseling Their Clients

Responsible attorneys should counsel their clients to either form a corporation, or when forming an LLC, to comply with the publication requirement to remain in good standing within New York. However, since the penalty does not revoke the right to contract, clients may be made aware that the only direct penalty for not complying with the law is the loss of the right to bring lawsuits within the State. As a result, if a noncompliant LLC should ever need to file suit in New York, it must account for the time required to comply with the publication requirement before initiating its claim.

You, Me, and 83(b)

By: Jon Avidor

Imagine you’re at a cocktail party with a circle of sophisticated, seasoned startup investors and you get caught in a conversation about 83(b) elections, finding yourself completely out of your depth. What you do next is critical: First, get out of there. Nobody deserves to be subjected to party conversation about tax law. Ever. Second, let a lawyer explain to you what in the world 83(b) is, and why you might want to consider making the election and making it on time so that you can avoid an unnecessarily high tax bill.

Background

The federal government taxes the value of any property a person receives in connection with the performance of services as part of the that person’s gross taxable income. If the property consists of shares of stock that are subject to vesting (meaning the company has a right to repurchase all or a portion of the stock under certain circumstances, such as your departure from the company) then you have the ability to choose when it’s taxed. If you don’t file an 83(b) election, you’ll be taxed at the time the stock vests, and the income on which you’ll be taxed is the difference between what you paid and the value of the stock at the time it vests).

By making an 83(b) election (a reference to Section 83, subsection (b) of the Internal Revenue Code, 26 U.S.C. § 83(b)), you are effectively asking the IRS to accelerate your tax, and to tax you at the time of grant, not when it vests.

Why Make the 83(b) Election

A taxpayer would be inclined to make an 83(b) election if she suspects that the value of the property will increase over time such that taxing the value of the property at the time of the grant, when it’s worth less, will alleviate a greater tax burden when her property rights fully vest later. This is commonly the case with early-stage companies. Consider the following scenario:

You are approached by the founders of a startup that has just gone through its first seed financing round with an offer to become the company’s new chief executive officer. The founders offer you a competitive compensation package, which includes 10,000 shares of stock at a price of $0.001 per share for an aggregate purchase price of $10.00. However, the stock is subject to a two-year vesting schedule and a right of repurchase on all unvested shares. You accept knowing that you will be taxed on the difference between the stock’s purchase price and  fair market value. You must now decide whether you want to be taxed at the time the shares are purchased (when the fair market value is $0.001 per share), or when the right of repurchase lapses and the shares are fully vested two years from now, presumably when you have increased the company’s value, and the fair market value of its shares, as its CEO.

It is often a good idea to file the 83(b) election soon after receiving value that could someday increase in value. This way, you will pay less in taxes if the potentially valuable asset actually realizes that value.

How to Make an 83(b) Election

Any transferee should consult with her professional tax advisor before making any decisions regarding whether or not to make an 83(b) election. It is in each transferee’s sole discretion whether to make an 83(b) election, and as such, it is that taxpayer’s sole responsibility to submit this notice to the Department of the Treasury. However, be aware that a transferee has a small window of time, within thirty days of the award date to be exact, in which to make the 83(b) election, so she should not delay this decision for long.

To make the election, the taxpayer sends a letter to the IRS that contains information about the taxpayer, the property and transfer for which the election is being made, any restrictions on the property, the amount paid for the property and its fair market value, among other things, as required by Treasury Regulations, 26 C.F.R. § 1.83-2(e). In addition, the taxpayer must also provide a copy of the 83(b) election notification to the transferor (commonly, the corporation).

Legal Alert for Online Service Providers

By: Jon Avidor

On December 1, 2016, the U.S. Copyright Office rolled out its new electronic registration system and directory for registered agents under the Digital Millennium Copyright Act (“DMCA”). This shift from paper filings to an online platform requires any service provider with a designated agent prior to November 30, 2016 to reregister its agent through the new online system by December 31, 2017 to continue its protection under the DMCA safe harbor. If you or your business maintains a website that enables users to post or transmit content, you may qualify as a service provider under the DMCA and this notice might apply to you.

