A Limited Liability Company, or LLC, is one of the various ways to incorporate your business. LLCs are free to operate like partnerships while enjoying the benefits of limited liability and tax savings.
New York is one of the few States requiring you to publish a notice of your LLC’s formation. The State requires you to file biennial reports. Many seek a corporate presence in New York, given the economic and cultural importance of the State.
Informing ourselves of the intricacies involved in incorporating an LLC in New York will ensure that you do not needlessly repeat the process and waste your time and resources. Let us look at how to successfully establish one’s Limited Liability Company (LLC) in the State of North York.
Name Your New York LLC
Naming your LLC is the first step you will undertake. Remember, the name of your business will be how the consumers come to know of your existence.
A good name will also help the customers quickly identify your business from among the competition. So make sure that you choose a name that is easy to remember and appeals to your potential customer base.
The State of New York prescribes certain legal guidelines to follow while naming your LLC.
The name of your business should have the words “limited liability company” or one of its abbreviations (LLC or L.L.C.).
You cannot name your LLC in a manner that confuses it with a State or Federal agency. For example, you cannot name your LLC the “Skyrim City Police Department.”
A few restricted words may require additional paperwork if included in the name of your LLC. ‘Bank,’ ‘Attorney,’ and ‘University’ are a few examples of such words. Such words may also require the presence of the respective licensed individuals. For more information, you can read the New York ‘Restricted Word List.’
The name of your LLC should be different and distinguishable from the names of other registered entities.
To know more, read the entire naming guidelines by visiting the New York Senate website.
Does Your Business Require a DBA?
DBA is short for ‘Doing Business As Certificate.’ In New York, a DBA is called a ‘Certificate of Assumed Name.’ You may want your LLC to conduct business under a name different from the registered name.
You may have registered your company as “Pizzas and Sandwiches L.L.C.” However, you do not want to use the same name for commercial purposes and instead want to use “Pizza Corner” as the name of your business. You must apply for a DBA with the New York Department of State by mail or in person.
Apply for a DBA by Mail or In-PersonDownload Form
Mail to or apply In-Person:
New York State Department of State
Division of Corporations
One Commerce Plaza
99 Washington Avenue, Albany, NY 12231
Fax: (518) 474-1418:
$25 for the Certificate of Assumed Name
$10 Certified Copy of Certificate of Assumed Name
$150 2-hour processing, $75 Same day, $25 within 24 hours
Doing a Name Search and Name Reservation
Before finalizing a name for your LLC, you must ensure that the name you selected is not similar to an existing business. You may use the State’s Business Entity Name Search portal to check if your chosen name is truly unique. This is not only a legal requirement but also a practical one.
If you are set on what you want to name your LLC but are not yet ready to form it, you can reserve your LLC’s name. New York permits a 60-day reservation, beyond which you can extend for another 60 days, but only twice.
Reserve a Name by MailDownload form
New York Department of State,
Division of Corporations,
State Records and Uniform Commercial Code
99 Washington Avenue 6th floor
Albany, New York 12231
Reserve Your Domain Name
The internet is becoming increasingly popular every day. Most people read internet reviews and look for an online presence before purchasing a product or service. A well-designed website may aid in acquiring new customers.
Even if you do not plan to start a website in the foreseeable future, it is suggested that keeping that option open would be a good idea because the internet is rapidly becoming an essential means of doing business. We, therefore, recommend that you check the availability and register a suitable web domain.
Choose a Registered Agent in New York
A registered agent is a person who acts as a point of contact for an LLC. The primary task of a registered agent is to receive all official documentation and correspondence on behalf of the LLC, as the LLC is not a natural person.
This may include accepting the service of legal notices, government correspondence, and company filings. If you do not have a registered agent, you risk missing essential communications addressed to your LLC by the State authorities.
New York law requires that your business have a registered agent.
Who Can Be a Registered Agent?
The State of New York would be your registered agent by default, according to Chapter 34 of the Limited Liability Company Law. However, it is recommended that you designate an additional registered agent because the State offers only a limited set of services.
Anyone from your company or anyone you trust (for example, your spouse, your lawyer, etc.) can be your registered agent. You can also designate yourself as your LLC’s registered agent if you wish. You can also hire a registered agent service that would act as a registered agent for your LLC, receive all official communication on its behalf and then relay it back to you.
New York mandates that your LLC’s registered agent:
- Be over the age of 18,
- Have a physical address in New York,
- Be available during regular business hours,
- Be allowed to conduct business in New York if a legal entity such as a commercial service.
Individual v. Registered Agent Service
You can appoint yourself or any of your friends or family as the registered agent of your LLC. Alternatively, you can also hire a professional service which comes with a lot of advantages.
Using a registered agent service would not have to worry about deadlines or legal paperwork. A professional registered agent service ensures that you don’t fail to duly respond to any notice or other communication that may be sent to your LLC. They remind you when your returns and other filings are due and help ensure you don’t miss any deadlines.
A registered agent service understands how to properly manage, arrange, and store all legal documents and notices and make them readily available when needed.
