Are you looking to start an LLC in New York? If so, this article is for you. Many factors go into starting a business, which is why the process can be complex.
However, with some guidance and planning ahead of time, anyone can do it. We will cover everything from how to choose a name for your LLC all the way through filing all of the necessary documents.
This article should have everything readers need to know about how to start an LLC in New York State.
LLC as a Business Structure
LLC is a business structure that takes advantage of the limited liability of a NY corporation and combines them with the flexibility of a sole-proprietorship.
In a limited liability company, the members of the LLC are not personally responsible for any debts or lawsuits that arise from business operations.
This means if someone sues your business due to uniform commercial code violations and wins, they won’t be able to go after personal assets such as cars, homes, or bank accounts.
How to Start a New York LLC
There are certain steps you need to take to start a New York LLC. First, you will want to research the legal name of your business and make sure it is available for use with your state’s Division of Corporations (which can typically be found on their website).
Besides choosing a name for your New York LLC, you will also need to choose a registered agent, which is the person who supervises and accepts important legal documents on behalf of your LLC.
If you create this business entity, you can be your agent without any additional help from another party.
Once you have an agent, you need to file Articles of Organization with the Division.
There are several required documents for this, so it is important to call your local office before filing anything online or at their counter.
Depending on where you live in New York State, different forms might be needed, and fees will vary as well.
The New York LLC formation might seem like a daunting prospect, but it is not complicated at all.
With the right guidance, new business owners can easily learn how to start an LLC in New York State and get their new company off the ground quickly.
Step 1: Select a Name for Your LLC
First things first, your New York LLC needs a unique name that hasn’t been taken by another LLC.
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.
Related: How to Form an Anonymous LLC
Step 2: Appoint a Registered Agent
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 where they can receive important legal documents for your LLC.
A good place to find a registered agent is to look online. You can find a list of registered agents in NY by looking up your county or the New York Department of State website.
Instead of looking up registered agents individually, you can find a company that offers a registered agent service.
These companies will provide a physical address for your business, forward all legal documents to you, and even file annual reports when you need them to.
Additional registered agent address information can be found in the New York Business Corporation Service Bureau.
A New York registered agent service will most likely be more expensive than a registered agent you find on your own.
Step 3: File New York Articles of Organization
New York LLC articles of organization can be filed with the NY Secretary of State.
You will need to complete articles of organization, which are a form that includes basic business information such as your name and address, number of members in the company, etc.
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)
- Registered Agent Name & Address
- Effective Date *Date articles are received by the state*
- Purpose of Business
- Duration (if not perpetual)
Step 4: Create an LLC Operating Agreement
LLC operating agreements are written contracts that dictate how the business will operate. It has many benefits, such as ensuring members have clear roles and positions within the company.
A New York LLC operating agreement explains what every member of the LLC is responsible for in regards to running 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 business.
Operating agreements state that all members must contribute something toward operating costs.
This way, there will be no surprises when expenses need paying because every member has already stated that they are willing to pay a certain percentage toward these costs.
The operating agreement also mentions how much money, if any, members will have to contribute toward starting up the company.
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.
Some of the most important points of an operating agreement include:
- How much capital each member will have to contribute toward the LLC.
- The percentage of ownership held by each member and how profits are divided.
- 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.
Step 5: New York LLC Publication Requirement
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 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;
- Name under which your LLC will operate;
- 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 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 formation.
Step 6: Obtain an Employer Identification Number (EIN)
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 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 your EIN.
Step 7: Pay the Annual Filing Fee
LLCs need to pay New York sales tax and file a sales tax return on a quarterly basis. In addition to sales taxes, LLCs also need to pay New York state taxes.
If your business has an EIN or SSN, you can register online through the New York Department of Taxation website at nytax.gov.
You also have to keep in mind the federal tax requirements for LLCs.
Even though your company is based out of New York, it still has to file federal taxes because the state does not have federal income tax laws in place.
Business taxes and federal income taxes are due April 15 of every year. The sales and use tax return is due quarterly on the last day of the month following each quarter.
Step 8: Taxing LLC Members
If there is more than one member in an LLC, they can be taxed as a partnership or as individuals.
Members who work in the company and make money from its success are considered self-employed and must pay taxes on their earnings.
But if you’re only putting up your own investment dollars, then you don’t have to worry about paying any income tax because it’s viewed as an equity stake instead.
The best part about being a member of an LLC is sharing an LLC’s income without personal liability.
Personal liability is only brought to question when the LLC and the member (or members) become separate.
For example, if an LLC opens a storefront yet all sales are made online through Amazon or eBay, it becomes hard to prove that those profits were earned from their physical storefront.
Step 9: Get a Business License
Depending on the business type, business owners may have to get a business license from the county clerk.
This applies to both New York LLCs and corporations that are based in NY.
The process is fairly simple as long as you follow instructions closely. You’ll need an application form, which can be found on your local county site under business licenses or corporate business registrations.
Business licenses enable you to open business bank accounts, among other things.
File the New York Biennial Report
The next step to establishing your LLC is filing the New York 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 biennial report essentially serves as an update saying, “Hey, I’m still alive and running my business in NYS.”
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.
In general, 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 Department of State is responsible for processing biennial reports. You can file your report online at their website.
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.
Open a Business Bank Account
After registering with the New York Department of State, 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 with managing all of the details themselves.
Someone who is not very tech-savvy may struggle here, especially when it comes time to manage complex tax issues that arise from using business bank accounts.
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 highest amount of features for them to make use of.
However, this is one of the last steps you have to take. Make sure you’ve filled everything correctly with the New York Department of State first.
Can I Have a Professional LLC in New York?
Yes. Anyone can have a professional LLC in New York, as long as they meet the following requirements:
-Be 18 years of age
-Be a licensed professional in New York State
-Be registered with the professional board(s) that have oversight over your professional services.
Can I Form a Single-Member LLC in New York
Yes. Single-member LLCs can be formed in New York. A single-member LLC will report their business income on a Schedule C with the rest of their tax return.
How Long Does It Take for an LLC to Be Approved in New York?
It can take anywhere from one to four weeks for your LLC application to be approved in New York.
The processing time depends on the amount of New York LLCs that are being formed.
How Much Does It Cost to Start Up an LLC in NY?
It costs $200 to file Articles of Organization with the New York Secretary of State.
If you hire a professional service provider, it will cost more, but you will get peace of mind that your application is being filed correctly.
How to Dissolve an LLC in NY?
In order to dissolve an LLC in New York, you must file Articles of Dissolution with the Secretary of State.
You can download and fill out a PDF form on their website.
Can the New York Department of State Act as a Registered Agent?
Yes, the Secretary of State is authorized to act as a registered agent for service of process.
After you form an LLC in New York, the New York Department of State will be able to receive legal documents on your behalf.
Can I Start a Foreign LLC in NY?
Yes, but you need to apply for a Certificate of Authority to do so. This requires the foreign LLC to meet certain requirements, including appointing an agent for service in New York and paying a fee of $250.
Setting up a NY LLC is not an easy process. With all the regulations and requirements, you could be risking your business with just one mistake.
The state of New York has strict guidelines for what constitutes a valid entity to operate as a limited liability company or corporation, so you must follow these steps precisely if you want to avoid mistakes from the start.
Prospective LLC owners need to file every document correctly with the Department of State, including the operating agreement.
We have provided this guide with tips on how to set up your new New York limited liability company successfully—follow them carefully.