Sole Proprietorship in New York

A sole proprietorship business is not just the simplest but one of the oldest forms of business. If you are planning to start a sole proprietorship in New York then this is one state that provides everything from the right business climate to some of the best startup accelerators and incubators. The state is home to 2.3 million small businesses and offers a wide variety of incentive programs to sole proprietorships and other forms of small businesses.

What is a sole proprietorship in New York?

In order to start a sole proprietorship in New York, there are several aspects you have to consider like creating a proper business plan or getting a tax ID, or even obtaining the necessary business license. A sole proprietorship business as the name suggests consists of a single owner of the business. This type of business is also known as individual entrepreneurship, sole tradership, or just proprietorship. As a sole proprietorship business, it doesn’t have to be a one-man show as you can always hire employees. You can also form a sole proprietorship in NY online or offline.

Pros and cons of sole proprietorship in New York

A sole proprietorship is considered as an unincorporated business entity and because it is a single-owner type of business structure, the business and the owner are considered the same. There are several advantages that make it beneficial to file a sole proprietorship in NY State. This form of business also has certain disadvantages as compared to other business structures. So, let’s look at the pros and cons of a sole proprietorship.

Pros

• Simple and easy to form – This type of business formation doesn’t require much paperwork and you are not required to register the business with the New York Division of Corporations as compared to other business structures like LLC or a corporation.
• Lower cost of formation – You can start a sole proprietorship in New York with ease and even from your home or any commercial space or even a co-working hub. You can form a sole proprietorship in NY online or offline and have less capital requirements as well as lower annual compliances.
• Management decisions – Since this form of business is run by a single owner, all operations as well as management-related decisions will be made by the sole owner without any interference.
• No sharing of Profits – The profits earned by the business after you start a sole proprietorship in New York, will go to the owner or sole proprietor. Unlike some of the other forms of businesses, it is not split amongst members, partners, or shareholders.
• Simpler tax – When you form a sole proprietorship in NY online, you will not be required to file tax returns separately for your business. Instead, you will report the income earned on your own personal tax return.

Cons

• Unlimited liability – If you start a sole proprietorship in New York then the business and owner will be considered the same and hence there will be unlimited liability where debts are concerned. There will be no legal distinction between business and personal assets.
• Decision making – There are several advantages of being the sole owner but there is a disadvantage too. As the owner, you will be responsible for making all decisions as well as the operations and this can be tedious.
• Difficult to raise capital – When you form a sole proprietorship in NY online, one of the biggest disadvantages is raising capital. If you require startup capital or want funds for expansion it will be difficult to raise capital unlike in corporations where you can sell stock.
• Liquidation – One of the biggest disadvantages when you start a sole proprietorship in New York is liquidation. If the business owner passes away then unlike a corporation, the business will be liquidated.

Steps to Start a Sole Proprietorship in New York

If you want to start a business without any partners, all by yourself then it is time to file a sole proprietorship in NY State. The state of New York has different requirements for this type of a business structure and as the owner you will be required to fulfill them or be compliant with them. If you are wondering how to start a sole proprietorship in NY then just like any other form of business, there are several aspects and processes to consider. Let us look into these processes in detail as they will enable you to help set up the business and run it smoothly.

1. Prepare a business plan

A business plan is one of the most important areas to focus on before you file a sole proprietorship in NY State. A business plan is considered to be a strategic plan that encompasses marketing, sales, and finance. The role of a business plan is to help you identify the various aspects and areas of a business that you should prioritize. The process of preparing this document will require you to conduct in-depth market research, which will help in not only developing your business idea further but assist with how to start a sole proprietorship in NY, implement good practices and achieve higher growth and sustenance. Some of the components of a good business plan for a sole proprietorship include:

Components of a Business Plan

• Statement of Purpose (Mission Statement)
• Description of the Business
• Products or Services
• Personnel and management
• Insurance
• Methods of Record Keeping
• Marketing Plan
• Competition
• Methods of Distribution
• Summary of Financial Needs
• Financial goals and projections

2. Choose an NY business name

One of the important processes before you file a sole proprietorship in NY State is to identify a business name. It is important to ensure the name of your sole proprietorship is creative and distinct. Here are some tips that will help you in choosing a New York business name:

