How much does it cost to form a New York LLC or Corporation?
New York boasts of a strong economy and you can benefit from this economy if you are planning to form your startup in the state. You can form any type of business and the cost to form a New York LLC or a corporation is less than in other states like California, Nevada, Massachusetts, and Washington DC. This guide has been specifically created to provide you with an insight into various aspects of LLC vs Corporation in New York including formation cost of New York LLC or corporation, Annual maintenance cost, and Pros and Cons of LLC or corporation.
New York LLC or Corporation
New York is one of the few states that boasts of a growing economy, robust infrastructure, and strong financial markets. The state is placed third in terms of Real Gross Domestic Product (GDP) with the finance, insurance, and real estate industry being on the top as it added a real value of $433.95 billion to the GDP. There are several different forms of businesses that you can choose from in the state like a Business Corporation, Limited Liability Company, General Partnership, Limited Partnership, and Sole Proprietorship among others. Since the cost to form a New York Corporation is lower in New York as compared to some of the other states, many entrepreneurs prefer to form a corporation or an LLC in the state.
Which business entity should I choose for a New York business?
If this is the first time you are starting a business then one of the foremost steps is to identify the legal structure for your company. The business structure should be chosen after researching and analyzing the pros and cons of each type of business structure. This is more so as the structure chosen will have a significant impact on several key areas of your business like the annual maintenance cost of a New York Corporation or LLC or any other form of business, legal liability, taxation, and ownership control of the company. Here is a list of areas that will help you to identify the right structure according to your requirements.
- Limited Liability Protection – One of the most important aspects to consider apart from the cost to form a New York LLC or corporation is liability protection. This type of protection simply refers to avoiding any personal liability for any debts of the company owned by you. Liability protection is not offered by all forms of businesses and can play a defining role in reducing the New York LLC annual fee.
- Pass-through taxation – Pass-through taxation refers to the passing through of taxes from the business to the owners or members. There are specific forms of businesses where this type of taxation is possible and in such a scenario, the business taxes are filed through the personal tax return of the owners of such a business. Hence, there will be no double taxation and this in a way simplifies business taxation.
- New Business Cost – The cost to form a New York LLC or a business corporation is not the only cost that will come into play when you establish a new company. There are also several factors that will be responsible for determining the total cost to incorporate in New York and these include the following components:
- Reserving of business name
- Filing of annual taxes
- Correction and amendments
- Filing Annual reports or Biennial Statement
- Renting or lease commercial space
- Hiring Employees
- Buying or renting office equipment
- Obtaining business licenses and permits
Pros and Cons of forming an LLC or Corporation in New York
New York is the perfect place to start a new business as it is the financial hub of the nation and has much to offer in terms of commercial space, talent, business incentives, and transportation infrastructure among others. This is one of the reasons why entrepreneurs prefer to form a corporation or an LLC in the state, both of which are considered as business structures with numerous benefits. Of course, the cost to form a New York Corporation may be different from that of an LLC and there are several pros and cons of forming a limited liability company and a corporation.
New York LLC
A New York limited liability is one of the most popular business structures especially if you are looking for tax benefits. An LLC has several advantages and a few disadvantages as well. Here are some of the pros and cons that will help you make an informed choice.
Pros of LLC
- If you form an LLC in New York then you will be able to enjoy the flexibility of being taxed as a sole proprietor, C corporation, partnership, or can even elect for S corporation
- The cost to form a New York LLC is less as compared to some of the other forms of business entities
- You will require less paperwork when it comes to new business formation
- The formation cost of New York LLC will depend on whether you form a single-member LLC (with one person) or multiple-member LLC (several people)
- Members of a New York LLC will enjoy limited liability protection against legal issues or debts
Cons of LLC
- If you form an LLC in New York then apart from the cost to form New York LLC, you will also be required to file taxes
- As an LLC member, you will not be on the payroll of the company and instead will be paid through distributions
- Angel investors and VC’s prefer a New York Corporation over an LLC when it comes to funding
- It is quite complex and hard to transfer ownership in an LLC as compared to a corporation
Are you thinking of starting an LLC in New York?
New York Corporation
A business corporation in New York is one of the most favored structures in the state because most investors and seed-stage funders prefer this organizational structure. A corporation does have several benefits and a few disadvantages as well. They are:
Pros of a Corporation
- A business corporation helps to protect your personal assets implying that creditors of a New York corporation can seek payment only from the assets owned by the corporation.
- The cost to form a New York Corporation is less as compared to some of the other states.
- One of the advantages is that you will have easier access to capital including investors.
- Perpetual existence is another salient aspect of a corporation and it means the entity can continue to exist indefinitely even after the owners or directors are not there.
