How to Start an LLC in New York
Starting a new company can be intimidating, but the feeling of running your own business is well worth the hassle. From day one, you’ll have to navigate a new world of responsibilities and requirements, starting with the actual formation of your company. If you’ve decided to start a limited liability company, you’ve made a smart choice: LLCs provide excellent liability protection for owners, while also being relatively simple to maintain.
The formation of new LLCs is handled on the state level, rather than the federal level. For NY entrepreneurs, the process is handled by the New York State Division of Corporations. In the guide below, we will go through all the necessary steps to start an LLC in New York.
Consider utilizing an LLC formation service
Entrepreneurs have two basic options when it comes to LLC formation: Do the work themselves, or hire a company to help. Both methods have advantages and disadvantages.
If you do the work yourself, you will save a bit of money. However, the risk of doing something incorrectly is higher, and the process is a bit more complex.
If you use a service, the process will be much simpler, and error-free, as the service will guide you through each step. The only downside is that these companies charge a small fee.
There are many services that can help form a limited liability company in New York. Two of the best are ZenBusiness and Northwest Registered Agent. Both of these services provide tools and one-on-one guidance to help you navigate the business formation process.
ZenBusiness is known as a more budget-friendly option (starting at just $49). Northwest is a bit more expensive but is known for excellent, personalized service.
Name your new company
Whether you use a service or do the paperwork yourself, the first step will be to find an appropriate name for your business. You want to find a name that is relevant to your business activities, and hopefully memorable for your clients.
Beyond selecting a good business name, keep in mind that the name will need to meet certain requirements:
- The name must contain “Limited Liability Company”, or the abbreviations “LLC”, or “L.L.C.”
- The name must be distinguishable/unique from other companies in the state of New York. You can use this search feature to search a database of existing companies in NY.
- The name must not contain any government-related words or other restricted phrases
- If the name includes restricted financial-related words like “bank” or “trust”, special permission may be required.
Once you have found a name to use, you can move on to the next step. Alternatively, you can also reserve the name for 60 days. This is useful if you like the name, but aren’t yet ready to move forward with the formation process.
Using an assumed name in New York
New York allows for the use of what is called an “assumed name”, or a “doing business as” name (DBA). These are secondary names that are used for branding purposes. They are attached to the existing business entity, allowing the LLC to do business legally under multiple names. Assumed names must be registered before use (and the actual LLC must already be formed in order to attach an assumed name).
For example, “ABC, LLC” could register a trade name for “ABC Plumbing” or “Brooklyn Plumbing”, if those names were available. In this way, businesses can use a single LLC as the parent company for multiple businesses, or simply utilize different branding strategies.
More information on assumed names can be found here.
Choose a New York registered agent
By default, the Secretary of State is the Registered Agent for all newly formed LLCs in New York. This means that notice of lawsuits and other documents will be sent directly to the Secretary of State, who will then forward it to the LLC’s principal address.
You can also choose to appoint your own Registered Agent. This could be yourself, an employee, or a professional Registered Agent service. The only requirement is that the individual or service must have a physical mailing address in New York state.
Sticking with the default (using the Secretary of State as your Agent) may seem like the simplest choice, but it’s not necessarily the best option. This is for a few reasons.
For one, the principal address of the LLC must be published in a local newspaper. If your business is home-based, this means that your home address will be published. If you use a Registered Agent service, you can choose to use their address as the address that is published.
Similarly, because the notice must be published in a local newspaper (in the area of the LLC’s principal address or the Registered Agent’s address), it can be cheaper to use a service. This is due to the high cost of publishing in New York City, where the Secretary of State’s office is. In other words, if you use the default Registered Agent, you will have to pay NYC newspaper publishing costs. If you use a Registered Agent service located outside of NYC, the publishing costs will often be substantially lower.
If you do choose to use a service, two of the best options are ZenBusiness and Northwest Registered Agent. Both have operations in New York and are an affordable and professional way to satisfy the Registered Agent requirement.
Create an LLC operating agreement
Note: This step is optional, but recommended.
Operating agreements are documents that establish operating procedures and ownership structures for new companies. They are internal documents, which means that they are drafted and then kept on file – and aren’t required to be submitted to any agency. As such, the form is optional.
Though optional, most businesses should still have an operating agreement. It’s particularly vital for companies with more than one owner because the agreement can help to prevent future conflict over ownership rights. Even single-member LLCs can benefit from an operating agreement, however.