• Keep it as simple as possible and it should be easy to pronounce
• The business name should represent your business, products, or services
• Try to pick a name that is not limiting as your business may expand or grow in the future
• Conduct a business name search over the internet to get an idea
• Try choosing a name that conveys meaning and sounds positive
• Once you have identified a name, conduct a copyright or trademark search
• It is also important to ensure the availability of a domain name

3. Form the sole proprietorship

If you are planning to start a sole proprietorship in New York as a domestic or foreign entity then you will be required to file a Certificate of Assumed Name pursuant to NY Gen Bus L § 130 (2020). An assumed name is known as a New York DBA (Doing Business As) or a fictitious business name and without this, you will not be able to transact business in this state. You will have to file the Certificate of Assumed Name with the New York Department of State, Division of Corporations along with a $25 filing fee.

Do you want to form a sole proprietorship in New York?

4. File fictitious business name

Normally, sole proprietorships use a DBA also known as an assumed name as the business is not a separate legal entity from the owner. You will need to file a New York DBA only if you don’t want to conduct business under your own name.

For example: If an individual named Claude James wants to start a sporting goods store in New York, he can simply use his own name ‘Claude James.’ If he wants to name it Claude’s Sporting Goods and wants to do business under this name then he will need to file a New York DBA.

• You need to identify a name like Claude’s Sporting Goods depending on the primary business activity
• The business name should be kept simple and also relate to the product of services being offered like Mannie’s TV Repair
• Once you have identified a business name, you need to also conduct a New York DBA name search with the Trademark Electronic Search System (TESS) of the U.S. Patent & Trademark Office

5. Get an EIN

An EIN or Employer Identification Number is also known as the Federal Employer Identification Number (FEIN). It is a unique number that is assigned by the Internal Revenue Service (IRS) to business entities. If you file a sole proprietorship in NYS then ideally you will be filing taxes on your personal tax returns and hence will need a Social Security number (SSN). There are instances in which a sole proprietorship may be required to apply for and obtain an EIN. Such instances according to the IRS are:

• If the sole proprietorship business has employees
• If you have a Keogh plan
• As the owner, if you are going to be filing tax returns related to Employment, Excise, Tobacco, Alcohol, and Firearms
• If you form a sole proprietorship in NY online and it is categorized in special types of organizations like Non-profits, cooperatives, and Estates among others.

You can apply for an Employer Identification Number (EIN) before or after you file a sole proprietorship in NYS.

6. Obtain the necessary licenses and permits

Once you start a sole proprietorship in Texas, one of the foremost requirements is that of a business license. It is important to note that the state of New York does not require a license or permits to operate a sole proprietorship business but some professions may require state licensing. Some of the professions that require licensing after you form a sole proprietorship in NY online include:

• Legal
• Banking
• Architecture
• Pharmacy
• Insurance
• Public Accountancy
• Interior Design
• Athletic Training
• Dietetics-Nutrition
• Clinical Laboratory Technology
• Medicine
• Veterinary Medicine
• Social Work

7. Open a bank account for your New York business

A sole proprietorship business as the name suggests has a single owner. The taxes are also filed on the personal income tax return of the owner. Hence, it is very important to keep your personal gain and revenue generated by the business separately. This is possible if you start a business bank account. You can open this separate account before or after you start a sole proprietorship in New York.

• A business account will keep your business finances separate
• A checking account will keep your payments received or sent organized
• It will also organize accounting records and thus ensure a clear audit process
• It will ensure easy filing of your tax return
• Depending on the bank, you will be able to leverage overdraft protection

8. Report and pay taxes

When you file a sole proprietorship in NY State, you have to keep in mind that for tax purposes, you and your business are the same. As a result, you will not be required to file tax returns separately for your business. Instead, you will have to report the income earned through your personal tax return. You have to report all income earned during a year to the New York State Tax Department using a Federal 1040, Schedule C, Profit or Loss from Business (Sole Proprietorship) form.

Ready to Start a Sole Proprietorship Business in New York

A sole proprietorship is one of the simplest forms of businesses that you can start. It is a type of unincorporated entity and you can start a sole proprietorship in New York without having to register with the Division of Corporations, NY State Department. If you are wondering how to start a sole proprietorship in NY then IncParadise can provide you assistance regarding the formation of your new business in NY.

