Client Accounting Services for High Net Worth Individuals in New York City

Most people hear the phrase and picture bookkeeping. That is the first layer, not the whole job. A Manhattan household with an operating company, two rental buildings, a family LLC and a brokerage account is really running four sets of books that all have to agree with one another before April. The work starts with one chart of accounts across every entity, monthly bank and brokerage reconciliation, and a running schedule of what each entity will push onto the personal return. A partnership files Form 1065 and an S corporation files Form 1120-S, and neither one pays the income tax itself. The K-1 lands on your Form 1040, where New York State and New York City each take a second and a third bite of the same dollar.

From there the job splits into two tracks. The first is ordinary back office work: vendor payments, payroll oversight for household staff, receivable follow-up for the operating business, and a monthly reporting package a busy person can read in ten minutes. The second track is tax position, and it runs all year. We keep a stock and partnership basis schedule for every pass-through interest, track suspended passive losses under Publication 925, hold cost basis and acquisition dates for anything headed to Schedule D, and carry the rental depreciation detail that Schedule E will demand. Those records are cheap to keep and painful to rebuild.

Here is what the gap costs. A client arrived with 180,000 dollars of S corporation wages, 640,000 dollars of K-1 income, and 210,000 dollars of dividends and realized gains. His prior bookkeeper had never kept a stock basis schedule, so a 300,000 dollar distribution had been reported as tax free when only 240,000 dollars of it was actually covered by basis. The remaining 60,000 dollars was a capital gain nobody reported. New York taxes capital gains as ordinary income rather than at a preferential rate, so once the state and city rates were applied the correction ran about 6,400 dollars of New York tax on top of the federal amount, plus interest. Rebuilding the schedule took nine hours of work. Maintaining it takes about twenty minutes a month.

The mistake we see most often here is treating the personal return as a January problem. By January the year is shut. If the operating company was going to elect into the New York pass-through entity tax to work around the federal cap on state and local tax deductions reported on Schedule A, that election had a deadline in March of the tax year, and the entity had to make PTET estimates during the year to earn the federal deduction. Miss the window and you have paid New York with after-tax dollars for no reason at all. Charitable timing and retirement funding work the same way. A December decision is worth money. The same decision in April is a conversation about next year.

Reporting cadence is the other half of the answer. Books close by the fifteenth of the following month, and the package that follows shows consolidated cash by entity, a distributions log, a basis roll-forward and an updated projection of the April number. Quarterly we revisit that projection against actual results and adjust the payments on Form 1040-ES rather than guessing at them. Documentation standards follow the IRS guidance on recordkeeping, because New York State auditors ask for the same substantiation the IRS does and they ask for it more often.

Practically, the ledger runs through our bookkeeping team and the filings through individual tax returns, and both groups look at the same file instead of trading spreadsheets in March. That single file is the real argument for keeping accounting services for high net worth clients in New York City under one roof, since the New York State Department of Taxation and Finance has no interest in the fact that your bookkeeper and your preparer were different firms. Going forward, we would rather hand you a number in September you can still change than a number in April you can only pay.

New York City is the only market we serve where three separate governments reach the same dollar of ordinary income. The city resident income tax runs to roughly 3.876 percent. New York State climbs to about 10.9 percent at the top brackets. Federal ordinary rates top out at 37 percent, and investment income can pick up another 3.8 percent through the Net Investment Income Tax computed on Form 8960. Compare that with Austin or Miami, where there is no state personal income tax at all, and you can see why a plan that works fine in Texas is close to useless in the five boroughs.

There is a fourth layer that newcomers miss. The city imposes an Unincorporated Business Tax of roughly 4 percent on unincorporated businesses operating in New York City. A sole proprietor reporting on Schedule C or a partnership filing Form 1065 can land inside it. Individuals get a credit against the city personal income tax for part of the UBT, but that credit phases out completely once city taxable income passes 142,000 dollars, so for the households on this page the credit is worth nothing. The UBT is simply a real 4 percent cost of operating unincorporated here.

Numbers make it concrete. A consultant nets 900,000 dollars through a single-member LLC run out of a Tribeca office. The Unincorporated Business Tax at roughly 4 percent is about 36,000 dollars, with no offsetting credit at that income level. On top of that sits federal ordinary tax, self-employment tax at 15.3 percent on earnings up to the annual wage base and 2.9 percent Medicare above it as reported through Schedule SE, then New York State, then the city personal income tax. Before any planning, that consultant keeps well under half of the last dollar. Restructuring the entity, moving part of the profit through payroll and electing into the state pass-through entity tax changed the annual result by about 41,000 dollars.

