Estimated reading time: 15 minutes
New York has always been a symbol of hope, promise, and endless possibilities. So, it’s no surprise that when an entrepreneur decides to start an LLC, New York is one of the first places that comes to mind.
But it’s more than just what New York symbolizes. As the fourth most populous state in the union, New York has very strong industries in the technology, finance, investment, media, entertainment and tourism sectors. So, if you’re looking to start a business in any of those industries, there are few places better than York.
But because of its notoriously high cost of living, for those who want to start an LLC, cost can become a major issue. That’s why understanding the ins and outs of how to get an LLC in NY is so important.
In this blog post, we’ll take you step by step through the process, including general requirements you need to prepare for and the resources you need to succeed. This way you can learn the ins and outs of forming an LLC in NY.
Table of contents
- Choose a Business Entity
- Create a Business Name
- Register Your Business
- Get Your Employer Identification Number or EIN
- Attain Your Business Licenses and Permits
- Get a Registered Agent
- How to Set up Registered Agent Service
- Open a Business Bank Account
- Filing Business Taxes
- Let’s get started
Choose a Business Entity
To understand how to start an LLC in NY you need to understand entity formation. The most popular business entity structures are Limited Liability Companies (LLCs) or Corporations. This article will focus on LLCs and LLC formation, but here are the differences between an LLC and a Corporation.
A corporation is a legal entity created separately from those who own and operate it. A corporation’s debts and taxes are separate from its owners, thereby offering the greatest personal liability protection of all business structures. The two most common types of corporations are S and C corporations.
Limited Liability Company
LLCs are the most popular business structure, blending the aspects of corporations, partnerships, and sole proprietorships into a simple and flexible business entity. Like corporations, LLCs protect the owners and operators from personal liability similar to a corporation, and they possess the “pass-through” tax benefits of a partnership.
Creating an LLC in New York can be difficult and confusing, especially as a first time business owner. But with a company like Inc Authority in your corner, you’ll not only have your LLC formed for you, you’ll get expert guidance beyond business formation, so you never have to wonder or worry about what to do next!
What About DBAs?
DBAs (which stands for “doing business as”) grants business owners the ability to conduct business under an assumed name. A DBA is also referred to as a fictitious business name and is an authorization by the state for your business to operate under an assumed name.
For sole proprietors and owners of LLCs, DBAs offer a cheap way to gain legal recognition for the secondary name of your choice.
- Sole proprietors: For sole proprietors starting a new business, DBAs are a budget-conscious way to gain legal status and work under a creative company name.
- LLC owners: If the name on your LLC paperwork and your business name differ, DBAs offer the opportunity to operate as an LLC under a different legal name.
DBAs come with benefits like the ability to open a bank account, create enforceable contracts, and establish federal employer tax status (getting an EIN). It’s possible to file multiple DBAs, allowing a single LLC to operate different businesses under the same legal umbrella. If you’re starting a business or expanding your LLC in New York, get the proper legal recognition early on to start off on the right legal footing.
New York Business Filing Fee
Despite many of the high costs of staring a NY LLC, New York is actually on the lower end when it comes to state filing fees, at $205. Compared to Massachusetts’ $500 filing fee, New York’s fee isn’t so bad.
So, in a nutshell, when it comes to LLC cost, New York is high in many areas but fairly reasonable in others. You’ll have the weigh all the costs to determine your next steps.
|New York Sate Fee:||$205|
|New York State Filing Time:||3 Weeks|
|Certificate of Publication:||$50|
NOTE: Within 126 days after the effectiveness of the articles of organization, New York state law requires you to publish in two newspapers a copy of the articles of organization or a notice related to the formation of the LLC.
After publication, the newspaper publisher will give you an affidavit or certificate of publication. The Certificate of publication must then be submitted to the:
New York Department of State
Division of Corporations
One Commerce Plaza
99 Washington Avenue
Albany, NY 12231.
|Due Date:||On the anniversary of the month your business was organized|
Our entity-setup service is 100% free.
We’ll waive our service charges, labor costs, and overhead. You only pay the state fees and postage, which are mandatory regardless of who incorporates for you. Start now for free!
Create a Business Name
Starting an LLC in NY also requires you to figure out your business name. It’s actually one of the biggest decisions you’ll make. It may not seem as important as choosing the type business entity, but it is. As a matter of fact, many legal issues can arise from choosing the wrong name for your business startup. So, let’s look at how to register a business name in New York:
- First off, come up with a unique business name that captures what your business will do, is easy to pronounce, and isn’t era specific or too niche. This is easier said than done, so take your time.
- Once you’ve decided on a name, search the web to make sure no one is using it. This may force you to go back to the drawing board. You might also want to check if your desired website URL name is already taken, then plan for an alternative,
- After doing a basic search, you’ll need to do a more thorough trademark search. This is an important step that can lead to a lawsuit if done incorrectly. A good rule of thumb to follow when doing a trademark search is to search for misspellings, plurals, variations of spelling, sound-alike and more…
- Finally, to register a business name, New York law requires you to run your chosen name through the New York State Division of Corporations, State Records, and UCC database making sure to follow the same rules mentioned above.