Business License in New York

A New York business license is a type of permit that is issued by the state or any government entity to a variety of businesses. The license or permit helps a new business to conduct operations in the state. The type of license is often dependent on the business activity and this criterion may vary from one state to another. There are some businesses that might not require a license at all while others may need to obtain multiple licenses or permits. In order to understand how you can obtain a New York business license, it is important to identify whether you need one and what types of business activities or businesses actually require one.

Who needs a New York business license?

Normally, every business that has or is planning to generate a revenue stream in any state of the USA will need to obtain a business license, permit, or tax registration to conduct its business legally. The said business will have to be compliant with the licensing regulations as defined by the Federal or state government. If you are planning to operate your business in New York then you will be required to apply for and obtain a New York business license.

• If you are operating a brick-and-mortar business like a retail store or an accounting firm
• If you are selling goods or are in the manufacturing business
• If you are providing a service that according to state laws require you to apply for a license
• If you are planning to operate an e-commerce store or an online business then a different category of licenses will be applicable

What business license do I need in New York?

If you are planning to form a startup in New York then your business may require a single license or permit or multiple licenses. The type of New York business license required by your company will vary according to the category in which your business is classified. The three categories for New York business license and permits are:

• Industry – The industry that your business is classified under like Agriculture, Transportation, Health, Recreation, and Manufacturing among others.
• Occupational – The professional or occupational skills required by you or your employees to aid in the operation of your business like certified public accountant, interior designer, or landscape architect.
• Local – The city or county you are planning to operate your business from like Manhattan, Brooklyn, Long Beach, and New York City among others. You may be required to be compliant with the zoning requirements of the city or county.

What business licenses will you need in New York?

Obtain Professional Licensing

One of the important forms of New York business license is a professional license or an occupational license. A professional license is considered to be a type of license, certificate, permit, registration, or even a qualification that enables a person to pursue a specific professional or business legally. You can apply for and obtain a New York business license or professional license from the New York Office of the Professions. The type of license required would depend primarily on the profession chosen by you.

What is a New York State professional license?

The professional license is a type of New York business license that has rules and regulations which are different from that of general business licensing. A professional license indicates that a person or an individual has met the minimum requirements as mentioned by the NY Education Law for entering a practice or using a professional title within the state. Once you obtain a New York business license or professional license, it will be valid for the life of the applicant unless it is annulled, revoked, or suspended by the NY Board of Regents.

Which professions require licensing?

The New York State Board of Regents is responsible for overall or general supervision of all types of education related activities within the state including the licensing of professions. Medicine was the first profession to be licensed by the New York State Board of Regents. Today, there are over 30,000 business entities indulged in professional practice. If you want to obtain a New York business license to conduct professional practice then there are 50 professional areas that you can choose from.

• Architecture
• Athletic Training
• Dentistry
• Mental Health Practitioners
• Social Work
• Veterinary Medicine
• Pharmacy Establishments
• Engineering
• Geology
• Nursing
• Interior Design
• Public Accountancy

Other New York Business Licenses

If you are an entrepreneur or a small business owner thinking of starting a new business then one of the primary requirements is that of a New York business license. The type of license you will require is dependent on several factors like profession, physical address of the business, and activity. Apart from professional licenses, there are other categories of New York business licenses and permits and one of the most important is the seller’s permit.

Seller’s permit (Certificate of Authority)

The seller’s permit is often known as the General Vendor license or even the certificate of authority. If your business will be transacting in New York or will be selling merchandise, products or taxable goods and services in this state then you will be subjected to sales tax. Hence, you will be required to register with the Department of Taxation and Finance and obtain a Certificate of Authority, which is a form of New York business license also known as the seller’s permit.

• Regular Certificate of Authority – This type of New York business license is required by those businesses that plan to make taxable sales from a shop, store, home, or any facility owned or rented by the business.
• Temporary Certificate of Authority – This is applicable for those businesses that are expected to make sales in not more than two consecutive taxable sales quarters within a 12 month period in New York.

Local New York Business Licensing

There are five boroughs and 62 counties in New York and if you are planning to start a business here then you will need to obtain a New York business license according to the industry and also on the local or county level. The process for obtaining a New York business license will vary depending on the type of license required by your business. There are over 30 different licenses and permits that are issued by the Department of State and to determine the permits required, you need to conduct a New York business license search. The New York Business Express website provides detailed information about various state licenses and how you can obtain them.

