Steps to start a business in New York
Most startups and small businesses in the state of New York have been experiencing growth and are expanding at a faster rate than ever before. The state has achieved one of the lowest taxes in several decades, is home to an ever-growing talented workforce, and is attracting major investments and state-of-the-art innovations. These are key drivers of business climate and are considered essential building blocks for the progress of each business. You can start a business in New York in any industry but it is important to identify the key areas that will augment business operations in the future.
1. Prepare a New York Business Plan
If you are planning to start a business in New York then you need to identify the market, customers, risks, competition, and even the business formation and operational cost among other things. This can be made possible by formulating a business plan, which will also lead the way for an operational strategy. There are different types of business plans like a strategic business plan, start-up business plan, feasibility business plan, and operations plans among others. What you need is a start-up business plan as it will constitute various areas and elements of starting a business in NYC checklist. An ideal business plan will help you to minimize your overall risk and also pave the way for your strategic planning and prioritization. The various areas to focus on in order to create a strong business plan are:
- Executive Summary
- Synopsis of your business or startup
- Market overview
- Target Audience
- Products and Services
- Risk and Competition
- Revenue Model
- Operating Model
- Core Management Team
- Financial Plan
A good business plan will also help you identify short-term and long-term market risks and benefits, which will play a key role in the growth of your company.
2. Attend Entrepreneurial Training or Development Programs in New York
You may have a brilliant idea but to actually implement it in the form of a startup or business can be quite demanding in terms of acquiring skills and knowledge pertaining to the very area of your business. If you have an idea and are planning to register a business in New York then it is important to understand how entrepreneurial training or development programs can further your cause. This type of program will help you to understand and identify the skills you possess and the skills and knowledge required towards making your business operational and successful. Hence, such programs should be an integral part of your starting a business in NYC checklist.
The primary objective of an entrepreneurial training program is to provide business counseling and impart knowledge through workshops and classes to bring out the leadership qualities necessary to operate a business in New York. There are several entrepreneurial training and development programs offered by the New York Small Business Development Center (NYSBDC) and New York City Economic Development Corporation (NYCEDC). Their training programs help you to develop practical business skills making it easier to start a small business in NYC. There are several other private organizations and institutions that offer business counseling as well as knowledge and training to aspiring first-time entrepreneurs.
3. Choose a Business Structure for New York Business
One of the most important aspects, before you register a business in New York, is choosing the right business structure. In order to choose a business structure, you will need to identify your requirements and long-term objectives. For example: if you are looking for a structure that offers tax benefits then it is better to choose an LLC or an S Corporation. This is an important element of your starting a business in NYC checklist and you can choose unincorporated or incorporated business entities like:
4. Naming Your New York Business
The identity of any new business is driven by its name as the name helps in creating brand value and increases brand recall. A good business name should take into account several factors. For example, it should be simple, short, and connected to the products or the services of the company. The uniqueness of a name is also a key factor as it will make your business stand apart. If you are planning to start a small business in NYC then there are certain legal naming requirements that you will be required to fulfill.
- The legal aspect of a business name will vary according to the type of business structure. For example, if you were to incorporate in New York then the corporate name will be governed by NY Bus-Corp L § 301 (2019). Similarly, if you were to register a business in New York as an LLC then the naming requirements would be governed by NY LLC L § 204 (2018).
- The New York business laws also govern the uniqueness of the business name. If you form a corporation then the name should contain words like the word “corporation” or “incorporated” and an abbreviation of any of these words like “Inc.” or “Corp.”. Similarly, if you were to form a limited liability company then the name should contain words like “Limited Liability Company” or abbreviations like “L.L.C.” or “LLC”.
- If you are planning on doing business in New York then the business name should be distinguishable from any other name existing in the database of the department of state, division of corporations.
- The laws for reservation or registration of a business name are different for different states. In most states, you are required to reserve a business name for a specific period including New York where you can reserve your business name for a period of 60 days by filing the “Application for Reservation of Name”.
- It is important to check business name availability prior to filing the name reservation application. Once you reserve the name, it will be easier to register a business in New York.
5. Choose a Location for your New York Business
A key element driving the success and growth of a business is the location of a business. New York is one of the best states for a startup but where in New York? New York, also known as New York City, has five boroughs, which are Manhattan (New York County), Queens (Queens County), Brooklyn (Kings County), Staten Island (Richmond County), and the Bronx (Bronx County). Each of these locations has its advantages and disadvantages but certain aspects are common for each of these counties. The aspects to consider before you start a small business in NYC are:
- Transportation – One of the foremost requirements for businesses especially in the manufacturing, retail, wholesale, and food industry is that of transportation infrastructure. New York has a complex but dense transport infrastructural system, which connects it to the other states as well as the rest of the world. The easy access to varied transport and transit systems will ensure you are able to start a business in New York and operate it without any hiccups.
- Accessibility – This aspect is important especially when it comes to employees and clients. The location of your office should be in a place that has parking space or accessibility to a mass transit system.
- Security – This aspect is an integral part of your starting a business in NYC checklist and you need to consider a location that is a low risk and low crime zone like the Bronx is a higher risk zone as compared to Manhattan South.
- Skilled Workers – There are certain areas in New York where finding skilled workers are more as compared to other locations. The requirement of skills varies according to the type of business for example Brooklyn has too many food establishments and hence it will be easier to find employees with certain skills like a Sous Chef or a Kitchen Manager.
- Demographics – Your target audience will drive your business. Hence, it is important to start a small business in NYC at a location that has a higher demographic or is accessible for your target audience.