Another essential benefit is maintaining your privacy. The registered agent’s address is available for the public to access on the concerned websites.
So if you work out of your home or a private office, having a professional registered agent service will help you maintain privacy. Moreover, having a registered agent service lets you focus your energy and time on core business areas.
File the Articles of Organization with New York
In order to incorporate a limited liability company in New York, you must finally file Articles of Organization. It is a formal legal document that must be presented to the New York Department of State. Once this is completed, your LLC is registered and is recognized in the eyes of the law.
The State provides you with a single form to file all papers, removing the need to manage multiple forms. The following information is needed to be included in the form:
- The Name of your LLC.
- The location of the LLC’s headquarters.
- The LLC’s mission.
- Business management – whether member-managed or manager-managed
- Information regarding your LLC’s registered agent
Option 1: File Articles of Organization OnlineFile online – OR –
Option 2: Apply for an EIN by Mail or FaxDownload form
New York Department of State, Division of Corporations
One Commerce Plaza, 99 Washington Avenue
Albany, New York 12231
Fax: (518) 474-1418
New York does offer to expedite filing services. You may visit the Department of State website to know about the expedited fee schedule. The expedited fee varies based on fast you want your application to be processed.
Publish Notice of Formation
It is mandated by the New York Limited Liability Companies law that within 120 days of formation, LLCs must publish a notice of LLC formation in two newspapers. This requirement is there to notify all possible stakeholders of such incorporation. If there is any opposition, it should be addressed before the incorporation is complete.
New York’s Limited Liability Companies Law sets specific requirements for such publication. The publication must be done for six consecutive weeks in the county’s newspapers in which your LLC’s registered office or the registered agent’s office exists. One of the newspapers must be a weekly newspaper and the other a daily newspaper. Further, the newspapers you choose to publish should be approved by the local county clerk.
Upon publication, the publisher will give you an affidavit of publication. The affidavit and the Certificate of Publication must be filed with the New York Department of State, Division of Corporation. This filing involves non-refundable fees of $50. The prices may change. Contact the New York Department of State to get the latest fee levied.
The Certificate of publication, with all the fields filled by you, along with the affidavits and the filing fee, are required to be submitted to the New York Department of State, Division of Corporations, One Commerce Plaza, 99 Washington Avenue, Albany, New York- 12231
Creating an Operating Agreement for your New York LLC
An Operating Agreement is an internal document that determines your LLC members’ powers, rights, obligations, and liabilities. Unlike the Articles of Organization, an Operating Agreement is not required to be filed with the New York State. However, the State mandates that each LLC adopt an Operating Agreement.
We strongly recommend that your LLC have a well-drafted Operating Agreement as it ensures that all the stakeholders of the LLC are on the same page. It reduces the risk of conflicts in the future.
You can adopt an operating agreement at the time of, before, or within 90 days of filing the Articles of Organization.
To ensure the smooth administration of their business, you should have a documented Operating Agreement. You may draft the operating agreement according to the needs of your business. However, irrespective of the nature of your business, it shall be advisable for your operating agreement to cover the following matters:
- Organization Details
- Duties of Members and Managers
- Management and Voting
- Capital Contributions
- Division of Profit and Losses
- Bookkeeping Procedures
- Procedure for adding new members
- Requirements concerning Meetings and Procedures thereof
Writing the Operating Agreement Yourself v. Hiring a Service
You can either write your Operating Agreement yourself or hire a professional. If you want to create a simple Operating Agreement to outline the terms of your LLC to its members, then it is recommended that you write one yourself. Writing your Operating Agreement would be cheaper and would be more simplified. You may purchase templates that you can customize to draft the operating agreement of your LLC.
Alternatively, you may also seek the help of an attorney or a professional in preparing your operating agreement.
A professional, who creates such agreements regularly, may be aware of which elements of the agreement are problematic and could lead to a disagreement. As a result, the professional can draft a more air-tight operating agreement for your LLC.
Limitations of Operating Agreement
There is no fixed format for this agreement. You have all the freedom to include the terms of the agreement you feel are necessary for your LLC. However, the terms are limited to the law. You cannot include something prohibited by the laws of New York.
Obtaining an EIN for your New York LLC
EIN stands for Employee Identification Number. An EIN is a number assigned to businesses by the Internal Revenue Service. It is used to identify companies for taxation. An EIN is also referred to as Federal Tax Identification Number (FTIN) or Federal Employer Identification Number (FEIN). You cannot open a business bank account, file federal and state taxes, or state any employees without an EIN.
The IRS issues an EIN, and you can apply for it online or through the mail.
Option 1: Request an EIN from the IRSApply online – OR –
Option 2: Apply for an EIN by Mail or FaxDownload form
Internal Revenue Service
Attn: EIN Operation
Cincinnati, OH 45999
Fax: (855) 641-6935
Filing Biennial Statements in New York
A New York Biennial Statement is a form you submit every second year to the New York Division of Corporations with information about your business. It is a document used by the authorities to get the latest and updated information about all the business entities operating in the State.