Example: If you plan to start food service establishments in Suffolk County then you will need to identify the type of establishment like a Restaurant (with or without seating), Delicatessen, or even an in-home catering service. After conducting a New York business license search, you will be able to identify your establishment type. The next step will be to apply for a FOOD Establishment Permit Application with the Suffolk County Department of Health Services along with an annual New York business license and permits fee. The fee would be different for different establishments like the fee for a Delicatessen is $425 while that of an in-home catering service is $130.

Building & Zoning Permits

One of the important aspects of conducting business is to ensure you have the required New York business license and permits including the building and zoning permits. All businesses are not required to obtain these permits and you can conduct a New York business license search to identify whether your business requires such permits.

Need any Assistance in Obtaining Your NY Business License?

If you are planning to start a new business in New York then one of the foremost requirements is ensuring you obtain a New York business license. A license or permit will provide you with the authorization to transact business in the state. Depending on the type of business activity, industry, and county, your company may require a single New York business license or multiple licenses and permits.

Naming your New York LLC

You can choose to form different types of business in New York although one of the most popular forms is a Limited Liability Company. So if you are planning to form an LLC then you will also need to create a business name and conduct a New York business name search to ensure its availability. There is a process involved when it comes to naming your business and it is extremely important to follow New York business name rules for the same. The steps for naming your New York LLC include:

• Think of a business name that is simple and connects to your business
• Ensure the said name is compliant with New York business name rules for LLC
• Conduct a New York LLC name search with the State Department database
• If it is available then reserve the name with the state

General New York LLC naming rules

One of the key aspects of forming a limited liability company is the business name and it is important to conduct a New York LLC name search to identify name availability and reserve the said name accordingly. When you are brainstorming a name for your LLC, it is essential to follow the New York business name rules or guidelines as provided in the Limited Liability Company Laws of the state. Let’s look at the naming rules that you need to be compliant with.

• The name of a New York limited liability company should contain the words “Limited Liability Company” or abbreviations like “L.L.C.” or “LLC” pursuant to NY LLC L § 204 (2020)
• According to the New York business name rules, the chosen name should be different and hence can be distinguished from the name of:
  • A domestic limited liability company,
  • An authorized foreign limited liability company
  • A fictitious name or DBA of any authorized foreign limited liability company
• The chosen LLC business name should be different from the name of any of the following:
  • Domestic and foreign business corporation
  • Domestic and foreign not-for-profit corporation
  • A Fictitious name or DBA of any authorized Business Corporation or not-for-profit Corporation
• In order to conduct a New York LLC name search, you need to ensure the chosen name does not contain any word or phrase or even abbreviation that is restricted or prohibited by any statutes of this state
• The LLC name should not also contain certain terms like “kindergarten,” “college,” “education,” “academy,” “institute” or “museum” among others.

New York LLC business search

When you form a new LLC in New York, one of the pre-requisites of new business formation is identifying and reserving the name of the company. Once you have identified a name for your company, the next step is to conduct a New York LLC name search through the database of the Division of Corporations.

• Search by entity name like XYZ LLC
• Search by entity type (active, inactive)
• Search by entity list (LLC, Inc, etc.)

Are you ready to form a New York LLC?

Naming your New York Corporation

A business corporation is one of the most commonly favored business types for startups and entrepreneurs. You can also transform your new business idea into a New York corporation to leverage various advantages and benefits offered by the state. In order to incorporate, you will be required to identify a business name by conducting a New York Corporation name search to ensure the availability of the said name.

• The name of your corporation should be easy to pronounce
• The name should have a connection to your products, services, or industry
• The name should take into account restrictions as mentioned in New York business name rules for a corporation
• Conduct a New York Corporation name search with the State Department database
• If the said name is available then reserve the name with the Division of Corporations

General New York C & S Corporation naming rules

A C-corporation is a traditional corporation and an S Corporation is a tax election. Whether you form a C Corp or an S Corp, the New York business name rules will be the same for either form of business. One of the important aspects to consider before you start the process of New York Corporation name search is the guidelines provided by the New York Laws for BSC – Business Corporation. Let’s take a quick look at the naming rules for a C Corp or an S Corp.