The pass-through entity tax deserves its own paragraph because it is the biggest legitimate lever the city offers. New York lets an eligible partnership or S corporation pay state tax at the entity level, deduct it against federal income, and hand the owner a credit on the personal return. The federal cap on state and local tax deductions claimed on Schedule A then stops mattering for that slice of income. There is a separate New York City PTET for eligible entities as well. Both are elective, both carry hard annual deadlines, and neither one is retroactive.

That leads to the common mistake. People assume their preparer will handle the PTET in the spring along with everything else. The election is made during the tax year, not after it, and the entity must fund estimates during the year to get the federal deduction in that same year. We have picked up clients who lost a deduction worth more than 30,000 dollars because nobody made a March phone call. The second frequent miss is bonus and equity timing. A December vesting event that could have been split across two calendar years is a decision, not an accident, and it stops being a decision on December 31.

Because of all this, accounting services for high net worth clients in New York City are built around a projection that gets refreshed quarterly rather than a return that gets prepared once. Our tax strategy consulting team owns the projection and our bookkeeping team feeds it real numbers, and payments go out on Form 1040-ES and the state equivalent against that projection. The New York State Department of Taxation and Finance publishes the PTET deadlines each year and does not extend them. Expect the city burden to keep rewarding people who plan in June and punishing people who plan in April.

New York runs one of the most aggressive residency audit programs in the country, and the trap is that you can be a resident of New York without being domiciled here. The statutory residency test has two prongs. If you keep a permanent place of abode in the state and you spend more than 183 days in New York during the year, you are taxed as a resident on all of your income no matter where it was earned. A day counts if you were physically present for any part of it. Landing at Kennedy at eleven at night to sleep in your own bed counts as a full day.

That is where the Florida story usually falls apart. Someone changes a driver license, registers to vote in Palm Beach and files a declaration of domicile, then keeps the apartment on East 72nd Street because the children are at school here. Domicile may well have moved. Statutory residency has not. Auditors ask for cell phone records, EZ-Pass logs, credit card statements, building entry swipes and airline itineraries, and they rebuild your calendar day by day out of your own data. In practice the burden of proof sits with you, and a vague calendar loses.

The arithmetic is unforgiving. A client sold his company and moved to Miami in March, kept the Upper East Side co-op, and logged 191 days in New York between board meetings and family. His income that year ran about 2,400,000 dollars, most of it from sources with no New York connection. Because he tripped both prongs of the test, New York taxed all of it as resident income instead of only the New York source portion. The resident treatment added roughly 210,000 dollars of state and city tax over what a nonresident filing would have produced, before interest. Eight days over the line. Had he tracked days as they happened and skipped two December trips, the year would have closed under 183.

Our part is documentary rather than heroic. We build the day log as the year runs, not in the audit, and we tie it to primary records instead of memory. We keep the substantiation the IRS recordkeeping guidance already asks for and add the New York specific pieces on top of it. When an examination opens we take the representation through Form 2848 on the federal side and the state equivalent, pull the federal transcripts so both records agree, and answer the notices in writing. If a prior year needs correcting, that runs through Form 1040-X and the state amendment together, not separately.

The mistake almost everyone makes is starting to count in December. By then the year is a memory exercise, and memory is the weakest evidence there is. The second mistake is assuming a small apartment does not qualify as a permanent place of abode. Size is largely beside the point. A studio you keep available to yourself all year generally counts, and so does a place you rarely sleep in. Nobody should read this as a promise of an outcome, because no return is beyond an audit and residency cases turn on facts. What we can do is make sure the facts are recorded while they are still facts.

This is why residency work is folded into accounting services for high net worth clients in New York City rather than sold as a separate product. The day log lives beside the general ledger our bookkeeping team maintains, and the position it supports gets carried onto the return by the same people through individual tax returns. The New York State Department of Taxation and Finance publishes its residency guidance openly, and it has gotten better at data matching every year. Anyone planning a move in the next few years should start the log the January before, not the April after.

Start with the statute of limitations, because it sets the floor. The IRS generally has three years from the filing date to assess additional tax. That window stretches to six years if you leave out more than 25 percent of your gross income, and it never closes at all on a return you never filed or one the government considers fraudulent. New York runs its own clock and can open a year the IRS has already closed, which surprises people who assume the two agencies move together. So three years is the shortest honest answer to the retention question, and for a household with entities and property it is almost never the right one.

Basis records are the ones that outlive everything. Publication 551 explains why: your gain on a sale is measured against basis, so the receipt for a 1998 renovation still matters in 2032. The same is true of the depreciation records described in Publication 946, of every partnership and S corporation basis schedule, of the closing package on each property, and of the invoices behind any improvement you capitalized. Keep those until three years after you dispose of the asset and report the sale, not three years after the year you bought it.