You must submit the Biennial Statements by the end of the month your LLC was initially registered, and you are to do so every two years. If not filed by the due date, your LLC would lose its ‘good standing’ status with New York.
The Biennial Statement must set forth the following:
- Name and address of the CEO of the LLC.
- The address of the principal executive office of the LLC
- The address to which the New York Secretary of State can send copies of the process accepted.
- The number of directors on the board and what percentage of it is women.
You can file your report online using the Department of State’s website. The filing fee is $9.
Tax Liability for Your New York LLC
You may choose to show your LLC as a corporation or allow the IRS to treat your LLC as a “pass-through entity” and tax you directly.
The way your LLC will be taxed depends upon the number of members in your LLC. There are four ways in which LLC will be taxed:
- Sole proprietorship: a business owned by a single person
- Partnership: a business owned by multiple people
- C – Corporation: income is split or segregated for taxation
- S – Corporation: tax liability is divided between the company and its owners
Federal Tax Liability
The amount of tax you owe the federal government on your annual earned income is your federal income tax liability. Depending on your income, you may or may not owe federal taxes; individuals whose income is less than the standard deduction do not owe income tax. The number of members in your LLC determines how your LLC will be taxed. Three types of LLCs will be taxed.
- If your LLC has a single owner who controls the entire LLC, it would be called a ‘single-member LLC.’ All single-member LLCs must report their incomes by filing Form 1040 Schedule C.
- If your LLC has two or more people owning and controlling the LLC, then it would be called a ‘multi-member LLC.’ All multi-member LLCs must report their incomes by filing the Form 1065 partnership Return. Afterward, Schedule K-1 is prepared for each of the partners of the LLC. Check IRS documentation about Form 1065 for more information.
- You must pay the federal income tax on the profits you withdraw from the business. All LLC managers and members who profit from the going concern must pay the Self-employment tax. This covers Social Security and other benefits.
State Tax Liability
The New York State levies income tax and sales tax on your LLC. New York State income tax becomes due on any money that you pay to yourself from your LLC. If any, the salaried employees in your LLC would also be required to pay these taxes.
In New York, the sellers are required to collect sales tax on the goods or services sold to customers. The sellers must make themselves aware of the current tax rates and charge the same to the customers.
You can make payments and file sales tax returns electronically using your Business Online Services Account. You can easily create an account, file your tax information and then make the payment from your bank account. Vendors mostly have to use the Sales Tax Web File.
Sales Tax is levied on selling specified goods and certain services. The Sales Tax rate in New York is 4% throughout the State. However, additional sales tax rates may be applicable in various local jurisdictions in New York.
Miscellaneous Tax Liability
If your LLC has employees, you must register with the Department of Labor for Industrial Relations to pay the Unemployment Insurance Tax. You must also register for Employer Tax on behalf of your employees.
Permits & Licenses
Your LLC may require various kinds of permits and licenses depending on the nature of your business. For example, if you own a restaurant, then you may be required to take health permits.
Federal Licensing requirements will depend on the business activity carried on by your LLC. If your company is engaged in any area of business regulated by the Federal Government, you will be required to obtain relevant Federal Licenses and Permits.
Some business activities requiring Federal Licenses and Permits are
- Alcoholic beverages
- Firearms, ammunition, and explosives
- Fish and wildlife
- Commercial fisheries
- Maritime transportation
- Mining and drilling
- Nuclear energy
- Radio and television broadcasting
- Transportation and logistics
At the State level, your LLC should obtain a seller’s permit if you sell products or provide services to which sales tax is applicable. You can apply for the permit by visiting the Department of Taxation and Finance website.
Additionally, depending on the area of business your LLC is engaged in, you might be required to get specific State licenses and permits. Please visit the state’s Professional License website to understand the licensing requirements of your LLC.
To know about the license requirements from the federal government, you can access the US Small Business Administration Guide. To know more about and to apply for licenses for the State of New York, you can visit the official website of the State of New York’s Licensing Center website.
Depending on where you operate your business, you may also be required to get the local government’s license and permit. To know more about local licensing requirements, get in touch with your town or county government.
Business Bank Account & Phone Number
An LLC Bank Account is opened as a separate account for your LLC. A different bank account is required so that your finances can be protected from the liabilities of the LLC, which is a separate legal entity.
You should opt for a virtual business phone for your LLC instead of giving your phone numbers for business requirements. Several vendors provide such services at competitive prices.
Using such services, you can set up pre-recorded prompts, call recordings, etc. It can be a local business phone number, a toll-free number, or a cell phone business number.
Getting a business phone number is a good idea, especially if you do not want your number to be put in the public domain along with your LLC.
After forming your LLC, you can take advantage of New York’s many schemes to promote businesses’ robust growth. The ‘Start-Up NY Program’ offers new undertakings tax breaks for ten years if operating near-certain educational campuses.
Get in touch with your local county or city government office to determine if your LLC is eligible for any of these incentives.
We hope you and your LLC make it big in the Big Apple.