To check the availability of your business name in New York, search their online database.
Register Your Business
Now that you’ve decided on an entity structure and created an original business name, here’s how to register a business in New York.
Articles of Organization
You only need to file your Articles of Organization with the State of New York once, but you will need to file a biennial report for your LLC, which has its own fees.
There are three ways to do this. You can download and mail in your New York Articles of Organization, create an account and file online, or have Inc Authority file do it on your behalf. If you decide to take a crack at on your own, you have two options below:
Option 1: Access the online Articles of Organization forms by clicking here.
Option 2: Access the Articles of Organization PDF from the New York Department of State website. This form will need to be mailed to the Department of State’s Division of Corporations.
The information below is what you’ll need to complete the form:
- Entity Name
- Location of LLC Office
- Service of Process Address
- Registered Agent
- Management Structure
- Effective and Dissolution Dates
You only need to file your Articles of Organization with the State of New York once, but you will need to file a biennial report for your LLC, which has its own fees.
Once your articles of organization have been filed and approved, you’ll need to properly organize your LLC with an Operating Agreement.
The state of New York requires all LLC business owners to file an Operating Agreement, regardless of whether the company has one or multiple members. Your Operating Agreement will outline the structure and purpose of your company as determined by your LLC members and will bind all the members of your LLC.
Issues that should be defined by your LLC Operating Agreement include:
- Member powers
- Rules for meetings
- Members’ voting rights
- How your LLC will be managed
- Guidelines for losses and profits
- Buyout provisions
Once the Operating Agreement has been adopted, it will provide protection for the members of your LLC. When the members of your LLC have agreed to the terms of your Operating Agreement and have signed the document, you should keep the agreement in a secure location.
Inc Authority can remind you to do or do for you if you choose to have us handle the paperwork.
Get Your Employer Identification Number or EIN
The next step in starting a NYC LLC is getting your EIN or Tax ID Number (TIN). This federal number is like your business’s social security number, separating you from your business. This protects you from fraud and identity theft.
Additionally, an EIN is required by your bank to open a Business Checking Account, file tax returns, obtain payroll services, and credit cards.
Attain Your Business Licenses and Permits
What you must also learn is how to get a business license in New York. Getting the proper licenses and permits for your small business, authorizes your company to do business in your city/county. This will include obtaining a Certificate of Publication as proof that your LLC has met the Newspaper Publication Requirement to maintain authorization to do business in New York.
When is comes to applying for a business license for your LLC, New York makes it easy with their online portal called the New York State Licensing Center. It’s a robust system that helps entrepreneurs discover what licenses/permits they need.
Keep in mind that local permits and licenses can vary between locations, so, the business licenses you’ll need to start a business in Albany New York will be different from the licenses you’d need in Manhattan.
Check with local small business offices, often part of the County Clerk or branch of the city government, to learn more. The Small Business Association (SBA) also offers expertise in finding local forms and permits or you can use an online business license service provider to obtain the proper licenses and permits for you.
Lastly, remember that licenses and permits will need to be renewed annually or in some cases, biennially. You can note these renewal dates on your own, or let Inc Authority send you reminders as it gets closer to the date.
Get a Registered Agent
There are an estimated 38 million home-based businesses in the U.S., so if you’re thinking about starting a business in your home, you’re definitely not alone.
But, did you know that all businesses are required by law to have an address where they can accept service of legal documents (like a service of process) from the state or government agencies during normal business hours?
As you can imagine, that’s not always possible (or advisable) with a home-based or foreign-filed business. That’s where a registered agent comes in.
A registered agent is a responsible third-party in the same state as your business who receives official government notifications (usually tax forms and notice of lawsuits) on behalf of your LLC .
Even if you aren’t planning on starting a home-based business or foreign LLC, having a registered agent is still advisable because it will:
- Limit third party access to your personal information
- Ensure that you never miss important documents
- Protect the privacy of owners
- Eliminate junk mail
- Ensure you’re never served with legal papers in front of your clients
- And more!
How to Set up Registered Agent Service
While it is possible to act as your own registered agent, it is not advisable. That’s why most companies hire a third-party (a professional service) to act as their registered agent.
Why not let Inc Authority act as your registered agent. We’ll be the buffer between your business’ legal matters and your physical place of business. That way, anyone trying to locate you, or the LLC must first come through us.
Learn more about our registered agent services here.
Open a Business Bank Account
To keep your personal and business expenses separate and to stay in good standing with the IRS, you need to open a business bank account for your LLC or corporation.
Setting up a separate bank account for your company makes it easier to for you do business, manage a cash balance, complete and file your income tax returns with the New York Department of Taxation and finance, deduct business expenses for taxes, conduct proper accounting, and execute employee payroll. It also provides better protection if legal action is taken against your company.
Additionally, business bank accounts create historical relevance through the relationship established with the bank, and can create unrestricted access to long-term funding options, business credit cards, and other financial solutions.
