Author Dominic Townsend
Posted Mar 3, 2023
Forming a Limited Liability Company (LLC) in New York can be a great way to start or grow a business. This article will help you understand how to form LLC NY and discover the advantages of forming an LLC in the state of New York.
An LLC is a type of business entity that combines some of the benefits of both partnerships and corporations. It offers limited personal liability, meaning as long as members meet their obligations to pay taxes, they won't be held personally responsible for any debts or liabilities incurred by the company. The tax advantages offered by an LLC depend on the number of members, but generally it's beneficial because you don't have to pay taxes twice – once at the corporate level and once again when profits are distributed to members.
In the state of New York, forming an LLC is relatively straightforward, but there are certain steps that must be taken in order for it to be legally recognized by state authorities. With this article, you'll learn how to form an LLC in NY so that you can take advantage of this type of business structure and reap all its benefits!
Discovering Advantages of forming an LLC in New York State
Forming an LLC in New York State is an important decision for any business owner. An LLC, or Limited Liability Company, offers many advantages compared to a sole proprietorship such as legal protections from personal legal exposure and the ability to grow through investments or partners. Startups especially prefer this entity structure over other options due to its flexibility and robust legal protections.
Forming an LLC in New York: 8 Easy Steps
Forming an LLC in New York can be a complicated process, but with the right steps, it doesn't have to be. Here are 8 easy steps to forming your LLC in New York and satisfying all permit requirements: Begin by deciding on a unique business name, then registering your LLC with the NY Department of State, obtaining an employer identification number from the IRS, filing the Articles of Organization, preparing an Operating Agreement, appointing a Registered Agent to accept legal documents on behalf of the company, obtaining any necessary permits or licenses for your business activities and lastly, submitting periodic reports and paying taxes as required by law.
1. Step 1: Choose a name for your LLC
Choosing a name for an LLC is one of the most important steps when forming an LLC in New York. It's important to be aware of state guidelines and regulations, and make sure that the name you choose makes sense for the type of business entity you are trying to create. For example, many sectors and professions such as doctor or college require written request before using those words in your LLC name. The New York Department of State also restricts certain words like ‘LLC’ in your LLC name, so it’s best to avoid them.
When choosing a name for your LLC, it's also worth checking the Business Entity Database, Yelp listings, and Yellow Pages to see if your desired name is already taken. If it is already taken, you can reserve a similar-sounding name with the New York Department of State by paying a reservation fee and submitting a written request at least 60 days before you want to form your LLC.
2. Step 2: Provide an address for receiving official mail
Forming an LLC in New York requires a registered agent to accept official mail on behalf of the LLC. You can appoint a business lawyer as your registered agent, or you can use an online legal service to serve as your additional registered agent. The state will automatically serve the York Secretary of State as the first registered agent for all York LLCs.
Your registered agent must have their own address separate from your LLC’s address. Your registered agent will receive any official mail from the government and forward it to you. It is important to provide a valid address for receiving this official mail when forming your LLC in New York.
3. Step 3: File your articles of organization
The third step in forming an LLC in New York is filing the LLC's Articles of Organization. This document establishes the LLC as a separate legal entity from its owners and includes basic information about the LLC including the name and purpose of the business, names of its owners, and whether it will be member-managed or manager-managed.
In a member-managed LLC, all owners participate in making daily decisions for the business. On the other hand, for a manager-managed LLC, owners select someone to make day-to-day decisions on their behalf. If you're a freelancer creating an LLC in NY, you'll need to fill out a fillable document using black ink on clean white paper and file it with required places along with a one-time nonrefundable filing fee. You may also choose to file online.
4. Step 4: Obtain the proper New York business permits
Forming a limited liability company (LLC) in New York is a great way to start a business, but it’s important to obtain the proper New York business permits before getting started. Operating businesses in New York can be a highly regulated industry, and more than 30 professions require special permits or licensing regulations. State examples include barbers, security guards, healthcare professionals, home inspectors and real estate brokers. Additionally, food service businesses require specific health permits from the city or borough and may also require additional licenses from their county licensing agency.
