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Starting an LLC in New York is a strategic venture requiring careful planning and legal protocol adherence. Nestled within the vibrant business landscape of the Empire State, establishing a Limited Liability Company (LLC) demands a systematic approach. From selecting a unique business name to filing the requisite documents with the New York Department of State, the journey involves navigating regulatory requirements and making critical decisions that will shape the foundation of your business.
Understanding the nuances of taxation, compliance, and operational considerations specific to New York is pivotal for aspiring entrepreneurs looking to embark on this rewarding entrepreneurial path.
In this guide, we will explore the steps and insights necessary to successfully initiate and navigate the process of forming an LLC in New York.
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How to Start an LLC in New York (Step-By-Step)
Step 1: Select a Distinctive Name for Your New York LLC
Ensure that your business stands out by choosing a unique name for your LLC. To confirm its uniqueness, utilize New York’s business name database for an LLC name search. This will help verify that another New York LLC or company doesn’t already use your chosen name. Alternatively, you can submit a written request to the Division of Corporations.
If your desired name is available, but you’re not ready to commence your LLC just yet, New York permits the filing of a name reservation form. This incurs a fee of $20 and grants you the exclusive right to use the chosen name for 60 days.
Remember that New York LLCs must incorporate terms such as “Limited Liability Company,” “LLC,” or “L.L.C.” into their names (e.g., “Jane Smith Architecture, L.L.C.” instead of “Jane Smith Architecture”). Additionally, New York state law prohibits certain words and phrases from being used in LLC names, while others may necessitate consent from government or professional agencies. It’s essential to review the complete list before finalizing your chosen name.
Insider Tip: In New York, you have the option to officially register a name for your LLC (e.g., “5 Boroughs HVAC L.L.C.”) but conduct business under a trade name (e.g., “Coolest A/C in the Bronx”). This is referred to as a “doing business as” (DBA) name or an “assumed name.” To pursue this, you’ll need to file a Certificate of Assumed Name, incurring a $25 fee plus additional fees for each county where you intend to do business ($100 for New York City counties and $25 for all other counties).
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Step 2: Select a Registered Agent in New York
By default, the New York Secretary of State serves as the registered agent for all New York LLCs. However, you have the option to appoint someone other than the Secretary of State as the registered agent for your New York LLC.
If you opt for a registered agent service, note that the Secretary of State remains the initial point of contact for the state and any parties serving your LLC with legal documents.
The Secretary of State will forward the following to either your LLC’s primary business address or the address of your designated registered agent:
- All formation documents
- Any service for processing information
- Legal documents related to taxation and reporting
Why might you choose a registered agent service in New York?
Cost Savings on Publication
New York mandates that newly formed LLCs publish a Notice of Formation in local newspapers, which can cost around $1,500 or more, especially if the principal address is in New York City. Opting for a registered agent service located outside the city allows your LLC to use the registered agent’s address as the principal address, significantly reducing publication costs.
Privacy Protection
New York’s LLC publication requirements necessitate publicly sharing your principal LLC address. Hiring a registered agent service enables you to use their address instead of your own, safeguarding your privacy.
Once the publication requirements are fulfilled, you can relocate your principal office to any location within New York State without needing additional notices to be published.
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Step 3: Submit the Articles of Organization for Your LLC
Once you’ve chosen a name for your LLC, the next step is to commence the paperwork. In New York, it’s imperative to file the articles of organization with the New York State Department of State to formally establish your LLC.
After the submission, the state will furnish you with a receipt, and you will be given the option to procure a plain copy, certified copy, or certificate of existence for your LLC. Although the typical processing time for New York Articles of Organization is approximately seven business days, you can expedite this service through the Division of Corporations for an additional fee.
The Articles of Organization form is a straightforward, fillable document that includes the following details:
- The name of your company
- The county where your business office will be located
- A mailing address for your LLC
- The name, address, and signature of the organizer (your information if you’re the one forming the LLC)
If your business operates remotely from your home or you want to provide potential clients with an address in the heart of NYC, you can opt for a virtual address for LLC-related business correspondence.
For submission by mail or in-person:
Address for the Division of Corporations
One Commerce Plaza
99 Washington Avenue
Albany, NY 12231-0001
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Step 4: Draft an LLC Operating Agreement
In New York, LLC members are required to create and adopt a written operating agreement within 90 days of filing the articles of organization. This operating agreement outlines the rights, powers, duties, liabilities, and obligations of each member within the LLC.
It’s important to note that this document doesn’t need to be submitted to the state, and there are no specific requirements for its content, but it’s recommended that each member possesses a copy.
Insider Tip: An LLC’s operating agreement delineates the rights and responsibilities of each member. Unless you have a single-member LLC, it may be advisable to seek legal counsel to ensure the effective drafting of your operating agreement, protecting the rights of each member appropriately.
Depending on your approach:
- Do-It-Yourself (DIY): Utilize an operating agreement template to draft your document independently.
- LLC Formation Service: If using an online LLC service for your LLC formation, check if they offer an operating agreement generator as part of their formation package.
