In New York State, starting a Limited Liability Company (LLC) is simple with a few documents, a waiting period, and paying state filing fees.
An LLC combines all the primary benefits of corporations, partnerships, and sole proprietorships. Moreover, it simplifies management, protects you from personal liability, and offers tax advantages.
The filing process varies by state, so understanding the LLC formation requirements will help streamline your process. With these six steps, you'll be on your way to start an LLC in New York.
Table of contents:
- Step 1: Name Your LLC
- Step 2: Appoint a Registered Agent
- Step 3: File and Submit the Certificate of Formation
- Step 4: Obtain a State Certificate of LLC Registration
- Step 5: Create an Operating Agreement
- Step 6: Get an Employer Identification Number (EIN)
- Costs to Start an LLC in New York
- Last Steps
Ready to get started with your LLC in NY? Let's get going.
Step 1. Name Your LLC
The first step in forming your business is choosing a name. Ideally, it should represent your brand, and customers should recognize it easily. It can be anything you like. But whatever name you choose, ensure it conforms to New York's LLC state guidelines, including:
- It says LLC (Limited Liability Company, or LLC)
- A name that is unique from other businesses
- It doesn't imply government affiliation
- It can't be confused with any government agency or department
New York also restricts several words and phrases for specific business names, and you might need approval from other state agencies.
Search the New York Corporation and Business Entity Database to see if your preferred LLC name is available. Alternatively, you can contact the New York State Department of Justice Division for more assistance. Please note that each search request incurs a $5 fee.
Choosing a business name goes beyond state guidelines; consider selecting a domain name that aligns with your business identity. Customer ease and brand consistency depend on it. While an exact match isn't essential, similarity is key to preventing confusion and ensuring customers find your site.
If you've found an ideal business name but aren't ready to form an LLC, reserve it promptly to avoid losing it to others. Consider using a DBA (assumed name) in New York to gain more marketing flexibility.
Step 2. Appoint a Registered Agent
Your LLC requires a registered agent to serve as the primary contact for the company. They receive lawsuits, tax notices, and compliance reminders on your behalf. Generally, for LLCs in New York, the Secretary of State serves as the default agent for the service of process (also called a registered agent).
But you can assign yourself as an individual or an organization if you prefer. To appoint your agent, you must file a Certificate of Change with the state department and pay a $30 filing fee through money order, MasterCard, Visa, or American Express.
If you appoint someone, make sure they meet the following criteria:
- Must be a New York resident with a physical address
- Must be 18 or older when assigned
- Licensed to do business in New York (for registered agent services).
- Is available in person to receive documents
Choose a registered agent vs. become one
There are many things to consider when selecting a registered agent service for your LLC. If you choose to serve as your own and primarily do business from your home, your home address becomes tied to the business, which means that:
- Your home address becomes public information
- You may receive more marketing or junk mail from companies who purchase mailing lists from the Secretary of State
- In the event you are served legal papers, your family, friends, and neighbors may witness this, which can be embarrassing
- Anytime you move, you will have to update your address with the Secretary of State
LLCs that have not appointed a registered agent risk losing their status and the added asset protection that comes with owning an LLC. You may also miss tax and compliance deadlines or not know that your business is being sued. This could result in added fines or legal consequences that negatively impact your business.
Step 3. File and Submit the Certificate of Formation
In New York, a limited liability company must file an Articles of Organization or a Certificate of Formation. A certificate of formation defies the LLC's purpose, location, and members. You file the Articles of Organization with the Department of State under Section 203 of the Limited Liability Company Law.
To file, send the Articles of Organization and $200 filing fee to the New York Department of State, Division of Corporations, 99 Washington Avenue, Albany, NY 12231. You can also file online at the Department of State's website, and your filing receipt will be emailed to you within minutes of filing.