You can draft an operating agreement using a template provided by a service like ZenBusiness. A local attorney may also be able to help with the process.
File LLC Articles of Organization
The Articles of Organization must be filed with the New York Secretary of State in order to form a new LLC. This can be accomplished online or through the mail. There is a mandatory, non-refundable filing cost of $200 for this service.
To file online
Use the Division of Corporations On-Line Filing System to complete the Articles of Organization. Pay the $200 state filing fee.
To file by mail
Fill out the Articles of Organization and mail it, along with a check for $200 to:
New York Department of State,
Division of Corporations, One Commerce Plaza
99 Washington Avenue
Albany, NY 12231
This page has some more details about filing the Articles of Organization, and the other requirements that you will need to meet.
Satisfy New York LLC publication requirements
New York State limited liability law sets out a unique requirement for new LLCs: They must publish an announcement of their business opening in two local newspapers (one weekly and one daily), for three consecutive weeks, within 120 days of initial formation. The business must publish either a copy of the Articles of Organization or a notice related to the formation of the LLC, including the name of the LLC. More information can be found here.
The newspapers approved for publication will be listed by the County Clerk in the County you have indicated on the Articles of Organization. Check with your local government for a list of options. Newspapers in New York are very familiar with the process, making the process relatively simple (although somewhat expensive).
Once your notice has been published, the newspaper will issue you an Affidavit of Publication. You must then file the Certificate of Publication with the state government, and include the Affidavits of Publication. There is a $50 fee as well – include a check made payable to the Department of State.
The form, along with the Affidavits, should be mailed to:
New York Department of State,
Division of Corporations, One Commerce Plaza,
99 Washington Avenue
Albany, NY 12231
Apply for an EIN
An Employer Identification Number, or EIN, is an important federal tax identification number issued by the Internal Revenue Service and used for tax purposes. It’s a bit like a social security number, except for a business rather than an individual. This number is required in order to hire employees or open a business bank account, so it’s important for all businesses to apply for one.
There is no cost to apply, and the process is simple. Simply fill out this application on the IRS website to obtain your EIN.
Apply for business licenses & permits
New York LLCs will be officially formed after the Articles of Organization and Certificate of Publication have been filed. However, that’s not all that is needed in order to do business legally in NY.
Many businesses will require additional licenses or permits. These could come on the federal, state, or local level – or a combination of all three. In general, businesses in more regulated industries (agriculture, alcohol, medicine, etc.) will require more permits, while simple retail operations will require just a few.
On a federal level, regulated businesses may need specialty permits or licenses.
On a state level, certain permits may be required – for example, liquor licenses or professional licenses for medical service providers. More information can be found here.
Finally, local business licenses may be necessary on the city or county level, as well as health permits and other specialty permits. Check with your local government for details.
New York LLC tax requirements
At this time, you will also want to look into tax reporting requirements in the state.
Businesses planning to sell taxable goods or services should register as a sales tax vendor. Businesses with employees will want to register for unemployment tax accounts. There may also be other specialty tax requirements, depending on the type of business.
Keep your business in good standing
Once your business is formed, you’re not done! There are various ongoing compliance tasks that you will need to handle. You must keep your business in good standing with federal, state, and local authorities – or risk fines, penalties, or even dissolution of your LLC.
The specific requirements that you must satisfy will vary depending on the type of business you run, and the location(s) in that you operate in. In general, LLCs face more reporting requirements than simpler business structures like sole proprietorships. With that said, there are some general tasks that most businesses in New York will face:
- New York Biennial Statement – due every 2 years
- Report new employees to the New York Department of Taxation and Finance
- File state tax returns
- File employer tax returns/payroll taxes
- Collect sales tax and file sales tax returns
- File federal business taxes and federal income tax returns
- File local taxes
- Renew business licenses
- Renew specialty permits
- Keep a Registered Agent appointed
- Notify the Secretary of State of any changes to your business
This list is not comprehensive, so there are other requirements that your New York LLC may face. Business owners should do their own research to ensure they are ready for all relevant compliance tasks. Alternatively, you can use a professional service like ZenBusiness and Northwest Registered Agent to help stay on track.
Separate business and personal finances
It is very important to keep your business’ finances separate from your personal funds. The best way to do this is to open a dedicated business bank account, and then to use this new account exclusively for all business transactions.
You can open a business bank account at almost any financial institution. Most will require a business license and an EIN, although you should call ahead to see if there are any other requirements.
This is also a good time to look into business insurance, business credit cards, and other financial tools that may help you grow your business.
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