How to start an LLC in New York
How can you start an LLC in New York?
You can start a New York LLC in some of the top sectors like the financial services sector; famous for the New York Stock Exchange (NYSE), professional and business services, manufacturing, food establishments, retail, and healthcare among others. So, if you are wondering how your business can be a part of this thriving economy then this article will provide you with relevant information pertaining to benefits of forming an LLC, choosing a business name, filing formation documents, opening a bank account, following NYC LLC publishing requirements among others..
LLC in New York
New York is the 3rd largest economy in the U.S and is home to 2.3 million small businesses, which is a great jump since 2008 when the number of small businesses was 439,660. A large number of small businesses have chosen the Limited Liability Company business structure due to the several advantages. Entrepreneurs prefer to start an LLC in New York due to the business climate and robust infrastructure. One of the top LLCs in the state includes the American Stock Exchange (AMEX) or NYSE MKT LLC, and it has been designed with flexibility and choices for growing startups as well as investors. When you form a New York LLC online, you can take advantage of the fact that this is the financial capital of the nation.
What is New York LLC?
If you are planning to register a New York LLC then it is important to identify how a limited liability company is defined. It is one of the most popular forms of business in the US and in New York. An LLC is considered owing to the numerous benefits it has over other business structures. There are different forms of a limited liability company that one can choose from and this includes:
- Sole Proprietorship or a Single-Member LLC
- Series LLC
- Multi member-managed LLC
- Anonymous LLC
- Manager-Managed LLC
- L3C Company
- Restricted LLCs
A limited liability company is characterized under “Incorporated Business Entities” although it can also be an unincorporated business organization like a sole proprietorship. A Limited Liability Company is considered to be a hybrid form of business entity as it combines the partnership-structure flexibility with the corporation-structure limited liability. In order to form a New York LLC online, you will need to follow the new LLC registration requirements as governed by the New York Laws, LLC – Limited Liability Company Law, Article 2 – Formation.
What are the benefits of forming an LLC in New York?
There are several reasons why entrepreneurs prefer to start an LLC in New York and one of the primary reasons is the benefits choosing this type of business structure offer. Some of the benefits offered by an LLC are:
- Protection – One of the primary benefits or reasons for forming a New York LLC online is protection. Since a limited liability company is a hybrid structure and shares certain unique features of a corporation, it simply means that an LLC is in itself a legal entity. Thus, members and owners cannot be held personally liable for any debts of the company and are protected against the same.
- Decision making – As an entrepreneur or a single owner, you can start a New York LLC as a single-member LLC. This has two main benefits, which are the ability to make your own decisions without the liability problems existing in a sole proprietorship.
- Avoiding double taxation – Once you form a New York LLC online, it is considered as a pass through entity, which means that there will be no double income taxation. In other words, the profit generated by the company will be taxed only once in the form of the individual income tax return of each member.
- Less paperwork – One of the salient aspects of a limited liability company is that there will be less paperwork as compared to other corporate entities.
Forming an LLC in New York
New York is one of the few states that has an aggressive economy and a pro-business environment. The state has just the right business, transportation, and logistics infrastructure to support small businesses as well as larger companies. If you are planning to start an LLC in New York then there are several processes involved in the registration and operation areas of the business. We have explained each relevant process in a step-by-step manner.
1. Choose New York LLC name
In order to start a New York limited liability company, one of the first steps is identifying a name for your business. A business name is like the identity of your company and all your marketing plans, customer or client initiatives, brand promotion activities, and new business formation will revolve around this name. There are certain LLC naming guidelines that you are required to follow along with New York LLC name search. The guidelines are:
- The chosen name should contain “limited liability company” or abbreviations like L.L.C or LLC pursuant to NY LLC L § 204 (2018).
- The business name should be distinguishable from the names of any domestic LLC, any authorized foreign LLC, and fictitious name or DBA of an authorized foreign limited liability company.
- The chosen name should also be distinguishable from the names of any domestic business corporation or not-for-profit Corporation as well as any other form of New York domestic corporations.
- The business name should not consist of any word, phrase, or abbreviation that is restricted or prohibited by any other New York statute.
Once you have created a business name that meets with the state statutes, you will need to conduct a New York LLC name search for business name availability. If the chosen name is available in the state database then you can file the Application for Reservation of Name with the Department of State, Division of Corporations. The name can be reserved for a period of 60 days and this process will enable you to form a New York LLC online.
2. Choose New York LLC registered agent
In order to start an LLC in New York, it is mandatory to designate and continuously maintain a registered agent in the state pursuant to NY LLC L § 302 (2018). IncParadise can be your New York LLC registered agent. As we are qualified and have the experience of handling service of process as required by state statutes, we can assist you with the process of registering your new business as well as fulfilling various business-related annual requirements as required by the state statutes. This has to be completed while ensuring your business is in compliance with all requirements of the Department of State. As a new business owner, you might not be familiar with the state laws or the documentation and paperwork required and this is where a New York LLC registered agent like IncParadise can provide the necessary assistance.
