How to Start an LLC in New York
An LLC, short for Limited Liability Company, is a legal business structure which permits you to own and operate any form of business and protects personal assets and properties.
Starting an LLC in New York is pretty straightforward, as an LLC is the simplest business entity you can form and operate anywhere in the United States.
In a nutshell, to form an LLC in New York you need to:
- Come up with a unique and recognizable name for your LLC;
- Assign a registered agent if you want to keep privacy (OPTIONAL);
- File the Articles of Organization with the New York Department of State;
- Make an Operating Agreement (OBLIGATORY);
- Make a newspaper publication with a notice of your LLC formation;
- Get an EIN number (a Tax ID) from the IRS (DEPENDS).
- File a Biennial Statement every two years with the NYS Department of State;
- Register with the State's Department of Taxation and Finance;
- Apply for business licenses or permits (OPTIONAL).
1. LLC Business Name
This is the first and most important step to starting a Limited Liability Company. Your LLC name should comply with the requirements of New York.
Make sure that the name you chose for your LLC is original, unique, and different from already existing and registered businesses in New York.
It is advisable to carry out a thorough name search on the website of the State of New York to help you confirm that your preferred LLC name is still available and not already in use.
New York LLC Naming Requirements
Be sure not to use a name that could be confused with any government agency. You may need additional paperwork to be able to use restricted words like Attorney, University, Bank, etc.
The law in New York demands that you include a designator at the end of your LLC name. Approved designators for a New York LLC name are LLC, L.L.C., Ltd., Limited, and Limited Liability Company.
Here is a list of prohibited terms, which you must avoid in your LLC business name.
2. Registered Agent
The New York Department of State (same as the Secretary of State) automatically acts as the registered agent for every LLC formed in New York. However, you can appoint your own registered agent besides the Secretary of State.
Though the Department of State remains the first to be contacted for any lawsuit, legal processes, or correspondences regarding your LLC. All formation, service of process, taxation, and reporting documents will be forwarded to your appointed registered agent by the Department of State.
TIP: Use a Registered Agent Service to Keep Your Address Private
It is smart to hire a New York registered agent to represent you as New York State law requires you to publish a notice of formation when starting an LLC in New York.
This notice will be published in local newspapers, and your address publicized to all. This isn't good for your privacy, especially if you listed your home address as the principal address.
Employing the services of a professional registered agent will help you keep your home's privacy uncompromised.
A registered agent (or a resident agent) is an individual or a business entity that has been designated by the LLC to receive service of process notices, government correspondence, and compliance-related documents on behalf of the LLC. The registered agent must be residing in New York.
3. Articles of Organization
This can be done online or by mail, and only takes a few minutes when processed online and 3-5 days by mail.
The New York LLC Articles of Organization require you to submit information such as your LCC name, a period of existence, effective date, LLC purpose, name and address of Statutory Agent, etc.
If you decide to send the formation paperwork by mail, then please download the form and send it to this address:
Department of State Division of Corporations
State Records and Uniform Commercial Code
One Commerce Plaza
99 Washington Ave.
Albany, NY 12231
4. Operating Agreement
New York legally demands that your business must have an operating agreement to be able to register an LLC.
An Operating Agreement is a legal document that outlines who the owners of the LLC are, and the company's operating guidelines. It documents what belongs to who, how taxes are to be paid, the profit-sharing formula, etc.
This document, however, is not to be filed to the State but should be kept among your business records for future reference and conflict resolution.
It's advisable to have an operating agreement even as a single-member LLC.
An operating agreement is an internal legal document that establishes how your LLC will be run. It sets out the rights and responsibilities of the members and managers, the ownership structure, and operating procedures.
5. Employer Identification Number (EIN)
After your LLC has been approved you'll need to obtain an Employee Identification Number (EIN).
This is a nine-digit number with which the Internal Revenue Service (IRS) identifies your business for taxations.
EIN also goes by the name FEIN (Federal Employer Identification Number) or FTIN (Federal Tax Identification Number).
It's your business' Social Security Number sort of and is required for opening a business bank account, filing taxes, and hiring employees.
It can be easily obtained for free from the IRS, either online or by mail.
6. Publication Requirements
You're required to publish a copy of your New York approved Articles of Organization in two newspapers within 120 days of your LLC's formation.
One of these newspapers must be a daily and the other a weekly, and both must be approved by the designated county you listed in the Articles of Organization you filed.
The notice runs for two consecutive weeks, after which affidavits of publication will be issued to you by the publishers, you'll then submit these to the New York Department of State alongside the Certificate of Organization to receive your Certificate of Publication.
New York charges $50 to issue this certificate.
Tip: This newspaper publishing typically costs up to $1500. Hiring a professional registered agent who is outside New York but authorized to do business in the State can save you hundreds of dollars.
7. Biennial Reports
According to the NYS Department, all Limited liability companies registered in NY are required to file a Biennial Statement every two years with the NYS Department of State.
Online filing is available on the Department of State's website. The filing fee is $9. Entities who wish to receive a notice when the Biennial Statement is due for filing must provide an email address at the Department of State’s Email Address Submission/Update Service.
8. NY State Taxes for LLCs
LLCs in New York are required to register with the State's Department of Taxation and Finance for payment of State taxes. LLCs don't have to file a separate return for federal taxes.
Taxes accrued by your LLC are usually listed in your personal tax return on a Schedule C.
Upon getting an EIN you will be presented with the different tax structures available for LLCs in New York. The majority of LLCs opt for the default tax status, and some choose the S corp status in order to minimize federal taxes.
We recommend you get an accountant to help calculate the taxes accurately as this process can be quite complicated, and incorrect calculations might attract some sanctions against your LLC.
9. Business Licenses/Permits
Just like in many other States, business licenses are not issued by the State of New York, you'll need to apply to your city/county for the necessary licenses and permits if your business needs them.
This usually would depend on your industry and the locality (city/town/county) of your business. You need to find out if you need a license or permit to operate your business within the area.
To make things easier for yourself, hire a professional licensing company to handle this.