- Hiring an Attorney: If opting for legal assistance to form your LLC, inquire whether the attorney can draft the operating agreement for your LLC.
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Step 5: Satisfy the Publication Requirements for Your New York LLC
A distinctive aspect of understanding how to register an LLC in New York is grasping the publication requirement. Within 120 days of the state accepting an LLC’s articles of organization, the LLC must publish a notice concerning its formation or a copy of its articles of organization.
This notice must be published in two newspapers designated by the county clerk and distributed over six consecutive weeks in the county where the LLC’s registered office is located.
Following each publication, the printer or publisher of each newspaper will furnish the LLC with an affidavit of publication. Subsequently, the LLC is required to submit a Certificate of Publication, along with the $50 filing fee, and attach the affidavits of publication from the newspapers.
Insider Tip: Publication costs can vary significantly across the state. Smaller rural papers are more budget-friendly than those in major metropolitan areas. Consequently, many small New York LLCs opt to engage a professional registered agent service in a more cost-effective area, utilizing its address to save on publication expenses.
Step 6: Acquire an Employer Identification Number (EIN)
Every multi-member New York LLC is required to obtain an Employer Identification Number (EIN) from the Internal Revenue Service (IRS) to fulfill tax obligations. Alternatively known as a Federal Employer Identification Number (FEIN), this distinctive identifier plays a role akin to an individual’s Social Security number for a business.
Possessing an EIN empowers an LLC to initiate various financial activities, including opening a business bank account, applying for credit lines, receiving payments, compensating employees, covering business expenses, and executing other monetary transactions.
Insider Tip: While there are instances where obtaining an EIN for your LLC may not be mandatory, it becomes necessary if you intend to engage in business transactions, file specific types of taxes on behalf of the business, or hire employees.
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Methods for Initiating an LLC in NY
Registering an LLC in New York should hinge on factors such as the time available, the budget at your disposal, and the complexity of your business.
Do-It-Yourself (DIY)
Opting for a do-it-yourself approach is popular among businesses seeking the most cost-effective startup option. Apart from state fees, there are no additional costs. The New York Department of State offers excellent resources that guide you through registering an LLC in New York, covering all requirements.
However, the drawback of the DIY method is that depending on the nature of your business, the complexity and time involved in filing on your own may be more burdensome than paying the extra cost for an LLC formation service to handle the filing on your behalf.
LLC Formation Service
Utilizing an online LLC service is an excellent option for new businesses aiming to establish or convert to an LLC structure. Services such as ZenBusiness, Swyft Filings, and Incfile LLC provide customizable pricing packages and additional features, streamlining the creation and maintenance of your LLC. Simply input the required information, and the service will generate the necessary documents and handle the filing process on your behalf.
ZenBusiness
ZenBusiness is an online platform specializing in LLC formation, designed for entrepreneurs and small business proprietors. It equips them with tools to initiate and grow their companies. The platform provides budget-friendly and comprehensive LLC formation packages, covering services such as registered agent aid and annual report filing.
Furthermore, ZenBusiness offers continual support and valuable resources to help businesses stay compliant and strive for success.
Swyft Filings
Swyft Filings stands out as a dedicated service for LLC formation, renowned for its swift and straightforward process. The range of services provided by Swyft Filings covers everything from incorporation to compliance, along with support for registered agents. The company also provides tailored assistance, guiding businesses through the complexities of LLC formation and ensuring compliance with state and federal regulations.
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Incfile
Incfile provides a comprehensive resource library designed to assist novice entrepreneurs in identifying the most suitable business structure for their needs. Additionally, Incfile aids in the preparation and filing of documents, simplifying complex concepts such as a registered agent, articles of organization, and EIN. With a solid reputation and favorable online reviews, the company is a trusted ally for business establishments.
Consider Hiring an Attorney
While opting for legal counsel tends to be the most expensive option, it can be the most suitable choice for companies dealing with complex financing arrangements or those aiming for a non-traditional tax structure, such as an S-Corp or C-Corp.
If you opt for a DIY approach, apply for an EIN online to instantly generate your number. If you decide to use an online LLC service for the formation, check if the package includes assistance with obtaining an EIN. If you hire an attorney for your LLC formation, you can receive guidance and support in the application process.
Manage Your New York LLC
Various business activities necessitate an LLC business license from the state or local municipality, regardless of whether you operate as a sole proprietorship, LLC, or another business entity. Ensure that you possess the necessary LLC licenses before engaging in business activities in New York.
LLC Taxation
For single-member LLCs, the tax structure mirrors that of a sole proprietorship. Essentially, you have the option for the LLC itself not to incur taxes. In such a scenario, the owner of a single-member LLC must disclose the LLC’s income on their personal tax return. This approach, known as “flow-through” taxation, signifies that the tax responsibility passes through the LLC to the individual members.
In cases where an LLC has multiple members (a multi-member LLC), it’s treated as a partnership, necessitating the filing of a Form IT-204 to report income.
