How to incorporate a business in New York?
The export industry is one of the largest industries along with manufacturing and a large number of new business owners opt to form a corporation in New York in these industries. It is important to first identify how to form a corporation in New York and that is what this guide talks about. It will provide an insight into every aspect of a new business right from naming your corporation to getting business licenses and much more.
New York Corporation
The economy of New York City is considered one of the largest in the country and is primarily driven by small businesses. There are several industries that are home to these small businesses and these industries are growing and expanding consistently. Today, some of the most notable corporations are headquartered in New York. The state not only attracts new businesses but also investors as it is considered to be the financial capital of the USA. This is one of the prime reasons why small business owners and entrepreneurs prefer to incorporate in New York. Some of the top corporations in the state include Loews Corporation, American Express, Aventura Technologies, Moody’s, MetLife, NASDAQ, CBS Corporation, and Time Inc. among others.
What is a New York Corporation?
If you plan to form a corporation in New York then there are primarily two forms of corporations to choose from. You can opt to form the traditional corporation also known as the C Corporation. Alternatively, you can elect S Corporation status as it offers tax benefits when compared to a traditional corporation. It is important to note that an S Corporation is not a business structure but an Internal Revenue Service (IRS) tax classification. If you are planning to form a C Corporation then you can register a New York Corporation online or offline. The other forms of corporations that you can form in the state include:
- Nonprofit corporations
- Professional Service Corporations
- Benefit Corporations
- Foreign Corporations
What are the benefits of incorporating in New York?
There are over 2.2 million small businesses in New York with a majority of entrepreneurs choosing to form a corporation in New York vis-à-vis other forms of businesses. There are several benefits of incorporating in New York including a great startup environment, robust infrastructure, and Foreign Trade Zones (FTZ) among others. Let’s take a look at the top benefits.
- Startup Ecosystem – One of the top benefits of incorporating in New York is that the state has an existing startup ecosystem. In fact, according to the Global Startup Ecosystem Report, the state is home to over 7,000 startups that are valued at over $71 billion. This is not all, the state is gradually moving towards a “Green Startups” platform with the objective of ensuring higher sustainability in the future.
- Business Tax Incentives – Once you register a corporation in New York, you will be able to benefit from the various tax incentive programs offered by different state agencies like the Department of Taxation and Finance. The incentives vary from one industry to another and include tax credits and exemptions. Some of the popular incentive programs include Investment tax credit (ITC), Exemption for tangible personal property, and Sales and use tax exemption.
- Global Business Center – One of the major benefits of incorporating in New York is that it is considered as a top financial hub for local startups as well as global businesses. Whether you want to start a local business or an international company, New York provides the right platform and target audience. You can even benefit from the Foreign Trade Zone Program (FTZ) for businesses in the export-import industry.
Starting a New York Corporation
New York offers plenty of opportunities and a pro-business environment backed by a logistics and transportation infrastructure and platform for funding and investors. If you have a business idea and want to benefit from these opportunities then you need to register a corporation in New York first. Let’s look at the important aspects of the process of forming a new business in the state.
1. Name New York Corporation
In order to incorporate in New York, one of the first steps is identifying a name for your company. A business name is integral towards the existence of a company as it separates your business from other businesses and is also used for marketing, branding, and sales. The process of new business formation revolves around your company name. There are certain business corporation naming guidelines that you are required to follow and they are:
- The chosen name should contain words like “corporation” or “incorporated” or abbreviations of any of these words like INC. or Corp. pursuant NY Bus Corp L § 301 (2020)
- The business name should be distinguishable from the names of any domestic corporation and the fictitious name of any authorized foreign corporation.
- The chosen name should also be distinguishable from the names of any domestic or foreign limited liability companies, domestic or foreign limited partnerships among others. The business name should not consist of any word, phrase, or abbreviation that is restricted or prohibited by any other New York statute like the board of trade or chamber of commerce.
Once you have created a business name compliant with the New York state statutes, you will need to conduct a New York business name availability search. If the chosen name is available then you can file the Application for Reservation of Name with the Department of State, Division of Corporations pursuant to NY Bus Corp L § 303 (2020). The name can be reserved for a period of 60 days and this process will enable you to register a New York Corporation online.
2. Appoint New York registered agent
If you are planning to form a corporation in New York then one of the foremost requirements of the state is to hire and maintain a registered agent in the state pursuant to NY Bus Corp L § 305 (2020). You can opt for statutory designation of the Secretary of State as the agent for service of process pursuant to NY Bus Corp L § 304 (2020) or you can choose one of the top registered agents in New York like IncParadise.
A New York registered agent like IncParadise can not only provide service of process but can also help you understand how to form a corporation in New York. We are qualified for handling service of process as required by New York statutes and can also assist you with the process of registering your new business.
