Why should you start an LLC in New York?
As much as you don't need an LLC to set up a business in New York, there are tons of benefits that come with setting up one. For instance, if you go the LLC way, you have the flexibility of choosing how you'll be taxed. Your business can be taxed as a sole proprietorship, partnership, etc. Additionally, an LLC is not limited to the number of members (owners) it can have, and with an LLC, you are not personally liable for the limited liability company debts.
However, even with so many pros, it can be frustrating if you don't know how to form an LLC in NY. For that reason, you may want to find out how to set up a business in neighboring Pennsylvania here, or how to start a Limited Liability Company in Ohio. So, how do you set up a New York LLC?
If you are looking for a reliable LLC formation service, you can check our Zen Business review, and if you want to start a business, without any hassle, check out the Wisconsin state LLC forming review, Colorado state LLC forming or Illinois state LLC forming. We also include a guide on how to start a Limited Liability Company in Maryland, or start a Limited Liability Company in NC nearby.
How do I start a New York LLC business?
When you want to form a business in NY, the essential decision you need to make is on the business entity's structure. There is a lot of flexibility in forming an LLC in New York. Check out how it compares to forming a LLC in California in this post.
For instance, you can form a single-member LLC if you want the simplicity of a sole proprietorship but with the benefits of a limited liability company. An LLC in New York protects you from the legal processes emanating from the company's debts and obligations.
Therefore, creditors cannot come for your personal belongings such as cars, houses, etc.
However, for you to form a limited liability company in New York, there are some requirements that you must meet. The New York Department of State determines the eligibility of forming an LLC in New York. The requirements apply across the New York state, meaning you must make sure you follow them whether you are starting an LLC in Albany or New York City.
What are the basic requirements for forming an LLC in NY?
You must meet one of the two requirements.
Either you must be a legal resident of New York or your business must be located in New York.
Note, you may require other business licenses and permits depending on your nature of business and location. For instance, you need special permits to start a daycare or food establishment in NY (see 'How to Start a Daycare').
If you want any legal assistance regarding setting up an LLC, you can check out our Rocket Lawyer review. We also reviewed IncFile LCC formation service.
How much does it cost to form a NY LLC?
To start operations as a New York LLC, you need to file for Articles of Organization. This is the legal document that allows you to form an LLC in New York officially.
You can file the legal document online or by mail, and you need to pay a $200 filing fee to the Department of state.
After filing your Articles of Organization, NY state requires you to publish a copy in two newspapers (one daily and one weekly). The publication requirement should be done within 120 days. You should pay a nonrefundable fee of $50 to the Department of state.
How long does it take to form an LLC in New York?
The actual filling of papers and forms In New York LLC formation may take even 30 minutes.
However, the processing of papers to verify that you meet all the LLC formation requirements in New York can take between four to six weeks.
Now that you know what is required of you in forming a limited liability company (LLC) in New York, which steps do you follow in setting up one?
Step 1: Get a name for your New York LLC business
Choosing a name is the first step you need to complete to set up an LLC business in New York.
Is the step inconsequential?
Although the step seems simple and inconsequential, it is essential as the name of the LLC must meet certain requirements of the NY state.
The name should also be relatable to your business, and it should be distinguishable from other names of corporations and partnerships and any other business in NY. And if your business idea is also as distinguishable as you name, who knows ,maybe you can attract the attention of someone willing to further fund it - learn more about angel investors here.
What are the naming guidelines in New York?
- The LLC name must have the phrase "limited liability company" or its abbreviations, including LLC or L.L.C.
- Your LLC business name should be distinguishable from any other New York LLC, corporation, or partnership
- The name should not be confused with a government agency such as a state department or FBI
- If the name includes restricted words such as a bank, university, or attorney, you require a licensed individual as part of the business. You also need more paperwork
You can also decide to use an alternate name, also known as an assumed name or Doing Business As (DBA). If you wish to use a different name from your business's legal name, you should file a Certificate of Assumed Name with the New York Department of state.
Before going through the application process, it's advisable to submit a written request to confirm your name's availability. You pay a $5 fee for every name that you want the department to search.
If a name is available, you can pay a reservation fee of $20 to reserve a name for 60 days.
Step 2: Get an LLC registered agent in the state of New York
However, you are free to designate someone else, other than the secretary of state, as a registered agent for your business. If you choose a registered agent service, the secretary of state remains the first point of contact between the state and your LLC business.
You should provide a principal address in New York for your LLC business. The secretary of state will send you the following to your address:
All documents for the LLC formation
Service of Process information
Documents related to your LLC taxation
Step 3: File Articles of Organization for the LLC
After getting a registered agent for the LLC business, the next step involves filing the Articles of Organization.
The Articles of Organization is the legal document that establishes your business as a legal entity. It includes basic information about the name of the business, such as:
- The LLC name
- Name and address of your registered agent
- The county the business is located
The Articles of Organization also includes your preferred mode of management for the LLC. If it is member-managed, it means the members are involved in the business's day to day running. If it is manager-managed, it means designate somebody else to make the day-to-day decisions for the business.
To complete the Articles of Organization, you can fill the document on the NY Department of state. Alternatively, you can download it and fill using black ink and white paper for it to be acceptable by the state's recording technology.
You can file the Articles of Organisation online, in-person, by mail, or by fax after paying a $200 filing fee. If you file online, you receive your receipt and acknowledgment immediately by mail.
For a foreign LLC, you must get a registered agent in New York.
Step 4: Fulfil the New York publication requirement
As mentioned earlier, after filing the legal document, the New York Department of state division requires you to publish a copy within 120 days. The publication should be in two newspapers, one weekly and one daily.
Can you publish in any newspaper of your choice?
Not really. The county clerk must approve your choice of the newspaper of the county you select in your articles of organization. After publication, the newspaper publisher will offer you a certificate of publication.
You should then file the certificate of publication together with the affidavits of publication to the New York Department of State, Division of Corporations, One Commerce Plaza, 99 Washington Avenue, Albany, NY, 12231.
If you fail to file a certificate of publication with the New York Division of Corporations, State Records and Uniform Commercial Code, the New York State department will suspend your LLC's ability to conduct business.
Step 5: Prepare an operating agreement for your business
At this point, you are done with most of the requirements for starting an LLC in NY, but you still have a few more steps.
For instance, you need to prepare an LLC operating agreement for the business. According to the department of state, members of an LLC should prepare and adopt an operating agreement before, at the time of, or 90 days after getting the legal documents for operation.
The LLC operating agreement ensures that the members and the managers are on the same page when running the company. It comes in handy in preventing any conflict emanating from business management.
Step 6: Get an employer identification number (EIN)
What is an EIN?
An EIN is a tax identification number from the department of taxation for your business tax purposes.
When you set up an LLC in New York, you must comply with the state's tax requirements. For instance, as an owner, you need to pay an n income tax from your LLCs shares income. If you'll be selling goods, you should collect and remit sales taxes.
Therefore, it is a requirement for limited liability companies to get an EIN.
When do you use the EIN?
- When you want to open a business bank account for the company
- To hire employees
- For state tax purposes
Note, you need to file a biennial statement to update the LLC's contact information with the Department of State in New York every two years. The filing fee for the biennial statement is $9.
There you have it, a step-by-step guide on setting up an LLC in New York. See, it is not a complex process, and you can do it in person to your satisfaction. When filling in the documents, make sure you only fill in the correct details to make the process hassle-free.