• The name of a New York C or S Corporation should contain the words “corporation”, “incorporated” or “limited”, or abbreviations like “Inc.” or “Corp” pursuant to NY Bus-Corp L § 301 (2020)
• According to the New York business name rules, the chosen name should be different and hence can be distinguished from the name of:
  • Any other domestic corporation
  • A fictitious name or DBA of an authorized foreign corporation
• The chosen business name should be different from the name of any of the following:
  • Domestic and foreign limited liability companies
  • A Fictitious name or DBA of any authorized foreign limited liability companies
  • Names of domestic and authorized foreign limited partnerships
• In order to conduct a New York Corporation name search, you need to ensure the chosen name does not contain any word or phrase or even abbreviation that is restricted or prohibited by any statutes of this state
• The name of a corporation should not also contain certain phrases or words like “board of trade,” “chamber of commerce,” “urban relocation,” “insurance,” “bank” or “endowment” among others.

New York Corporation business Search

If you are planning to incorporate in New York then one of the primary requirements related to new business formation is choosing a business name and reserving it. Once you have chosen a company name, the next step is to conduct a New York Corporation name search through the database of the Division of Corporations.

• Search by entity name like ABC Inc.
• Search by entity type (active, inactive, suspended)
• Search by entity list like Corporation

Want to register a Corporation in New York?

Need any Assistance in New York Business Name Search?

The process of New York business name search is the key to the formation of a new business in the state. We at IncParadise possess knowledge regarding the New York business name rules, which as a new business your name needs to be compliant with. If you need to check New York business name availability then we can help you with the process.

New York LLC Annual Filing Requirements

Once you have formed an LLC or incorporated a new business, the next step is to ensure your company meets all annual compliances as mentioned by the New York State Laws for business corporations and limited liability companies. This takes into account the filing of the New York Corporation annual requirements. It is important to note that different states in the US have different annual requirements although most states will require businesses to file annual taxes and an annual report. This report is known by different names like an Annual Franchise Tax Report, Statement of Information, Business Entity Report, and the New York biennial statement.

File LLC Biennial report

One of the important New York LLC annual requirements is the filing of the annual report also known as the Biennial Statement or Biennial Report. The biennial statement is a legal document that has to be filed by both domestic and foreign LLCs operating out of New York. The filing of a New York LLC annual report is governed by Section 301(e) of the Limited Liability Company Law.

What does it include and how can you file the LLC Biennial report?

The New York LLC annual report or biennial statement is one of the important annual requirements for a limited liability company registered in the state. This legal report contains important information regarding the said company and helps in keeping the LLC business records up to date with the Department of the State. The report contains the following information:

• Department of State (DOS) Case ID (DOS ID)
• Filing Period
• Name of the limited liability company
• Principal address of the LLC
• Owners name and address
• Name and address of the New York registered agent handling service of process
• The street address of owner or members

Do you want to file a New York LLC annual report?

What is the due date for filing?

As a part of the New York LLC annual requirements, you have to ensure the filing of the biennial statement happens during the stipulated time. The filing period or due date for a limited liability company is the calendar month in which the Articles of Organization or Application for Authority (Foreign LLC) was filed. The New York biennial statement has to be filed once every two years.

Penalties if fail to file

If you register an LLC in New York then the state considers biennial reports as important annual compliance documents. If at any given point in time if you fail to file the New York LLC annual report then there are no penalties but your company will not be in good standing with the state department. At the same time, the Department of State may also conclude that your said LLC is delinquent if you are unable to file this report within the filing period.

NY LLC Taxes and Annual Fee

The New York LLC annual requirements can vary according to the type of Limited Liability Company you have formed. Apart from the New York biennial statement, there are annual fee and tax requirements that a new business needs to file in the state. The requirements your company needs to be compliant with include:

• If your LLC is a disregarded entity then you will be required to file annual tax returns in New York if your company shows income, gain, deduction, or loss from state sources. You will be required to file an IT-204-LL form with the Department of Taxation and Finance.
• If you form an LLC to be treated as a business corporation for the purpose of federal income tax then you will be required to file a NY State corporation franchise tax return.
• If your LLC is manufacturing or selling products then you will be required to file sales tax or sales and use tax as a part of annual tax returns in New York.

