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:
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.