3. File Articles of Organization with the New York Department of State
Once you have thought of forming a limited liability company and have reserved your business name, the next step is to register a New York LLC. The formation of a limited liability company in New York is governed by the 2020 New York Laws, LLC – Limited Liability Company Law, Article 2 – Formation. In order to form an LLC, you will be required to file the Articles of Organization pursuant to NY LLC L § 203 (2020). The articles have to be submitted along with a filing fee of $200 and have to be mailed to the following address:
- Department of State
Division of Corporations,
State Records and Uniform Commercial Code,
One Commerce Plaza
99 Washington Ave.
Albany, NY 12231-0001
You can also file online through the online portal of Division of Corporations or alternatively, we at IncParadise can assist you with the process as this will minimize new business formation time. It is important to note that you will be required to fulfill NYC LLC publishing requirements and provide Affidavits of Publication pursuant to NY LLC L § 206 (2018) in order to ensure proper registration of your company.
You can register your LLC in New York Today!
4. Follow New York LLC publishing requirements
When you register a New York LLC, it’s important to ascertain what other state-based requirements or additional filings you have to fulfill. These additional filings can vary from one state to another and in New York, there is a publication requirement to fulfill. So, what does this requirement entail? As a part of NYC LLC publishing requirements, the state requires a newly formed limited liability company to publish a notice of formation for a period of six consecutive weeks in two newspapers as specified by the County Clerk in the county where the legal address of your company is registered. The publishing requirements pursuant to NY LLC L § 206 (2018) are as follows:
- You need to publish in a newspaper that is circulated daily
- You need to publish in a newspaper that is circulated weekly
- The LLC publication should appear once a week in both daily and weekly newspaper
In order to comply with the NYC LLC publishing requirements, you will have to provide the following information:
- The name of the LLC
- The date of filing Articles of Organization to register a New York LLC
- The county where your LLC is located
- The business address of your company
- The purpose of the LLC
- The name of the New York LLC registered agent
5. Prepare New York LLC operating agreement
One of the important aspects to focus on before you start an LLC in New York is the operating agreement of a limited liability company. This is a type of official document, which outlines the various terms of an LLC in accordance with the specific needs of the owners. It also provides an insight into operational and financial decision-making in a structured way. The New York LLC operating agreement will be set in paper rules as well as expectations for the limited-liability company while ensuring credibility of the company as a legal entity. Depending on the type of LLC, you can create a single-member or multi-member LLC operating agreement.
Some of the key areas outlined in a New York LLC operating agreement are:
- Organizational information like ownership structure
- Management and voting whether it is member-managed or manager-managed entity
- Capital contributions or money invested by each member
- Distribution of profits and losses
- Changes to the membership structure
6. Obtain New York LLC EIN
An EIN is known as the Employer Identification Number or the Federal Employer Identification Number (FEIN). If you register a New York LLC then you may need to apply for and obtain an Employer Identification Number depending on the type of LLC. A single-member LLC without employees working like a sole-proprietorship may not require an EIN but an LLC with employees or a multi-member LLC will need an EIN. This is a unique 9 digit number that is assigned by the Internal Revenue Service (IRS) and is primarily used by businesses for tax reporting purposes. If you hire a New York LLC registered agent like IncParadise then we can help you obtain the Employer Identification Number (EIN).
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7. Obtain necessary business licenses and permits
Once you register a New York LLC, it becomes a legal entity but how do you make your business operational? This is where applying for and obtaining necessary business licenses and permits comes into effect. Every small business in New York doesn’t require a license and similarly, your business may require a single license or multiple licenses. The business license and permits in the state can be categorized as under:
- Industry-based – After you form a New York LLC online, you may search for licenses based on the industry your business is categorized under. Some of the industries that require licenses or permits include agriculture, business services, construction, education, finance, health, manufacturing, retail, and recreation among others.
- Local licenses or permits – This is a type of licensing or permit that is applied for and issued by the city or county your business is operating from. So, if you were to start a New York LLC in Suffolk County, NY then you will need to check with the Suffolk County Department of Labor, Licensing, & Consumer Affairs regarding licensing requirements of your business.
- Professional Licensing – Some businesses may require professional licensing especially for owners of such a company. If you want to start a Cosmetology clinic then you will need a professional Cosmetologist license offered through the Department of State.
You can find valuable business license information and resources with the New York State License Center, The New York State Department of State Division of Licensing Services, and the New York State Office of the Professions. Alternatively, a New York LLC registered agent like IncParadise can also provide guidance on business licenses required by your company in the state. You can also avail of our Business License Research Report for detailed information on permits and licenses in New York.