It’s crucial to note that forming an LLC doesn’t automatically alter the tax status of your business. Unless additional steps, such as opting for S-Corporation status, are taken, the new LLC retains its “disregarded tax entity” classification. Each member remains individually accountable for fulfilling tax obligations related to the LLC’s income, encompassing self-employment state and federal taxes.
New York State Taxes for LLCs
If you decide not to modify your LLC’s tax structure, New York imposes an annual filing fee on businesses operating as disregarded tax entities with income, gain, loss, or deductions stemming from New York sources. This applies to most LLCs. The fee amount varies based on the LLC’s income, with a minimum of $25.
Payment of this fee can be done online through the Department of Taxation and Finance’s state website or by downloading and mailing Form IT-204-LL with the corresponding payment.
Additionally, depending on the nature of your business activities, you may be obligated to pay supplementary state taxes, such as sales tax, if you sell taxable products.
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Reporting Obligations for New York LLCs
After successfully navigating the steps to establish an LLC, it’s crucial to be aware of New York’s requirements to ensure the LLC maintains good standing within the state. Several regular filings must be adhered to.
While many states mandate yearly reports for LLCs, New York adopts a biennial approach. Both domestic and foreign LLCs are obligated to submit a biennial statement every two years. This statement serves to either update or verify the mailing address to which the New York Secretary of State can dispatch a copy of any accepted processes on behalf of the LLC (including the registered agent if one has been designated).
Filing the biennial statement can be conveniently done online through the Department of State’s e-Statement Filing Service, and the $9 filing fee can be paid using a credit or debit card.
The filing window extends throughout the calendar month in which your LLC’s original articles of organization or Application for Authority were filed. It’s important to note that early filings will not be accepted, and late filings will incur penalties.
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Establishing a Bank Account for Your LLC
A key attribute that enhances the appeal of an LLC is the liability protection it provides to its members. This protection is assured only when a clear demarcation exists between the company’s assets and those of its member(s).
Consequently, it’s imperative to prioritize the opening of a bank account and obtaining a business credit card for your LLC soon after its formation. Local banks in New York might present advantageous rates or additional benefits tailored for your company, making it worthwhile to explore these options before considering national alternatives.
Obtaining Business Insurance for Your LLC
Just as you wouldn’t go without insurance for your home or car, it’s equally important to ensure your business is adequately covered. While the concerns about property damage may not be as pronounced for a business as they’re for residential or automotive assets, the potential risk of legal action from individuals involved in your LLC’s business dealings is ever-present.
Since not all LLCs have identical needs for coverage, seeking guidance from a local insurance agent is essential to determine the most suitable business insurance for your specific circumstances.
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Employing Staff Members
Should you contemplate the expansion of your LLC through the hiring of additional personnel, New York imposes specific tax obligations on employers who meet certain criteria. It’s imperative to obtain an Employer Identification Number (EIN) to officially register as an employer with the state for tax-related matters.
As an employer, strict adherence to various requirements is essential, encompassing:
- Reporting new hires
- Fulfilling unemployment insurance obligations
- Appropriately withholding taxes
Market your New York LLC
Once your LLC is up and running, the next step is to broaden your customer reach and enhance business growth. A straightforward method to achieve this is by establishing an online presence. This can involve using a website builder to craft a page showcasing your services or products, or it can be as uncomplicated as setting up an Instagram account for your business.
In either case, these efforts will contribute to expanding your online influence and attracting new customers.
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How to Start an LLC in New York – FAQs
How Can I Establish an LLC in New York?
For domestic entities, the cost is $200, involving the submission of articles of organization, while foreign entities pay $250 and submit an Application of Authority to the Department of State. Submission of documents can be done by mail or online.
Is It Necessary to Advertise My New LLC?
All New York LLCs are required to publish advertisements in two local newspapers after formation. Proof of publication must be submitted within 120 days of establishing the LLC.
What Are the Other Legal Classifications Available for My Business?
Various legal classifications exist to safeguard businesses from liabilities. For instance, filing as a corporation may be advantageous if you wish for your company to be partially owned by external shareholders, a preferable arrangement for many business owners.
What Types of LLCs Can I Establish in New York?
- Professional LLCs (PLLC): New York allows the formation of Professional LLCs, which are established by professionals licensed under Title Eight of New York Education Law, such as attorneys, physicians, and architects.
- Foreign LLCs: New York permits the operation of Foreign LLCs, entities operating in one state seeking expansion into New York. This doesn’t require filing an Application for Authority with the Department of State, accompanied by a Certificate of Existence from their home state, with a fee of $250.
- Series LLCs: Although available in some states, New York doesn’t offer Series LLCs. This structure comprises a main LLC made up of smaller entities, ensuring separation for asset protection.
Can I Separately File My LLC and Personal Taxes?
In the conventional setup, an LLC’s income is passed through to its members. For a single-member LLC, the member reports the income on their personal tax return. Essentially, there is no option to file LLC and personal taxes separately, as the LLC is distinct from its members solely for liability purposes.
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