How to Start an LLC in New York? (11 Steps Guide)

Published by Jon Morgan | Co-Founder & Chief Editor

Last updated: February 15, 2024

FACT CHECKED by Lou Viveros, Growth & Transition Advisor

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Establishing a business entity involves planning as well as executing the step-by-step process.

Since I have over a decade of practice helping clients with LLC formation, I’ll provide you with everything you need to know about how to start an LLC in New York State.

I consulted LLC experts and legal advisors in New York to determine state requirements and which legal papers to file.

Another option is to use a New York professional LLC service to establish your LLC.

Quick Summary

How to Form a New York LLC

2. Choose a Name for Your LLC (Mandatory)

Your New York LLC needs a unique name that hasn’t been taken by another LLC.

Moreover, 4.1 million small business employees constitute 48.1% of New York's workforce, according to Statistics of U.S. Businesses, emphasizing the critical role small businesses play in the state's economy [2].

The challenge lies in finding a name that resonates with your brand while also adhering to the legal requirements.

To find out if a name is available or not, you can try to search for it on the New York Division of Corporations website.

This service will also let you know how much time and money your business needs to invest in order to reserve that desired LLC name.

If the Corporation Division doesn’t have any results, it means that the LLC name you selected is available.

But if it has any results, the LLC names are taken and not available for your LLC business entity registration. You’ll need to try another name with a new search query.

When selecting an LLC name, make sure that it’s easy to remember and spell because these factors can impact the memorability of your LLC in the long run.

3. Select a Registered Agent (Mandatory)

Every LLC in New York is required to have a registered agent or hire a registered agent service.

The responsibility of this person is to receive legal documents on behalf of your limited liability company and make sure they are forwarded to the company.

The registered agent must have a physical business address in New York.

Drawing from my experience as a business consultant, a reliable way to find a registered agent is through online searches, including checking your local county listings or the New York Department of State website.

These resources often provide a comprehensive list of registered agents, making it easier to find a suitable one for your LLC.

Instead of looking up registered agents individually, you can find a company that offers a registered agent service.

A New York registered agent service will most likely be more expensive than a registered agent you find on your own.

4. File Articles of Organization (Mandatory)

New York LLC Articles of Organization can be filed with the New York Secretary of State.

The New York Articles of Organization also include an “operating agreement” section where you outline how the business will operate.

There are fees associated with filing articles of organization that you can pay online or in person.

The articles of organization should only contain:

• Name (as per application)
• Address
• Members
• Registered Agent Name & Address
• Effective Date (Date articles are received by the state)
• Purpose of Business
• Duration (if not perpetual)

• Name (as per application)
• Address
• Registered Agent Name & Address
• Effective Date *Date articles are received by the state*
• Purpose of Business
• Duration (if not perpetual)

You will submit articles of organization to the New York Department of State, Division of Corporations.

Articles of Organization come with a $200 fee in the state of New York.

Learn more about the costs involved in starting a New York LLC.

Steps to Take After Forming an LLC in New York

After successfully forming an LLC in New York, there are several critical steps to solidify your business's foundation and ensure legal compliance.

These steps are crucial in transitioning from the formation phase to operational readiness, setting your LLC on the path to growth and stability.

5. New York LLC Publication (Mandatory)

If you are forming a limited liability company in New York, the Secretary of State must publish your LLC name and contact information.

You can comply with New York LLC publication requirements by having the notice of LLC formation published in the county where the LLC is located.

The notice of formation must include:

• Name and address of each organizer, which can be an individual or a fiduciary (trustee) acting on behalf of others;
• The name under which your LLC will operate;
• The principal office location for service purposes;
• The date you filed your LLC formation documents with the state.
• A short summary of your business purpose.

You must publish your notice in two different newspapers in the county where your LLC is located.

Please note that the newspapers have different publication deadlines, so be sure to check with them about which one works best for you. You must publish the notice for six consecutive weeks within 120 days of its formation [3].

6. Create a New York LLC Operating Agreement (Optional, but Recommended)

New York LLC operating agreements are written contracts that dictate how the business will operate. The document ensures the members have clear roles and positions within the company.

This includes what they are entitled to and a percentage each member should have when it comes time to take profits out of the business.

The operating agreement also mentions how much money, if any, members will have to contribute toward starting up the LLC.

This may be in the form of seed money or capital contributions. The amount each member is responsible for paying should be divided by percentages.

Other important points of an operating agreement include:

• Who gets to vote on company matters and how those votes are counted
• What happens if a member wants to leave the LLC

An operating agreement lists all of the above points and more. Once your LLC has an operating agreement in place, it’s already shaping up to be a real business.

7. Apply for an Employer Identification Number (EIN) (Optional, but Recommended)

If you have more than one owner, you should obtain an employer identification number (EIN) for your limited liability company.

A New York LLC’s EIN is a unique nine-digit number the IRS assigns to identify your business entity, just like social security numbers are used to identify people.

This key identifier will allow you to open bank accounts and file important documentation with the state.

There are several ways to obtain an EIN. If you have a business accountant, they can easily request one for your company during their next visit with you or via email.

Alternatively, businesses may also call the Internal Revenue Service and ask them what steps need to be followed in order to apply for their EIN.