Step 4. Obtain a State Certificate of LLC Registration
Following the filing and approval of the LLC's formation documents, the state will issue you a certificate confirming the LLC's formal existence. For six consecutive weeks, you must advertise your LLC formation notice in a daily and weekly newspaper in New York. It has to be done within 120 days of formation.
Publication must be in a paper approved by your county. To find out which newspapers are accepted, contact your county clerk. You must ensure that your LLC name on the notice corresponds to the name on the Department of State's records. Each newspaper company will send you an affidavit of publication and charge you for publication.
To complete the publication process, you must submit your LLC's Certificate of Publication to the New York State Department with a $50 filing fee. Failure to submit the Certificate of Publication within 120 days will revoke your LLC's business license.
Additionally, the certificate will allow you to get an Employer Identification Number (EIN), business licenses, and bank accounts for your LLC in New York.
Step 5. Create an Operating Agreement
The next step is to draft an operating agreement detailing your new LLC's rules, regulations, and procedures. New York LLC operating agreements (OA) are legally binding documents all LLC members sign.
Members of an LLC can enter into an operating agreement before, during, or within 90 days after filing their articles of organization under New York LLC law. Operating agreements offer many benefits:
- You avoid legal trouble under Section 417 of the state's LLC law.
- An operating agreement specifies how your New York limited liability company will function, which can reduce business disputes between members.
- The Small Business Association (SBA) says it can help maintain your LLC's limited liability status.
- It makes your company more credible, making loans easier. Business owners often have to submit an OA when they apply for a loan or open an account with a financial institution.
- It may sometimes replace default LLC laws in New York.
- New York LLC operating agreements: what to include
Step 6. Get an Employer Identification Number (EIN)
The Internal Revenue Service (IRS), a federal government division, assigns your LLC an Employer Identification Number (EIN). Like a Social Security Number, the EIN identifies your business to the IRS.
Before applying for an EIN, determine how many LLC members you have. The IRS and state require paperwork for changing from a single-member LLC to a multi-member LLC (or vice versa). Also, you'll need to transfer LLC ownership and amend your Operating Agreement.
Applying for an EIN online if you have an SSN (Social Security Number) or ITIN (Individual Taxpayer Identification Number is the simplest and fastest filing method. It takes about 15 minutes to complete the online application, which generates your EIN.
Costs to Start an LLC in New York
Depending on your LLC, the cost of starting an LLC in New York will vary, but forming an LLC in New York requires fees for:
- Corporation Articles – $200
- A Certificate of publication -$50
- Newspapers publishing notices- varies
- Name reservations $20
To get things done faster, you can pay:
- $25.00 per document for a 24-hour turnaround
- $75.00 per document for same-day processing
- $150.00 per document Processing within 2 hours
Last Steps
Open a Bank Account for Your LLC in NY
It may seem intuitive for new business owners, especially those with single-member LLCs, to use their accounts for business transactions. However, if you use your account for business transactions, you may report your taxes incorrectly, which does not work well for long-term accounting purposes.
By contrast, a business bank account keeps your finances separate from your company's, making bookkeeping easier.
Get Permits and Licenses
Depending on your industry, you can search for licenses after forming a New York LLC online. Permits and licenses in the state fall into the following categories:
- Local licenses and permits – These are issued by the city or county where you start your business. For example, you must check with the Suffolk County Department of Labor, Licensing, & Consumer Affairs about licensing requirements to form an LLC in Suffolk County, NY.
- Professional licenses – For example, starting a cosmetology clinic requires a State Department of State Cosmetologist license.
New York State License Center, Division of Licensing Services, and NY Office of the Professions are all reliable sources of valuable license information.
Federal and State Income Taxes
Your LLC must be tax-compliant and in good standing by paying the appropriate taxes. LLCs are treated as disregarded entities in New York and taxed as sole proprietorships or partnerships by default. However, federal income tax reporting differs. Multi-member LLCs report federal income taxes using Form 1065, while single-member LLCs use Form 1040 Schedule C.
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Last updated: Apr 2024