Types of Business Bank Accounts
Not all business bank accounts are created equal. That’s why it’s important to distinguish between the good, the bad, and the best business bank accounts.
A business checking is the most common type of business bank account and the first one you’ll want to open for your business. This because business check accounts allow you to:
- Accept deposits (over-the-counter cash, checks, credit card, and electronic deposits).
- Pay for business-related expenditures (payroll, taxes, business insurance, vendors, lenders, and everything imaginable that you’ll need to operate your business).
- Keep detailed records of all expenses and income.
- Protect your money. This account is Federal Deposit Insurance Corporation (FDIC) insured, meaning you’re covered up to $250,000 by the federal government should anything happen to the bank or your money.
- Support dual signatures. If you have a partnership or employees, you may wish to make it required that two signatures be present whenever a withdrawal or deposit is made.
This one should come as no surprise. A business savings account (like a personal savings accounts) lets you safely save money in a bank. You don’t need this right away though, only when you have an abundance of capital sitting in your business checking account, will you need to open a savings account. It allows you to:
- Make saving money a habit. The most successful companies (think blue chips like Wal-Mart, Amazon, General Mills, Hershey’s, and General Electric) all have solid reserves of capital.
- Protect your business during a cash-crunch. Incidentally, 80% of businesses fail because of cash flow problems.
- Save money so that you don’t have to take out expensive business loans.
- Maintain liquidity. With a business savings account, you can liquidate assets to buy equipment, purchase real estate, and make other big purchases for your business.
- Build business credit. Yes, having a business savings account can actually help you establish and build business credit.
CERTIFICATE OF DEPOSITS
A business certificate of deposit (CD) is a term account that offers maximum security and a guaranteed rate of return. You agree to lend your business’s money to the bank for a set period of time at an agreed-upon interest rate. The interest rates are usually higher than you’d receive from a business savings account or interest-bearing business checking account.
Here are the main features of a business certificate of deposit:
- It pays out 1% or more in interest. Some CDs pay over 2% in interest
- You cannot liquidate the account until the term expires. This means you can’t spend the money.
- The longer the term, the higher the interest rate.
- Different banks offer different term limits. Some CD terms are for a week, months, or even years.
MONEY MARKET ACCOUNTS
This is a lesser known type of business a bank account and isn’t for every business owner. You’ll want this type of account if you have a lot of money saved, want higher interest rates than a business savings account or interest-bearing business checking account, but still want some access to your money.
Here are the main features of a business money market account:
- Six withdrawals per month.
- Deposit money anytime.
- Deposit as much money as you like.
- Higher interest rates (currently between .1% and 1.6% APY)
- Require a minimum balance.
- Penalties if you withdraw more than six times in a month. Ask your banker what the penalty is if you withdraw more than six times.
How to Open a Business Bank Account
Opening a business bank account is as simple as gathering some information together and completing an application. Here are the steps to open a business checking account:
- Do your due diligence. Research different banks and discover what each one offers. Then decide which one will work best for your business type. An easy way to do this research is to check out some of our business bank reviews.
- Get a tax ID number. You can get one free EIN from the IRS. If you think you already have one, here’s how to look up an EIN.
- Gather your business formation documents.
- Gather your business license or business name filing paperwork.
- Call the bank and find out what other items you’ll need to open a business bank account. Every bank has different requirements, so make sure you check with them first before attempting to open a business bank account. Sometimes this information will be listed on the bank’s website.
- Go in person or online to complete all necessary paperwork and submit your business documents.
At Inc Authority, we make getting a business bank account easy. How so? Well, when you form your business with us, you gain access to a free Bank of America business checking account. So, don’t wait! Form your New York LLC today!
Filing Business Taxes
LLCs in New York (as in most states) are treated as corporations or limited liability partnerships. Because of this, they are subject to New York Personal Income Tax and Corporate Franchise Tax, which conforms to federal income tax classifications. Depending on the type of taxation you chose for your LLC, the tax responsibilities are as follows:
- An LLC treated as a limited liability partnership. These LLCs are required to file the Form IT-204, or Partnership Return Form with the New York City Department of Finance.
- An LLC treated as a C corporation for federal tax purposes, or an S corporation. These LLCs are required to file a New York State Corporation Franchise Tax Return.
- An LLC treated as a sole proprietorship. These LLCs must report all business income and expenses via the sole proprietor’s personal income tax returns.
In some cases, LLCs will be required to pay a filing fee or an estimated income tax on behalf of certain partners or members.
Let’s get started
Starting a business in New York is an exciting opportunity, but like starting most businesses it can be overwhelming. Why not let the business experts at Inc Authority do all the heavy lifting for you?
We’ll form your LLC or corporation, run a business name check, get your EIN, and make sure you have all the licenses and permits needed to run your business in New York.
Not to mention we offer a ton of free management tools to help make running your business as simple as possible. Contact us today to get started!
Incorporating is the most powerful thing you can do to legitimize your startup. And at IncAuthority.com, our setup LLC services are 100% free. Always. So, don’t wait. Form your new LLC today and enjoy the protection due to you and your business under the law.