6. Register Your Business with New York Department of State
New York with a $1.751 trillion economy and several rapidly growing industries like manufactured goods, commodities, and minerals, is considered as one of the favored destinations by entrepreneurs to start a small business in NYC. As an entrepreneur, you can choose from a wide variety of business structures available although some of the most popular forms of doing business in New York include a corporation, Limited Liability Company, and sole proprietorship.
Once you have chosen your business structure, you can move onto the next step, which is to register a business in New York. The registration process will depend on the business structure. For example, if you were to form an LLC then you will be required to file “Articles of Organization” pursuant to NY LLC L § 203 (2018). Similarly, if you were to incorporate in New York then you will be required to file a “Certificate of Incorporation” pursuant to NY Bus-Corp L § 402 (2019). The filing fee is different for different business structures and hence, it would be $200 for a limited liability company and $125 for a corporation.
To register a business in New York, you have to be compliant with all state and legal requirements as mentioned by the New York Department of State, Division of Corporations. You can submit the registration application physically at the New York Department of State, Division of Corporations, One Commerce Plaza, 99 Washington Avenue, Albany, NY 12231 or file it online. The alternate option is to file with the help of a top New York registered agent service like IncParadise. IncParadise can provide you with information pertaining to new business formation as well as assistance towards forming your startup in the state.
We can help you to start a new business in New York
7. Get Your EIN
One of the important requirements for first-time entrepreneurs or new business owners planning to start a business in New York is the Employer Identification Number (EIN). It is important to understand that not all forms of businesses require an EIN but if your business has employees or if you are filing tax returns like employment or excise then you will be required to apply for this Federal Tax Identification Number (FEIN). The FEIN is issued by the Internal Revenue Service (IRS) and it is a unique identification number that will help in the filing of annual tax returns and offers several other benefits to small businesses.
8. Open a Business Bank Account for New York Business
When you start a business in New York, you will need to use a bank account for business-related expenses and the same account can also be used for receiving payment from customers, vendors, etc. If you are thinking whether to use the existing personal banking account then there are several disadvantages. One very salient fact is that mixing personal and business expenses can bring about complexities in the filing of tax returns. On the contrary, there are several benefits of having a business bank account. For example:
- It helps towards maintaining your business records in an organized manner
- It will help in building a business credit rating
- A business bank account will ensure easy filing of taxes
- Business bank accounts enable operations of point of sale systems for retailers
9. Obtain the Necessary New York Business License and Permit
Once you register a business in New York, there is one more important step that you need to take to make the business operational. You will have to apply for and obtain a business license. As a new business or a startup, you may require a single license or multiple licenses and permits depending on the type of business. Most licenses are issued at the state level but you may have to apply for and obtain local licenses depending on where your business is situated. Permit and licenses in New York can be categorized as under:
- Industry-based Licensing – There are specific industries that require businesses to obtain a license prior to starting operations. You can apply for a New York business license if your business is categorized under any of the following industries:
- Specific Businesses like real estate broker
Professional Licensing – If you are planning to start a small business in NYC where professional or occupational skills are required then you may need to obtain a professional license before applying for a business license. As an example, if you plan to open a business dealing with various aspects of Athletic training like management of athletic injuries, and conditioning, and reconditioning activities then you will have to apply for licensure by filing the required application along with a fee of $158. The fee for a New York business license for different professions will vary accordingly.
Local Licensing – Once you register a business in New York, you need to check with the local authorities of the city or county your business is based in for licensing requirements if any. Each county or city has its own ordinances and licensing requirements and hence the licensing rules, ordinances, application, fees, and renewal in Suffolk County will be different from that of Richmond County. The local licenses and permits in addition to a state, industry, or New York business license.
If you want to know more about what type of New York business license your business requires then you can opt for our “Business License Research Report” service. This is a specialized service aimed at providing a detailed list of filing instructions, supporting document requirements for business licenses, and fees for business permits in New York.
10. Get Business Insurances
One of the important areas that most startups and new businesses need to focus on is business insurance. You may be asking yourself about the need for business insurance if you are planning to start a business in New York. The primary reason why insurance is recommended is that there is always a high probability and risk of business liability also known as a commercial liability. When a liability claim is made against your business then good business insurance will help in covering the cost of such claims. Some of the different types of insurance recommended if you plan on doing a business in New York are:
- Business liability insurance
- Business income insurance
- Workers’ compensation insurance
- Insurance specific to industries
- General liability insurance
- Product liability insurance
- Commercial property insurance
- Business owner’s policy for home-based businesses
In a nutshell, proper business insurance will provide protection from any unexpected cost during business operations like accidents, natural disasters, as well as lawsuits.
11. Annual and Ongoing Requirements
Once you register a business in New York, in order to keep your business active; you will be required to ensure all annual and ongoing requirements are met. The annual requirements may vary according to the type of business structure although there are certain requirements that are common for all. Let’s look at the various annual requirements applicable if you incorporate them in New York.
- Annual Report – Most states in the USA require businesses to submit some form of report annually and they are known by many names like annual report, statement of information, etc. If you are doing business in New York as a corporation or an LLC then you will be required to submit a Biennial Statement once every two years with the New York Department of State – Division of Corporations. It has to be submitted by the end of the incorporation or registration anniversary month and IncParadise can help you in filing the New York Annual Report.
Tax – One of the important annual filings is that of a tax return. The type of taxes you will be required to file will vary according to the business structure. The most common forms of taxes in New York are:
- Business Corporation Tax
- Sales and Use Tax
- Withholding Tax
- Pass-through entity tax (PTET)
- Other taxes and reporting requirements
- Business License – You will be able to start a business in New York and make it operational only after you have obtained a business license. You may require a single or multiple licenses and permits depending on the industry and the county your company is based in. Once a New York business license is issued, it has to be renewed annually as non-renewal can lead to penalties and you may not be able to conduct business in the state.