Aspiring entrepreneurs should take the time to research all of the licensing requirements necessary to operate their business legally in New York. Doing so will help ensure that they can operate their business without interruption and avoid any potential penalties associated with failing to adhere to state regulations.
5. Step 5: Publish notice of LLC formation
New York State law requires LLC formation to be published in two consecutive weeks in two newspapers approved by the county clerk. This notice must match the initial articles of organization and include acceptable contact information for the LLC. For a New York City-based business, this can cost up to a thousand dollars due to steep publishing rates from most New York City newspapers. To save money, many businesses hire a third-party service or use the registered agent’s address in place of their own on the publication notice. Businesses located outside of New York City may be able to find lower publishing rates and still meet the publication requirement set by the New York Department of State within the 120-day timeframe. Once this requirement is fulfilled, businesses can conduct business as usual in line with state department regulations.
6. Step 6: Create an LLC operating agreement
Creating an LLC operating agreement is an important step in forming your LLC in New York. It is a written agreement that establishes the basic company information, legal purpose, tax treatment, and manager information of the LLC. It should include details such as the LLC address, registered agent, member contributions including rights, member meetings, approval rights, member compensation and exit rights. Beyond these basic provisions, it should also cover topics such as company dissolution and other major decisions.
You have 90 days to create an operating agreement after filing your Articles of Organization with the state. You can either create an operating agreement through an online legal service or hire a business attorney to draft one for you. To ensure the formation of your LLC is done correctly and legally, it's best to consult with a lawyer who specializes in business law before signing any documents or making any major decisions.
7. Step 7: Keep your LLC active
Once your LLC is formed, you'll need to keep it active in order to start running your business. This includes having a business bank account, applying for a business credit card, and looking into small business insurance. Additionally, you'll need to consider business accounting software and hiring employees.
LLC's are pass-through entities meaning the paying of federal income taxes falls on the LLC owners. In New York State, there is an annual filing fee required for multi-member LLCs which ranges from $25-$85 depending on the amount of income generated by the LLC. You may also be required to pay federal and state employment taxes if you're selling goods or services and remit any sales taxes collected. For more detailed information on how to keep your LLC active in New York State contact the New York Department of State and submit a biennial statement if necessary.
8. Step 8: Comply With federal requirements, such as obtaining an employer identification number
Forming an LLC in New York requires compliance with federal requirements, such as obtaining an employer identification number (EIN). An EIN is like a federal tax ID and will be required when opening a business bank account and applying for business loans. It is also legally required for single-member LLCs to file form 8832, which determines their federal tax status.
The York Department of State requires all business owners to obtain an EIN in order to complete the formation process. This ensures that the LLC is legally recognized by the IRS and subject to excise tax duties or pass-through taxation, meaning that it is taxed as a separate entity from its owners. By taking care of this step, you are ensuring that your LLC's status is complete and you can start operating your business.
Frequently Asked Questions
How to form a professional LLC in New York?
Forming a professional LLC in New York is easy and straightforward. With the right information and resources, you can create your business quickly and efficiently. Learn more about how to form an LLC in New York with our helpful guide.
How do you get a business license in NY?
If you are looking to obtain a business license in New York, the process is straightforward and can be completed online. To learn more, please refer to the official website of the New York State Department of State: https://www.dos.ny.gov/corps/bus_entity_search.html#lobiz.
How much money does starting a LLC cost?
Starting a LLC typically costs anywhere from $50-$800, depending on the state you're filing in. Learn more about how to start an LLC and get the best rate for your business.
How do I register a LLC in New York?
To register your LLC in New York, you must submit the Articles of Organization to the New York Department of State. For more information on filing requirements, fees and processing times, visit the NY Department of State website.
How do I start a sole proprietorship in NY?
Starting a sole proprietorship in New York is simple! All you need to do is register with the Department of Taxation and Finance and obtain a Certificate of Authority. Download our guide for more information on the steps involved.