Cons of a Corporation
- Although the cost to form a New York Corporation is low, there are some other costs that can affect a corporation as it undergoes double taxation. This means the business pays taxes on the income and shareholders pay tax on dividends.
- The process to incorporate in New York can be time-consuming and may involve a lot of paperwork
- A business corporation follows quite a rigid structure and has less flexibility than some of the other forms of business like an LLC.
Do you want to start a New York corporation?
New York LLC Cost
A limited liability company is quite a popular structure of business across the nation and also in New York. It offers several advantages to the owners including the low cost to form a New York LLC. You can choose to form a Single-member LLC (SLLC) or a Multi-member LLC and also define the tax structure according to a sole proprietorship or even a corporation and partnership.
Cost for forming a New York LLC
If you are planning to form a limited liability company in New York then there will be certain types of costs associated with it including the initial formation cost as well as the New York LLC annual fee. The costs associated with a limited liability company include the following:
- You will need to reserve a business name prior to filing new business formation documents and the fee of the same is $20
- You will have to file articles of organization for forming a New York LLC and the costs associated with this is $200
- If you are planning to form a New York LLC then one of the important aspects is the publication requirement. You have to publish notices regarding the LLC formation in two local newspapers and the costs will vary according to the newspaper chosen. This is a one-time cost to form a New York LLC.
The above costs are fixed or one-time costs and are considered as the formation cost of a New York LLC.
Annual maintenance cost for New York LLC
Apart from the initial costs of formation for a limited liability company in New York, there are certain other annual costs. The New York LLC annual fee includes several aspects related to the annual maintenance of the company and this is apart from the initial cost to form a New York LLC. The annual maintenance costs include:
- Business LicensesOnce you have filed the formation documents, your business will not be operational unless you have obtained the necessary licenses and permits. The cost will vary according to the type of licenses or permits and the number of licenses required. It is not a part of the cost to form a New York LLC but is considered as an annual maintenance cost because you will be required to renew your licenses each year.
- Biennial StatementOne of the important requirements of a New York Limited Liability Company is the Biennial Statement. The New York LLC annual fee for the biennial report is $9 and this report will be due every two years.
- AmendmentsIf you need to make any changes to the articles of organization then you will be required to file a Certificate of Amendment along with a fee of $60
There are several aspects of new business formation along with the cost to form a New York LLC. We, at IncParadise, can help you to register an LLC in New York as we possess the experience and expertise related to new business formation in the state.
New York Corporation Cost
A business corporation works differently from a limited liability company and other business structures but it does have its own advantages including the fact that it attracts investors. If you are planning to incorporate in New York then you can also leverage several state driven business incentive programs. So, what does it cost to form a New York Corporation? Let’s look at what forming and running a NY Corporation entails:
Cost of forming Corporation in New York
The cost to incorporate in New York is actually less than the cost to incorporate in several other top states in the country. The incorporation costs are basically initial costs towards new business formation or registration and include:
- You have to file a Certificate of Incorporation in New York and the filing fee is $125
- If you require an amendment or correction then you will be required to file the Certificate of Amendment along with a fee of $60
- You have to also reserve a business name using the Application for Reservation of Name along with a fee of $20. This is also an integral part of the cost to form a New York Corporation.
Annual maintenance cost for New York Corporation
The cost to form New York Corporation is an initial or one-time cost but there are certain costs that are recurring or annual in nature. Such costs are classified under the annual maintenance costs of a New York Corporation. The annual maintenance is important as it ensures your business is in compliance with all state laws. The maintenance costs include:
- Business Licenses – Once you have filed the necessary documents along with the cost to form a New York Corporation; you will need to apply for business licenses. Licenses and permits ensure your business can become operational or transact in the state. The cost of licenses and permits will vary according to the type of license being issued. It is also considered as an annual maintenance cost of a New York Corporation because you have to renew your licenses each year.
- Biennial Statement – A Biennial Statement also known as a Biennial Report is an important requirement of a New York business corporation. This report is due once every two years and the fee is $9.
The cost to form New York Corporation will also take into account other aspects of the business like obtaining a tax ID, filing taxes, or making amendments. We, at IncParadise, can not only provide guidance pertaining to fulfilling annual maintenance requirements and state compliances but can also help you to incorporate in New York.
Need any Assistance in Forming Your New York LLC or Corporation
If you are thinking of incorporating in New York or want to form a Limited Liability Company in the state then there are several aspects to consider related to new business formation. There are several initial formations and annual compliance requirements to fulfill and this can make the process complex. We, at IncParadise, can help in making the process simpler by handling your new business formation or incorporation requirements along with the state compliance.
IncParadise is one of the leading business incorporation and registered agent service providers in New York and we have helped thousands of companies to start their businesses. We also provide additional services to New York businesses like getting tax id, foreign qualification, and S corporation status, among others.