3. Choose New York Corporation’s initial directors
One of the important requirements to focus on before you register a corporation in New York is choosing the initial directors pursuant to NY Bus Corp L § 701 (2020). Normally, the shareholders of the company will be responsible for the election of the board of directors and defining their term or tenure. The corporation’s initial directors may consist of one or more members pursuant to NY Bus Corp L § 702 (2020) and the numbers can be fixed or changed through the corporation by-laws.
4. File a certificate of incorporation with NY SOS
Once you have identified a business name, the next step is to register a corporation in New York. There is a process that you will be required to follow for incorporation that is governed by New York Laws, BSC – Business Corporation, Article 4 – Formation of Corporations. You will need to file the “Certificate of incorporation” pursuant to NY Bus Corp L § 402 (2020) and this document has to be signed by each incorporator and include their personal information like name and address.
The Certificate of Incorporation has to be submitted with the New York Department of State, Division of Corporations along with a fee of $125. You can submit the incorporation document by mail or register New York Corporation online. Alternatively, we at IncParadise can assist you with the process to incorporate your business in New York. This will help you to not only save time as incorporation is a detailed process but also you can avail of some of our additional services that are crucial towards business operations.
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5. Prepare bylaws for New York Corporation
When you form a corporation in New York, one of the important aspects to focus on is the preparation of the bylaws. There is no set content for corporate bylaws nor will you be required to submit this document with the New York Department of State. The objective of the bylaws is to set forth internal rules, regulations, and procedures that identify the existence, role and responsibility of a corporate office. Some of the other aspects covered in the bylaws are:
- Number of board of directors
- Shareholder meetings
- Statement of purpose
- Operational guidelines
- Power of officers, shareholders, and directors
- Plans for stock distribution
6. Get an EIN
If you are planning to register New York Corporation online or offline, there are certain processes that you need to complete to make the business operational. One such facet is that of applying for and obtaining an Employer Identification Number (EIN). This is a unique 9 digit number, which is issued to businesses by the Internal Revenue Service (IRS). It is also known as the Federal Employer Identification Number (FEIN) and is required for filing tax returns and also for opening business bank accounts.
7. Hold an organizational meeting
Once you form a corporation in New York, one of the first things to do is to conduct an organizational meeting. This is an initial meeting or the first meeting that is held by the incorporator or incorporators after you register a New York Corporation online. The importance and requirements of these meetings are governed by NY Bus Corp L § 404 (2015). The objective of the meeting is to establish a corporate structure for the company by appointing officers and initial directors. Organizational meetings are also important for adopting corporate by-laws.
8. Open a bank account
One of the important areas for any new company is starting a banking account. You can open a business banking account before or after you register a corporation in New York. You are probably wondering why you can’t use your personal bank account for the same and the truth is that using a personal account will make accounting and especially tax returns quite complex. There are numerous benefits of using a business bank account or checking account like:
- It will help in limiting your personal liability
- This account will provide financial protection to the business as well as the owner
- A business banking account will help you to track all types of expenses, monitor spending, and help avoid any unintended or accidental overspending.
- Having this type of account will give the right message to your customers including professionalism
- This is one of the benefits of incorporating in New York as there are several top banking institutions to choose from
9. Issue stock
If you incorporate in New York then one of the primary requirements is the issuance of stock. Every corporation formed in the state has to designate the number of shares the said company is authorized to issue and this has to be specified in the certificate of incorporation. You have to also indicate if the stock or shares are with or without par value. It is important to note that if you register a New York Corporation online then the authorized stock structure with no par value is 200 shares in New York according to the Department of State.
10. File New York biennial statement
Once you form a corporation in New York, there are different annual or even biennial requirements that a business has to fulfill in order to conduct business in the state. One of the important requirements is that of an annual report, which is known by different names in different states and as a biennial statement in New York. Once you register a New York Corporation online or offline, as a domestic or a foreign corporation, you will have to submit the biennial statement pursuant to NY Bus Corp L § 408 (2020). The statement has to be filed once every two years along with a filing fee of $9 to the NY Department of State and the submission ensures a good standing with the state.
11. Obtain necessary licenses and permits
Once you register a corporation in New York, it doesn’t mean that you have all necessary clearances for conducting your business in the state. In fact, you will be required to apply for and obtain the necessary business licenses and permits to make your business operational. If you register a New York Corporation online but operate your business without the required licenses then you may be penalized for the same. Your corporation may require a single license or multiple licenses and permits. The licenses in the state can be categorized as under:
- Industry-based – If you have been wondering how to form a corporation in New York, then one of the important aspects is licensing. Business licenses in the state are issued according to the industry your business is operating in like business services, agriculture, construction, finance, education, health, retail, manufacturing, and recreation among others.