8. Open an LLC Bank Account (Optional, but Recommended)

After obtaining an EIN, business owners have to open a business bank account. They can use a business checking account or business savings account for operating their LLCs.

A business owner should only consider online business bank accounts if they are comfortable managing all the details themselves.

Every New York LLC needs business bank accounts.

The business owner of a New York LLC should sign up with a business checking account that provides the most features for them to make use of.

9. File Your New York LLC Biennial Report

The biennial report or New York LLC biennial statement, is a filing that you must submit to the New York Department of State every other year.

The statement also needs to contain information about your LLC—when it was formed, where its headquarters are, and whether or not it has been terminated.

The report is due on April 15 of every other year. However, if you are late for filing or your LLC is terminated, the report needs to be filed within 30 days of these events.

The New York state department is also responsible for processing any changes to your LLC’s registered agent, its address, or the date of formation.

10. Obtain Business Licenses and Permits

Obtaining the necessary business licenses and permits is a crucial step for any LLC operating in New York.

The specific licenses and permits required can vary significantly depending on the nature of your business, its location, and the industry regulations. For instance:

• Professional Licenses: Certain professions require state-specific licenses. Accountants, architects, and real estate brokers must obtain professional licenses from the respective New York State licensing boards.
• Health and Safety Permits: Restaurants and food service businesses need health department permits, while construction companies must adhere to specific safety regulations.
• Environmental Permits: Businesses that impact the environment, like manufacturing plants, may need permits from the New York State Department of Environmental Conservation.
• Sales Tax Permit: If your LLC sells goods or services subject to sales tax, you must register for a sales tax permit with the New York State Department of Taxation and Finance.

11. Choosing Your Tax Structure

Choosing the right tax structure for your LLC in New York is a crucial decision that can impact your financial health. Common options include being taxed as a disregarded entity (similar to a sole proprietorship), a partnership, or an S-corporation.

• Disregarded Entity/Partnership: Ideal for small LLCs, this structure allows profits to pass directly to members, avoiding corporate taxes. However, it may lead to higher self-employment taxes.
• S-Corporation: This option can save on self-employment taxes, as profits and losses are passed through to shareholders, but it requires stricter compliance and payroll setup.

You can change your tax structure by filing IRS Form 2553, ideally by March 15th of the tax year in which you want the change to occur. This ensures a smooth transition and compliance with IRS guidelines.

Related Articles:

• How to Cancel an LLC in New York
• Best LLC Services in New York
• What is the New York LLC Publication Requirement
• How To Look Up An LLC in New York

Benefits and Drawbacks of an LLC in New York

Benefits:

• Limited Liability Protection: New York LLCs provide owners with protection from personal liability for business debts and obligations.
• Flexible Taxation Options: LLCs in New York can choose to be taxed as a sole proprietorship, partnership, or corporation, offering flexibility in tax planning.
• Ease of Formation and Operation: New York's process for forming an LLC is relatively straightforward, and the state requires fewer formalities compared to corporations.
• State-Specific Incentives: New York offers various incentives for small businesses, including tax credits and grants, which can be beneficial for new LLCs.

Drawbacks:

• Publication Requirement: Unique to New York, LLCs must fulfill a publication requirement, which can be costly and time-consuming.
• Higher Taxation and Fees: New York generally has higher business taxes and filing fees compared to some other states, which can be a disadvantage for small businesses.

"In New York, the individual income tax operates on a graduated scale from 4% to 10.9%, and certain local jurisdictions impose their own income taxes. Corporate tax rates vary between 6.5% and 7.25%."

-Jon Morgan, Co-Editor & Co-Founder of Venture Smarter

• Rigorous Compliance for Specific Industries: Certain industries in New York face stringent regulatory requirements, impacting LLCs in those sectors.
• Complex Local Laws: Navigating local laws and regulations, especially in New York City, can be challenging for LLCs.

DIY vs. Professional LLC Formation

DIY LLC Formation

Pros:

• Cost-Effective: DIY formation is generally less expensive as it eliminates service fees.
• Direct Control: You have complete control over the filing process and documentation.

Cons:

• Time-Consuming: It requires more time and effort to understand and complete all steps correctly.
• Risk of Errors: Without legal expertise, there's a higher risk of making mistakes in paperwork or compliance.

Professional LLC Formation Service

Pros:

• Expertise and Accuracy: Professionals are knowledgeable about state-specific rules, reducing the risk of errors.
• Time-Saving: A service takes care of the paperwork, freeing up your time.
• Additional Services: Many offer ongoing compliance assistance, legal advice, and document filing.

Cons:

• Cost: Professional services can be costly, especially for startups with limited budgets.
• Less Personal Control: You're entrusting your business formation to a third party.

Both options have their merits. DIY can be more affordable and offer direct control, but it requires a significant time investment and carries the risk of errors. Professional services offer expertise and save time, but at a higher cost and with less personal involvement.

Your choice should depend on your budget, time availability, and comfort level with legal procedures.

FAQs

References:

1. https://advocacy.sba.gov/wp-content/uploads/2022/08/Small-Business-Economic-Profile-NY.pdf
2. https://www.census.gov/programs-surveys/susb.html
3. https://dos.ny.gov/certificate-publication-domestic-limited-liability-company-0