New York INC Annual Filing Requirements

If you are planning to form a business corporation then there are several annual maintenance requirements that you will need to fulfill. Annual compliance is required in all states of the USA and New York Corporation annual requirements revolve around the filing of taxes and an annual report. The annual report is also known as a New York biennial statement and is an important legal document. The annual filings are governed by the 2020 New York Laws, BSC – Business Corporation.

File Corporation Biennial report

One of the important New York Corporation annual requirements is the filing of the annual report, which is also known as the Biennial Report or Biennial Statement. A biennial statement is a legal document, which needs to be filed by both domestic and foreign business corporations operating in the state. The filing of a New York biennial statement is governed by Section 408 of the Business Corporation Law.

What does it include and how to file the Corporation Biennial report?

The biennial statement is a mandatory New York Corporation annual requirement and has to be filed pursuant to NY Bus-Corp L § 408 (2020). It is a legal document that contains business-related information pertaining to the corporation. The information set forth in this report is:

• Department of State (DOS) Case ID (DOS ID)
• Filing Period
• Name and address of the chief executive officer
• Street address of its principal office
• Number of board of directors
• Name and address of the New York registered agent handling service of process
• The number of women directors on the board

Wondering how to file an annual report for a New York Corporation?

What is the due date for filing?

As a part of the New York Corporation annual requirements, you will need to file the annual report during a specified time period. The filing period for a corporation is the same as that of an LLC, which is the calendar month in which the Certificate of Incorporation or Application for Authority (Foreign Corporation) was filed. The New York biennial statement has to be filed once every two years.

Penalties if fail to file

Once you incorporate in New York you will have to maintain compliance with the state by ensuring all New York Corporation annual requirements are met. If at any given point in time, you fail to file your annual report within the due date then there are no penalties as such. If the New York biennial statement has not been filed for a period of two years then such a company will be declared as delinquent on the records of the department of state pursuant to NY Bus-Corp L § 409 (2020)..

NY Corporation Taxes and Annual Fee

When you form any type of business there are some state requirements that you have to meet in order to share a good standing with that state. Similarly, New York Corporation’s annual requirements require you to file taxes or annual returns to maintain compliance. The annual tax returns New York applicable to a business corporation are:

• If you have incorporated in New York or participated in certain business activities in the state then you may be required to file New York State corporation tax return. This tax is filed using Form CT-3 or General Business Corporation Franchise Tax Return.
• If your corporation is into manufacturing or selling certain goods then you will be required to file sales tax returns or sales and use tax as a part of annual tax returns in New York.

Need any Assistance in Filing New York LLC or INC Biennial Reports?

If you form a business in New York then there are different annual requirements to fulfill depending on the type of business you form. The New York biennial statement or the annual report is one of the most important documents considered a part of LLC or New York Corporation annual requirements.

Online Business in New York

The retail e-commerce industry and revenue have grown by leaps and bounds in the United States from $424.9 billion in 2017 to $767.7 billion in 2021. The percentage change in retail e-commerce sales growth was 31.8 percent in the USA in 2020 as compared to a worldwide growth of 27.6 percent. This only hints at the possibility of long-term growth for those planning to start an online business in New York. Apart from this, there are also several advantages that you can leverage if you start an eCommerce business in NYC. You can start your online business in New York as a Limited Liability Company or as any other form of business like a corporation or even a sole proprietorship.

What are the biggest benefits of doing business online in New York?

If you are planning to start an online business in New York then there are several advantages you may have over a brick and mortar business. The state of New York also provides several benefits to a small business in terms of overall cost of setting up and operating such a business. You can start an online business from home in NYC or even from co-working spaces. Let’s look at some of the biggest benefits:

• Infrastructure for eCommerce – Infrastructure is an integral component when it comes to making your business stand out or achieve the intended growth. Infrastructure for an online business or e-commerce is a little different from that of a traditional brick-and-mortar store. The good news is that if you start an eCommerce business in NYC then you can benefit from high-speed internet access, keeping in mind this is key to any online business. A report by broadbandnow.com reveals that 98.3% of New Yorkers have access to high speeds of 100mbps or faster.
• Low Business and Operating Costs – If you are taking your business online then one of the biggest benefits is the lower operational costs. If you want to start an eCommerce business in NYC then all you need is an operational website along with an integrated payment gateway so that customers can transact from the convenience of their home. This also means that you don’t have to buy or rent a commercial space and work straight out of your home thus cutting down overhead costs as well as costs associated with utility, space, etc.
• Other Salient aspects – There are several other benefits that you can leverage if you are planning to start an online business in New York. Some of them are:
  • Global access
  • 24/7 Availability
  • Improved customer service
  • Flexibility of operating from anywhere
  • Provide services in real-time
  • Manage your business from remote locations