- Local licenses or permits – When you incorporate in New York, you have to mention the city or county your business is based in. The licensing requirements are different for different cities and counties. If you are operating your business within the official limits of the City of Buffalo, NY then you will need to check their “License Applications & Code Requirements” specific to your business activity. If you were to start a bakery with a maximum of 25 employees or less then you will have to apply for a license with the City Hall along with the licensing fee of $220.
- Professional Licensing – Once you register a New York Corporation online your business may even require professional licensing depending on the type of business activity. There are over 32 professional occupations that are licensed and vary from home inspectors to real estate brokers and others.
If you want to know more about New York business licenses required by your company then you can avail of our Business License Research Report that provides detailed licensing information in New York.
12. Comply with other tax and regulatory requirements
Once you start an LLC in New York you may be required to pay some form of tax in the state. Taxes actually vary from one state to another and also according to the type of business entity and hence the taxes filed by a limited liability company may not be the same as that of a corporation. Some of the important taxes collected in the state of New York include the following:
- Business Corporation Tax
- Withholding tax
- Sales and use tax
- Other taxes like Employer Compensation Expense Program (ECEP) or Stock transfer tax.
Know more about starting a New York Corporation
As a first-time business owner or an entrepreneur, there are several facets to the state of New York when it comes to starting a business. If you want to incorporate in New York then you may have to confront a multitude of questions regarding incorporation and other aspects of the new company. Hence, we have created this section of “Frequently Asked Questions” for addressing some of the most common queries including how to form a corporation in New York as an entrepreneur or new business owner.
Why form a Corporation in New York?
New York, the center of the nation’s financial hub is considered by entrepreneurs as an excellent place for startups and small businesses. The state with a $1.751 trillion economy has many benefits to offer those who want to form a corporation in New York. Some of the top benefits of incorporating in New York are:
- Since it’s a financial hub; businesses enjoy access to investment capitalists and angel investors
- It is one of the densest populated cities in the nation and hence a bigger and more diverse customer base
- The state has a booming startup environment
- It has foreign trade zones and opportunity zones
- A wide variety of business incentive programs are offered by the state for small businesses and startups
- Availability of small business grants
- Accessibility to a pool of committed, professional and skilled workers
How do I know if my New York Corporation name is available?
Once you have chosen a business name in accordance with the rules, regulations, and prohibitions governed by NY Bus Corp L § 301 (2020), you will need to conduct a New York corporation name search. The Department of State, Division of Corporations has an extensive database known as the Corporation and Business Entity Database.
The database lists names of all businesses incorporated or registered in the state. You can search the Division of Corporations name database using different fields like search using entity name and type of entity. The database also contains assumed name filings for corporations, limited partnerships, and limited liability companies. The search will help you in determining if your chosen name is available, which will further ensure you are able to file the Application for Reservation of Name.
What will be the cost to form a corporation in New York?
If you want to register a corporation in New York then there will be certain formation costs governed by 2020 New York Laws, BSC – Business Corporation, Article 4 – Formation of Corporations. If you are planning to form a domestic corporation then you will be required to submit the Certificate of Incorporation along with a fee of $125. This has to be filed with the Department of State, Division of Corporations.
Can I register an S Corporation in New York?
Yes, you can register an S Corporation. You will need to first register a corporation in New York and then elect to be treated as an S corporation. The Internal Revenue Service (IRS) governs the election and specifies certain requirements required by a traditional corporation to qualify for S corporation status. You will be required to file the Form 2553 (Election by a Small Business Corporation) pursuant to section 1362 of the Internal Revenue Code.
Can I register a foreign Corporation in New York?
Yes, you can incorporate in New York as a foreign corporation and its formation is governed by 2020 New York Laws, BSC – Business Corporation, Article 13 – Foreign Corporations. As a foreign corporation, you will not be able to conduct business in the state until it is authorized or completes a foreign qualification. If you want to register a New York Corporation online as a foreign business then you will need to submit an Application for Authority for a foreign business corporation along with the filing fee of $225 pursuant to NY Bus Corp L § 1304 (2020).
How can I dissolve my New York Corporation?
Once you form a corporation in New York, you can conduct business in the state. At any given point in time, if you want to dissolve your company then you will be required to file a Certificate of Dissolution pursuant to NY Bus Corp L § 1003 (2020). There is a statutory filing fee of $60 and it has to be filed with the New York Department of State, Division of Corporations. It is important to note that you will require the consent of the New York State Department of Taxation and Finance prior to filing the Certificate of Dissolution.
Ready to Start a New York Corporation?
If you want to incorporate in New York then it is one of the best destinations for a startup or a new business. You can choose different types of business structures although the benefits of incorporation are higher as compared to some of the other forms of business. There is a definite process to register a New York Corporation online and this may require you to submit documents and include personal and business information and this is where a top registered agent like IncParadise can assist you.
IncParadise is one of the reputable registered agents in the state and we can help you with the process of New York incorporation. We also offer a wide variety of additional services in New York like foreign qualification, EIN assistance, and many others.