The bill for a lost file is not theoretical. A couple sold a co-op they had bought in 1998 for 600,000 dollars and sold for 2,900,000 dollars. They had spent about 400,000 dollars on a gut renovation in 2007 and could not find a single invoice, because the contractor was gone and the bank had purged its records. Without substantiation the improvements could not be added to basis. The 500,000 dollar exclusion described in Publication 523 still applied, but the extra 400,000 dollars of gain ran through federal capital gain rates plus the 3.8 percent Net Investment Income Tax, and New York taxed the same amount as ordinary income. The total cost of the missing folder was roughly 138,000 dollars.

Practically we keep a permanent file and a rolling file. The permanent file holds entity documents, basis and depreciation schedules, property closing packages, prior returns, and any election ever made. The rolling file holds seven years of bank statements, brokerage forms, payroll filings and receipts for anything deducted. Travel and meals get the treatment Publication 463 describes, which means contemporaneous detail rather than a credit card line showing a restaurant name. Business records follow Publication 583 and the IRS recordkeeping page, which is also what a New York auditor will expect to see.

The common mistake here is trusting a brokerage. Custodians report basis on covered securities, but transfers between firms, inherited positions, gifted stock, dividend reinvestment going back decades and anything acquired before the reporting rules took effect can come through blank or wrong. We have seen a 1099-B show zero basis on a position with 180,000 dollars of real basis, which would have handed the IRS and New York tax on money the client never made. Somebody has to check that against your own records, and a broker is not going to do it for you.

Retention is boring right up to the day it is the whole case. Our bookkeeping team indexes documents as they arrive so nothing depends on anyone remembering where a 2007 invoice went, and the same index is what individual tax returns pulls from at filing. Clients who want the file reviewed before a sale rather than during an examination can request a consultation, and we will start with the basis schedules. Storage is cheap now and evidence is expensive later, and the gap between those two facts is where most of this money quietly disappears.

Withholding covers a salary. It does not cover K-1 income, a capital gain, a bonus paid in stock or rent, so most of the households on this page pay tax four times a year through Form 1040-ES. For 2026 the federal dates are April 15, June 15 and September 15, with the fourth payment due January 15 of 2027. New York State and New York City ride along on their own coupons with the same rhythm. Missing them is not a filing failure. It is an interest charge that accrues quietly and shows up as a line you did not plan for.

The safe harbor is what actually drives the number. Pay in at least 90 percent of the current year tax, or 110 percent of the prior year tax if your prior year adjusted gross income was over 150,000 dollars, and the underpayment penalty computed on Form 2210 goes away even if you end up owing a great deal in April. Publication 505 walks the mechanics. For a client whose income swings hard from year to year, the prior year harbor is usually the better bet, because it is a known number rather than a forecast of a year that has not happened yet.

An example. A client’s total tax last year was 480,000 dollars. The 110 percent harbor sets 528,000 dollars as the federal target, which is four payments of 132,000 dollars. In September her company sold and she realized 3,100,000 dollars of long term gain. She kept paying 132,000 dollars a quarter because the harbor was already met, and the balance of roughly 738,000 dollars went out with the return in April rather than in October. New York got its share on the same schedule. Nothing clever happened there. She simply held nine months of use of her own money instead of handing it over early because a number looked alarming.

The city adds two wrinkles. If the operating entity elected into the New York pass-through entity tax, that entity has its own estimated payment schedule, and those entity payments are what create the federal deduction, so they cannot be swept into the personal estimates. And because New York taxes capital gains as ordinary income rather than at a preferential rate, a gain that costs 23.8 percent federally can carry another 10 percent or so of state and city tax behind it. Investment income also drags the 3.8 percent Net Investment Income Tax on Form 8960, which is easy to leave out of a mental estimate.

The mistake we clean up most is the December surprise, where a client realizes a large gain in the fourth quarter and either underpays all year or panics and overpays in June. Both cost money. The other one is treating a refund as a win. A 90,000 dollar refund means you lent the government 90,000 dollars at no interest for a year, and in this city that money had somewhere better to be. If cash is genuinely short, the IRS online payment agreement exists, but planning ahead is cheaper than borrowing from the government after the fact.

Estimates are where accounting services for high net worth clients in New York City stop being paperwork and start being cash management. Our tax strategy consulting team resets the projection every quarter against the books our bookkeeping team closed, and federal payments go through IRS Direct Pay with the state paid the same week so nothing sits in limbo. As liquidity events get harder to time and New York keeps sharpening its data matching, the households that do well will be the ones who knew the number in September.