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How to Form an LLC in New York

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How to Form an LLC in New York

Thinking about starting a business in New York? If so, you will likely consider using an LLC as a potential company type. It’s one of the most popular types of a company because it can help shield you and its members from personal liability.

It’s important to understand how to start an LLC in New York since it has some distinct requirements.

If you don’t want to navigate the setup process yourself, you can opt to use an LLC formation service.

Let’s look at the steps you’ll need to take to get your LLC up and running. You can then determine how much help you’ll need to finish the job.

Find a Business Name

When forming your LLC in New York, you’ll need a unique name not currently registered with the New York State Division of Corporations.  It’s good practice to do some research and check online to see any other companies with your preferred name. 

You can do a preliminary search through the online Corporation and Business Entity Database. Note that just because you don’t find a corporation with your chosen name doesn’t mean there isn’t one.  This database only includes companies that are already on file with the Department of State. 

To get the official go-ahead, you need to submit a written request to the Department of State, Division of Corporations, One Commerce Plaza, 99 Washington Avenue, NY 12231.  It will cost $5 per name submitted, but this is the only way to be sure your name is available.  Once you’ve got the approval, it’s recommended that you file the response along with your filing documents for reference purposes.

Assign a Registered Agent

When forming an LLC in New York, it must have a registered agent assigned to it.  A registered agent’s mandate is to accept service of process for a business.

They must have a physical street address in the state that operates with regular working hours. They need to accept the company’s official mail and documents such as demands, notices, and service of process. 

It is a crucial part of the process because they receive critical legal notifications and official documents sent to the business.  A registered agent acts as your liaison and will communicate these relevant items to you when required.

There are plenty of options for registered agents as a whole industry has developed around providing these services.

If you do your research, you’ll be able to find a registered agent who can act on your behalf for a very reasonable price.

Filing and Fees

To form your New York LLC, you’ll need to fill out the DOS-1336 form or the Articles of Organization form. It includes your registered agent’s address, signatures of all the LLC members, and a unique name that meets state requirements.  The fees typically cost around $200, with the addition of $50 for the filing of the Certificate of Publication.  You can pay these through a range of payment methods, including cash, check, money order, or credit card.

You will need to have the LLC company operating agreement ready within 90 days of filing your Articles of Organization. Then submit and file the Certificate of Publication within 120 days of filing the DOS-1336 form.

For taxes, New York LLCs are considered corporations (which would require the filing of a New York State Corporation Franchise Tax Return) or limited liability partnerships (which would require the filing of the Form IT-204 or the Partnership Return Form).  There are some associated costs with these filing depending on a range of factors.  For more concrete information, you should consult a local tax practitioner.

Create an Operating Agreement

As part of your LLC filing, all LLC members should adopt a written Operating Agreement. It lays out the rights, powers, duties, liabilities, and obligations of the members between themselves as it relates to the LLC.  This document is to be kept internally within the company rather than being filed with the LLC.  If you don’t adopt one, there is no legal obligation to require one. Still, it is a crucial part of forming an LLC in New York because it sets expectations and responsibilities. It can help to avoid legal headaches down the line if things go sour between members.

This Operating Agreement should be entered into within 90 days after filing the Articles of Organization with the Department of State.  You may also want to consider getting legal advice when drafting this document. It is legally binding and will form the foundation for any disputes that may occur during your company’s operations.

Obtain an EIN

For federal income tax purposes, you’ll need to obtain an Employer Identification Number (EIN). Sometimes referred to as a Federal Tax Identification Number.  You can apply online for this number without charge and receive your number immediately upon completing the application process.  EIN applications must disclose the name and taxpayer identification number of the owner, general partner, or true principal officer.  The applicant must be an individual, not an entity, with the exception of government entities.

The only exceptions to this requirement are when the LLC is a single-member company and has no employees. Then you can use your social security number as you’ll be taxed in the same way as a sole proprietorship.  However, the moment you have an additional employee or any excise requirements, you will need to obtain an EIN immediately.

Get Licenses/Permits

For certain businesses in specific industries, you might require additional business licenses or permits to operate.  The complete list can be pretty extensive, so the best way to identify what you need is to use a business wizard like this one. It will ask you several questions about the business you want to start and then generate a list of all the various permits and licenses you require.

Typically, these additional permits and licenses will be for professional occupations, but there is a wide range of different considerations depending on what you intend to do.  Be sure to get some expert legal advice here if you’re still unsure what you need to operate legally.

Open a Business Bank Account

An important step in forming your LLC in New York is setting up a bank account for the business.

The reason you need to do this is to keep your finances separate from your personal finances. As discussed earlier, one of the goals of an LLC is to limit your personal liability if anything goes wrong with the company. To do that, you need to treat the LLC as its own entity and not comingle personal expenses and finances with the company.

As with your personal bank, a business bank can also provide you with credit card options and other financing options for the business.

The Bottom Line

This article outlines some of the nuts and bolts of forming an LLC in New York. It’s not the most exciting part of starting a company, but it’s critical to do it right.

There are a few more steps to starting an LLC in New York compared to some other states, so you may want to consider hiring a third party to assist. If you want to handle it on your own, just be sure to cover all the bases we discussed here in this article.

By taking your time to appropriately set up your LLC, you will ensure you get the appropriated personal protections associated with this type of company.

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