Top online business ideas in NYC

Online businesses and e-commerce has become a megatrend as it benefits businesses of different sizes through lowering capital costs while providing a better consumer experience. Whatever type of business you operate over the internet, you will need an online business license in New York to ensure it runs smoothly. There are a variety of business ideas that you can choose from now that internet marketplaces have really opened up. Some of them are:

• Service Based Company – You can provide a wide variety of services and using the internet, reach out to a global audience depending on the type of service being offered. You can start an online business from home in NYC to provide such services. These services can be targeted as a local audience as well as to customers based overseas or at a remote location. Some of the top services include:
  • Content Development and Management
  • Application Development
  • Online dating services
  • Mass media and Digital Marketing
  • Financial Services like digital payment services
  • Online personal assistant
  • Stock or foreign currency trading
  • Dropshipping
• Product Based Company – You can start an online business in New York to deliver a wide variety of products. There has been a paradigm shift and gone are the days when people would have to walk into a retail outlet to purchase goods from electronics to food. Due to the higher access to the internet and millions of websites and applications; you can order just about any product online. This is an important reason why entrepreneurs prefer to start an eCommerce business in NYC. Some of the top business ideas in this segment are:
  • Fashion and Apparel
  • Beauty and Personal Care
  • Entertainment including e-books
  • Home-based bakery
  • Virtual thrift shop
  • Electronic goods sale and repair
  • Any commoditized products
  • Self-created brands of products
  • Health-conscious food
  • Pet food

Starting an Online Business in New York

The future of online business marketplace or eCommerce seems quite bright as social media platforms have become major influencers in reducing the B2C (business to consumer) gap. You can start an eCommerce business in NYC or a home-based business with ease due to the flexible eCommerce environment and availability of many business resources. Of course, there is a process towards setting up a business online successfully and ensuring you apply for the right online business license in New York.

1. Prepare your New York online business idea and plan

You can start an online business in New York but you need to have a business plan in place first. A business plan is created based on an idea of what you are planning to sell or provide to your customers. Once you have an idea then you need to take into account the various factors that will help you to convert your idea into a sustainable online business. Even if you start an online business from home in NYC, you will need to create a business plan based on the resources you have and an in-depth study of the market dynamics. Some of the important components of a New York online business plan are:

• Executive summary
• Company overview
• Online demographic profile
• Market analysis
• Products or services
• Online revenue model
• Social Media Marketing plan
• Operations plan
• Logistics and Shipping (if required)
• Financial plan

2. Choose your New York online business name

Choosing a proper business name is quite an important step towards building your online business. The name is crucial as when you start an online business in New York, your customers are going to identify your brand, products or services with the business name. The name is an identity and hence is used for purposes of marketing, branding, and sales. This is not all; the new business formation process requires a company name. There is certain business naming guidelines that you will be required to follow and they are:

• The naming guidelines will vary according to the business structure. So if you start an eCommerce business in NYC as a corporation then it should contain words like “corporation” or “incorporated” or abbreviations like INC. or Corp., pursuant NY Bus-Corp L § 301 (2020)
• The chosen business name should be distinguishable from any other names existing in the database of the NYS Department of State, Division of Corporations. This is made possible by conducting a name availability search.
• If your chosen name is available then you will need to reserve it by filing the Application for Reservation of Name along with the appropriate fee.

3. Register your online business with NY SOS

Whether you start an online business in New York from your home or operate it out of a retail store or commercial space; one of the important requirements is to hire a reputable registered agent. The NY business law makes it mandatory to designate and continuously maintain a registered agent in the state. A registered agent plays several important roles right from providing service of process to ensuring your company is in compliance with all requirements of the Department of State.

Start your online business in New York today!