The Digital Millennium Copyright Act Safe Harbor

Section 512 of the DMCA, 17 U.S.C. § 512, provides Internet communications service providers with a safe harbor from liability for copyright infringement for infringing material posted by its users, provided the online service provider meet certain qualifications. The service provider must implement a notice and takedown protocol that would allow copyright holders to report alleged infringement of its protected work on its website or through its service, and the service provider may avoid liability for copyright infringement by removing the infringing material and, if appropriate, terminating repeat infringers. As prerequisite, the online service provider must designate an agent to receive these notices of claimed infringement, register that person with the Copyright Office, and identify him or her in its posted terms of service or usage policies.

Implications of the New Rule

The Final Rule by the Copyright Office, which amends 37 C.F.R. §201.38, institutes three changes implicating the notice and takedown regime of the DMCA:

  1. Online service providers that rely on the DMCA safe harbor protections must designate its agent to receive notices of claimed infringement through the Copyright Office’s new electronic DMCA Designated Agent Directory by December 31, 2017.
  2. Under the new system, agent designations expire after three years and companies will have to reregister to remain current. This is a departure from the old paper system in which agent designations did not expire.
  3. The new electronic DMCA Designated Agent Directory will list an online service provider’s agent designation history based on its paper filings.

If your business hosts or facilitates the transmission of user-generated content on its online platform and you miss the December 31, 2017 deadline to designate a DMCA agent through the new electronic directory or fail to maintain an active agent designation, your company will not continue to be protected by the DMCA safe harbor provisions, which means you could face exposure for copyright infringement alleged against users of your online service.

laptop and coffee cup on a desk

Founders Roundtable

By: Steve Masur

The next Founders Roundtable meetup on Nov 28th from 7-9pm at Spark Labs NEW Bryant Park location. Come join us along with the serial entrepreneurs, CEO’s, and digerati that make up the Founders Roundtable from 7-9pm where we will enjoy discussions from three new companies including one that Google featured at Cannes Lyons 2016. Find more information here and please RSVP if you’d like to attend.

Tax Benefits of Start Up NY

By: Steve Masur

A New York business that has partnered with a college or university sponsoring the tax-free area in which the company seeks to locate and do business, and demonstrates that it will create new net jobs in its first year of operations may participate in the START-UP NY program and, in doing so, operate tax-free for ten years.[1] Pass through entities do qualify for the tax benefits; in order to qualify for the program, the business must either be organized as a sole proprietorship, partnership, corporation, or limited liability company.[2]

START-UP NY eliminates tax liability for “any business or owner of a business in the case of a business taxed as a sole proprietorship, partnership or New York S corporation, that is located in the tax-free NY area,”[3] for ten years by providing tax credits for the following:

