The 2023 Small Business Profile from the Small Business Administration (SBA) reveals that approximately 2.2 million small businesses operate in New York, making up 99.8% of all companies in the state. Forming a Limited Liability Company could be an excellent choice if you aspire to join this thriving community. LLCs offer operational flexibility, personal liability protection, and various other benefits.
Our guide will explain how to start an LLC in New York, detailing state requirements, step-by-step procedures, and significant tax considerations.
Step 1: Name your Newyork LLC
Step 2: Choose a Registered Agent
Step 3: File an Articles of Organization
Step 4: Received a Certificate From the State
Step 5: Create an Operating Agreement
Step 6: Get an Employer Identification Number
Step 1: Name your Newyork LLC
When starting an LLC in NY, you’ll need to choose a name that adheres to New York’s specific naming requirements:
- Inclusion of Required Terms: Your business name must include “Limited Liability Company” or “L.L.C.”
- Uniqueness: The name must be distinguishable from existing businesses in the state. The Secretary of State’s website allows you to check name availability. For a search, visit this link.
- Restrictions on Government-Related Terms: The name cannot contain terms associated with government agencies (e.g., State Department, CIA, FBI, Treasury).
- Restricted Words: Certain words (bank, lawyer, attorney, credit union) may require additional documentation and licenses.
For a complete list of New York’s naming rules, see the comprehensive guidelines provided by the state.
Additional considerations:
Reserve your name: If your desired name is available. You must file a New York Business Name Reservation application if you still need more time to submit your registration documents. This service costs $20 and reserves your chosen name for 60 days.
Website Domain: Even if you’re still waiting to launch your website, securing your domain name is a good idea. Before finalizing your LLC name, check the availability of your desired web address to ensure it aligns with your business name, which helps maintain brand consistency and safeguards your online presence.
Step 2: Choose a Registered Agent
In New York, every LLC must designate an “agent for service of process,” which is the New York Department of State. The New York Department of State will accept legal documents and forward them to your LLC if someone sues your company. You must provide the Department of State with your LLC’s name and address.
Additionally, you can appoint a registered agent as an alternative point of contact for receiving service of process and other official documents.
Registered Agent Overview
A registered agent is an individual or entity authorized to receive legal correspondence and service of process on behalf of your LLC. They can be:
- An Individual: This can be yourself, an employee, or another person.
- A Professional Service: A company specializing in registered agent services.
Requirements for a Registered Agent
To serve as a registered agent in New York, an individual or entity must meet the following requirements:
- Residency or Business Presence: The agent must be a New York resident or a registered business entity.
- Physical Address: The agent must have their address in New York.
- Availability: The agent must be available during regular business hours to accept documents.
- Forwarding Documents: The agent is responsible for forwarding received documents to the LLC.
Advantages of Having a Registered Agent Service
Having a professional registered agent service offers several advantages:
- Privacy: The agent’s address will be a public record, not yours, which helps protect your privacy.
- Compliance: Professional services ensure you meet state requirements and handle legal documents efficiently.
- Convenience: These services manage legal correspondence and can help prevent missed deadlines.
The costs for professional registered agent services in New York typically range from $49 to $300, depending on the provider and the level of service.
Step 3: File an Articles of Organization
The Articles of Organization document officially establishes your LLC by providing essential information. You can use the DOS-1336 Form to file these articles in New York.
Steps to Prepare and File Articles of Organization
1. Prepare the Articles:
- LLC Name: Choose a name that complies with New York’s naming regulations.
- County Location: Indicate the specific New York county where your LLC will be based.
- Mailing Address: Provide a New York address where the Secretary of State should send legal documents related to your LLC.
- Organizer’s Signature: Ensure the person forming the LLC signs the Articles of Organization.
2. File the Articles:
- Online Filing: Submitting your Articles of Organization online is the most efficient method. This option will immediately confirm that we have received your submission.
- Mail Filing: You can also choose to mail your completed form. While this method is less immediate and generally takes longer, expedited processing options are available for an extra fee.
3. Fees:
- Standard Filing Fee: You must pay a $200 fee to file the Articles of Organization.
- Paper Copy Fee: An additional $5 fee applies to obtaining a paper copy of the filed document.
- Total Fee: The combined total for filing the Articles of Organization is $205.
4. Processing Time:
- Standard Processing Time: The Secretary of State typically processes and approves your filing in about seven business days.