4. Obtain all necessary licenses and permits for online business

Once you have applied for incorporation or registration of your new business, the next step is to make it operational. This can be made possible by applying for and obtaining an online business license in New York. Your business may require a single license or multiple permits and licenses depending on the location and activity the business is involved in. If you start an online business from home in NYC, you may still require certain permits. These licenses and permits can be categorized as under:

• Licenses and permits based on the industry your business activity is categorized under
• Local or County Licenses and permits
• Professional Licenses offered through the Department of State.

5. Buy website domain and build an eCommerce website

Since you are planning to start an online business in New York, it is important for your business to have the proper online presence. This is possible through the following steps:

• Choose a domain name – The domain name can be the same or similar to the name that you have reserved during new business registration.
  

  For Example: If you want to start an online business from home in NYC that sells cookies made fresh at home then you can use a name like “cookie Jar”. You can reserve this name with the state and also look for a domain like cookiejar.com or cookiejar.org.

• Choose a website hosting – If you want to start an eCommerce business in NYC then the right hosting matters. When choosing a hosting provider there are certain factors to be taken into consideration like hosting servers and plans, customer support, security encryption, bandwidth, root access, payment gateways, email accounts, shopping cart, and control panel among others.
• Create a Website – You can have your website designed by a professional web designer or choose an existing template or use an e-commerce website builder. In order to create a website, you need to have your images and content ready so that you can start an online business in New York as quickly as possible. It is also important to ensure that the website is available for all devices like a computer as well as a smartphone.

6. Get EIN and File your taxes

An employer identification number or EIN is also known as the business tax ID and this is a unique nine-digit number that is issued by the Internal Revenue Service (IRS). Most forms of businesses would need to obtain an EIN for tax purposes including those who start an online business in New York. This tax ID is also known as the Federal Employer Identification Number (FEIN) and has several other benefits like helping you to obtain a business loan and making the process easier to open a business bank account if you plan to start an eCommerce business in NYC.

7. Open a bank account

Apart from obtaining an online business license in New York, you will also need to have a business bank account in order to make an e-commerce website or company operational. Normally, if you already have an EIN, it is easier to apply for a bank account. There are several benefits of operating a business bank account but the most important is that it will help in ensuring your business income and expenses are kept separate from your personal income and expenses. This can further ensure your tax calculation and filing of returns are easier.

8. Comply with taxes and other regulatory requirements

After you start an online business in New York, you will have to maintain annual compliance and meet all necessary state requirements. These include filing annual tax returns in the state. Some of the important regulatory requirements include:

• Whether you start an online business from home in NYC or from a brick and mortar office, you will be required to file a Biennial Report also known as the annual report. This has to be filed once every two years with the New York Department of State – Division of Corporations.
• Most businesses will be required to obtain an online business license in New York. In order to keep your online business operational, you will need to renew these licenses and permits from the respective authority.
• If you start an eCommerce business in NYC then you will be required to collect sales tax. You will hence be required to file sales and use tax in the state, which is a total of 8.875 percent.
• You may be levied other forms of taxes depending on the specific business activity.

9. Market your business

Marketing is an important aspect of every new business and although the marketing tools may be the same, the strategy will be different for an eCommerce company. When you start an online business in New York, the entire marketing strategy will revolve around reaching your customers, creating a brand value, and revenue generation. You will be required to incorporate different tactics based on what you are offering, competition, and the customer demographics. Some of the tactics that will bear result if you start an online business from home in NYC are:

• Boost your online presence and create a strong digital engagement through various social media channels
• Create Search Engine Optimized (SEO) content for your blog or website
• Introduce and promote visuals like videos and images that help in strengthening your product, service or brand
• Advertise on relevant social platforms using engaging imagery and interesting content
• Create meaningful partnerships with complementary brands for cross-promotion
• Participate in different business-related online events including virtual conferences and webinars
• Integrate mobile commerce (m-commerce) to reach out to your customers

Looking to start an online business in New York?

You can start an eCommerce business in NYC with ease due to the availability of high-speed internet access for businesses as well as customers. The online marketplace is constantly evolving and hence you need to have a strong digital marketing strategy in place. Having a great business idea and turning it into a growing business is very much possible and IncParadise can assist you with ensuring you are able to start an online business in New York with ease.

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.

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

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.

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.