7. Open a bank account
One of the key requirements that are often overlooked when entrepreneurs start an LLC in New York is that of a business bank account. First-time business owners especially of a single- member LLC may feel that their personal account should be adequate for handling business transactions. The fact is that if you use your personal account for business transactions then you may not be able to report your taxes correctly and this will not be beneficial as a long-term arrangement. A business bank account on the contrary will help you to segregate personal finances from those of the company and ensure clean maintenance of your account books.
8. Comply with taxes and other regulations
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:
- Corporation franchise tax
- State Employer Taxes
- Sales and Use Taxes
- Withholding tax
Know more about starting a New York LLC!
If you are planning to start an LLC in New York, then you may be faced with several questions that need to be addressed. You may have questions pertaining to the cost of registering in New York, annual fee, disadvantages of forming in the state, New York LLC registered agent services, and much more. Hence, we have created this section of “Frequently Asked Questions” for addressing some of the most common queries that a startup or entrepreneur may have.
Is New York a good state to form an LLC?
There are several reasons why entrepreneurs prefer to start an LLC in New York and the most important are the benefits that small businesses and startups can leverage in the state. Some of the top benefits include:
- The state of New York offers new and existing businesses a wide variety of opportunities for finding talent, platform for making connections, expanding the business, and even trying out new ventures
- Once you form a New York LLC online, you will be able to take advantage of several types of business incentives including tax credit programs
- There is a diversity of industries where you can form your new business and achieve financial and economic growth
- The state has a strong transportation system and logistics environment, which provides the necessary support to startups and small businesses
- The state hosts numerous business-related events including seminars, funding events, and conferences for first-time and existing entrepreneurs
- There are 306 Qualified Opportunity Zones in the state where you can start a New York LLC to enjoy reduced taxes
- New York is home to foreign-trade zones (FTZ) and setting up your business here will provide benefits like duty deferral on imports, expedited shipments, zone to zone transfers, and inverted customs duty savings among others.
How do I know if my New York LLC name is available?
Once you have identified a business name, you need to conduct a New York LLC name search. The Department of State, Division of Corporations has a Corporation and Business Entity Database, which is basically a list of names of all types or forms of businesses registered or incorporated in the state. You can search this database using different fields like searching by entity name and entity type. This database also contains assumed name filings for limited liability companies, corporations, and limited partnerships. The search will help you to determine if your name is available so that you can apply for a reservation of the same.
How much does an LLC cost in New York?
If you want to register a New York LLC then there are certain formation costs attached to it. It is important to determine whether you are forming a domestic or a foreign Limited Liability Company as the cost of formation may differ. If you are forming a domestic LLC then the most important cost associated is that of filing the reservation of a name and Articles of Organization. The fee for filing Articles of Organization is $200 and that of name reservation is $20. Whether you form a New York LLC online or offline, there will also be a filing fee for the Certificate of Publication, which is $50.
Do I need a business license for my New York LLC?
Yes. Once you start an LLC in New York, the only way to make the business operational is by obtaining a business license. The type of license you require will depend on where your business is located, the type of business (e.g., nursing), and the industry.
Can I set up a single member LLC in New York?
There are two forms of member-driven Limited Liability Company that you can form and they are single-member and multi-member LLCs. You can form a single-member LLC in New York by filing the Articles of Organization with the Division of Corporations. We are one of the top registered agents in the state and can help you to form a single-member LLC.
What taxes does an LLC pay in New York?
Whether you form a New York LLC online or offline, you may be required to file state business taxes. The taxes levied on an LLC may also be different from other forms of business like a corporation or a general partnership. Your company may be required to file the following taxes:
- State Employer Taxes, if the LLC has employees
- Sales and Use Taxes if your LLC is selling goods
- Federal Income Tax.
Can I register a foreign LLC in New York?
Yes. You can register a foreign limited liability company in New York by filing the Application for Authority –Foreign Limited Liability Companies pursuant to NY LLC L § 802 (2020). The process to register a foreign LLC is also known as Foreign Qualification.
How do I dissolve my New York LLC?
Different businesses have different reasons for dissolving their company. After you start a New York LLC, if you want to dissolve the company then the only way to do it is by filing Articles of Dissolution of Domestic Limited Liability Companies pursuant to NY LLC L § 705 (2020). The dissolution articles have to be filed with the New York Department of State, Division of Corporations along with a statutory fee of $60.
Ready to form a New York LLC?
You can choose from a wide variety of business structures but one of the most popular forms is that of a Limited Liability Company. If you are planning to register a New York LLC then there is a registration process, which requires you to submit personal and business information as well as documentation. This is where IncParadise can assist you with the formation of your new business in the state.
IncParadise is a highly reputable New York LLC registered agent and we have helped thousands of companies to start their businesses with ease. We also offer a wide variety of additional services like foreign qualification and EIN assistance among others.