How to Start an LLC in New York? (9 Steps Guide)
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.
Quick Summary:
- To start an LLC in New York, simply follow the steps outlined by the state and prepare all the necessary paperwork.
- The state of New York requires the filing of a biennial report from your LLC.
- An LLC in New York offers liability protection, lower taxes and a less structured business entity.
How to Start a New York LLC
To start a New York LLC, you have to comply with state guidelines and submit all legal documents.
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
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.
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.
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.
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 New York Secretary of State.
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.
Step 4: Create an LLC Operating Agreement
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.
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;
- 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 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 [1].
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.
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 New York.
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 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 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 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 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.
LLC as a Business Structure
LLC is a business structure that takes advantage of the limited liability of a New York 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.
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
FAQs
Can I Have a Professional LLC in New York?
You can have a professional LLC in New York, as long as you are of legal age and a licensed professional.
Can I Form a Single-Member LLC in New York
You can form a single-member LLC in New York, provided that you follow state requirements and file the required documents. A single-member LLC will report their business income on a Schedule C with the rest of their tax return.
Can the New York Department of State Act as a Registered Agent?
The New York Department of State can act as a registered agent. After you form an LLC in New York, you can appoint the New York Department of State to receive legal documents on your behalf.
How Do I Qualify for a Foreign LLC in New York?
You can qualify for a foreign LLC in New York if you apply for a Certificate of Authority. This requires the foreign LLC to meet certain requirements, including appointing an agent for service in New York and paying a fee of $250.
Establishing an LLC in New York
The state of New York has guidelines for what constitutes a valid entity to operate as a limited liability company or corporation.
Prospective LLC owners need to file every document correctly with the Department of State, including the operating agreement.
Alternatively, you might obtain help by having a service provider like ZenBusiness set up the business for you.
References:
- https://dos.ny.gov/certificate-publication-domestic-limited-liability-company-0