  • Business Tax-Free New York Area Elimination Credit: This credit eliminates franchise tax and personal income tax calculated by the business when filing its tax return. The credit equals the business’ “tax-free area allocation factor” multiplied by its “tax factor.”[4] The tax-free area allocation factor is the business’ economic operational presence (assets and payroll) in the tax-free area.[5] For businesses with operations both inside and outside of a tax-free area, the credit would be prorated based on the percentage of assets and payroll within a tax-free area(s).”[6] For owners of pass-through entities (i.e., sole proprietors, partners, S-corporation shareholders, and LLC members), the taxpayer’s tax factor is the portion that individual’s income attributable to the income of the business in the tax-free area.[7]
  • Excise Tax on Telecommunication Services: This credit is equal to the amount in excise tax paid by the business on telecommunication services for services rendered within the tax-free area.[8]
  • Metropolitan Commuter Transportation District (MCTD) Mobility Tax: The business is exempt from this payroll expense.[9] The District includes New York City[10] and Rockland, Nassau, Suffolk, Orange, Putnam, Dutchess, and Westchester counties.[11]
  • Sales and Use Tax: This refund is for sales and use taxes paid for the retail sale of goods and services used or consumed by the business’ operations in the tax-free area.[12]
  • Real Estate Transfer Taxes: “Leases of real property in a tax-free area to an approved business are exempt from the New York state real estate transfer tax. This exemption also applies to any local real estate or real property transfer tax imposed locally.”[13]
  • Personal Income Tax Exemptions for Employees: Employees of START-UP NY businesses who were hired in a certified net new job[14] in a tax-free area are exempted from paying New York State personal income tax and, if applicable, New York City personal income tax or, Yonkers personal income tax surcharge or nonresident earnings taxes.[15] The employees only receive the wage exclusion tax benefit during the period that the business remains eligible for the START-UP NY tax exemptions (that being, at most, ten consecutive years).[16] The employer must withhold New York income taxes from the wages paid to eligible employees unless they provide the employer with a certificate of exemption from such withholdings.[17] There is a cap on the number of employees that qualify per business, as well as a statewide cap on the number of net new jobs.[18]

[1] N.Y. Econ. Dev. Law §§ 433–434 (McKinney’s 2015); see also STARTUPNY, http://startup.ny.gov/business-growth (last accessed Aug. 5, 2015).

[2] N.Y. Econ. Dev. Law § 433(1)(d).

[3] N.Y. Tax Law § 39(a)(1) (McKinney’s 2015).

[4] Id. § 40(b).

[5] Id. § 40(c).

[6] STARTUPNY, supra note 1.

[7] N.Y. Tax Law § 40(d)(2).

[8] Id. § 39(c-1); STARTUPNY, supra note 1.

[9] N.Y. Tax Law § 39(d); STARTUPNY, supra note 1.

[10] I.e., New York, Bronx, Kings, Queens, and Richmond counties.

[11] N.Y. Dep’t. of Tax and Fin, Guide to the Metropolitan Commuter Transportation Mobility Tax 5 (2012), available at http://www.tax.ny.gov/pdf/publications/mctmt/pub420.pdf.

[12] N.Y. Tax Law § 39(f); STARTUPNY, supra note 1.

[13] N.Y. Tax Law § 39(g). See also STARTUPNY, supra note 1.

[14] A “net new job” is defined by statute as a job that: “(a) is new to the state; (b) has not been transferred from employment with another business located in this state, through an acquisition, merger, consolidation or other reorganization of businesses or the acquisition of assets of another business, or except as provided in [N.Y. Econ. Dev. Law § 431(6)(d)] has not been transferred from employment with a related person in this state; (c) is not filled by an individual employed within the state within the immediately preceding sixty months by a related person; (d) is either a full-time wage-paying job or equivalent to a full-time wage-paying job requiring at least thirty-five hours per week; and (e) is filled for more than six months.” N.Y. Econ. Dev. Law § 431(5).

[15] N.Y. Tax Law § 39(e); STARTUPNY, supra note 1; START-UP NY Employee Information, N.Y. Dep’t. of Tax and Fin., http://www.tax.ny.gov/pit/sny/employee_information.htm (last accessed July 30, 2015).

[16] START-UP NY Employee Information, supra note 14. “Employees hired for and whose jobs are certified as net new jobs in a tax-free area will pay no state or local income taxes for the first five years. For the second five years, employees will pay no taxes on income up to $200,000 for individuals, $250,000 for a head of household and $300,000 for taxpayers filing a joint return.” STARTUPNY, supra note 1 (emphasis added).

[17] START-UP NY Employer Information, N.Y. Dep’t. of Tax and Fin., http://www.tax.ny.gov/pit/sny/employer_information.htm (last accessed July 30, 2015).

[18] Id. “There is a maximum of 10,000 tax-free jobs after year one, 20,000 tax-free jobs after year two, etc.” Id.