- Expedited Processing Options: If you need faster processing, you can opt for expedited services:
- 24-Hour Processing: Available for an additional fee of $25.
- Same-Day Processing: Available for an additional fee of $75.
- 2-Hour Processing: Available for an additional fee of $160.
Expedited processing options allow for a faster turnaround if you need to establish your LLC quickly. Once the Secretary of State reviews and approves your Articles of Organization, your LLC will become a recognized legal entity.
Step 4: Received a Certificate From the State
After you file and get approval for the LLC’s formation documents, the state will issue a certificate confirming the LLC’s formal existence. You may receive this certificate within up to seven weeks.
This certificate enables the LLC to apply for an Employer Identification Number (EIN), obtain business licenses, and open a business bank account.
Step 5: Create an Operating Agreement
This Agreement is a essential document that outlines how your LLC will conduct its business. When starting an LLC in New York State, members must adopt this agreement within 90 days.
While you do not need to file the operating agreement with the state, it is a vital component of your LLC’s operations. A written operating contract that is readily accessible is beneficial for several reasons, including resolving disputes related to financial arrangements and other potential legal issues. Courts will resolve disputes based on state law without an operating agreement, which may not align with the LLC’s or its members’ best interests.
Essential Components of an Operating Agreement:
- LLC’s Name and Principal Address: The official name and central location of the LLC.
- Duration of the LLC: The length of time the LLC will remain in operation.
- Name and Address of the Registered Agent: Information for the individual designated to receive legal documents.
- Information About the Articles of Organization: Details of the formation documents.
- Purpose of the Business: The nature of the LLC’s activities.
- Members and Their Contributions: List the LLC members along with their financial contributions or other forms of contribution.
- Profit and Loss Distribution: Detail how the members share the profits and losses.
- Admission and Exit Procedures: Outline the procedures for admitting new members and handling outgoing members.
- Management Structure: Provide details on how the LLC will manage its operations.
- Indemnification and Liability Clauses: Include provisions to protect members from certain liabilities through indemnification and liability clauses.
Legal Requirements and Customization:
New York law mandates that LLCs have a written operating agreement, which should be signed before, during, or within 90 days after filing the Articles of Organization. Failing to have an operating agreement can lead to disputes and costly litigation.
Customizing your operating agreement allows you to address specific issues and preferences unique to your business. Essential elements to include in a comprehensive operating agreement are:
- Member Financial Interest: Details on each member’s financial stake in the LLC.
- Corporate Governance: Structure and rules for managing the LLC.
- Officer Roles and Compensation: Roles and pay for any officers.
- Non-Compete and Non-Disclosure Clauses: Include non-compete and non-disclosure clauses to impose restrictions that protect the business’s interests.
- Capital Contributions: Initial and additional contributions from members.
- Profit Distribution: Specify how the LLC will divide profits among its members.
- Management and Voting Procedures: Specify how the LLC decides and conducts votes.
- Transfer of Membership Interests: Rules for transferring ownership stakes.
- Dissolution and Liquidation Processes: Outline the procedures for dissolving the LLC and distributing its assets.
- Dispute Resolution Mechanisms: Methods for resolving conflicts among members.
Consulting with a legal professional, especially if the LLC has multiple members, is highly recommended to ensure your operating agreement is accurately drafted and fully protects all members’ rights.
Step 6: Get an Employer Identification Number
The Internal Revenue Service (IRS) assigns the nine-digit Employer Identification Number (EIN) to identify your LLC for tax purposes. You can get your EIN by mail or online through the IRS website.
Purpose of an EIN:
- Tax Filing and Management: Use the EIN to file and manage state and federal taxes.
- Bank Accounts: Open a business bank account.
- Hiring Employees: Hire employees and handle payroll.
Benefits of an EIN:
An EIN provides several advantages for your New York LLC. It facilitates tax compliance by giving your company a unique identifier, which helps file federal income tax returns and accurately report business income and expenses.
Moreover, an EIN is essential for employee management, enabling you to hire staff and manage payroll taxes effectively. It also allows you to open a business bank account and conduct financial transactions smoothly, ensuring the efficient operation of your LLC.
LLC State Guides
FAQs:
How much does it cost to start an LLC in New York?
Filing the Articles of Organization costs $200, plus an additional $5 fee for a paper copy, totaling $205.
How long does it take to form an LLC in New York?
Standard processing typically takes about seven business days. Expedited processing options include 24-hour, same-day, and 2-hour services.
Do I need to publish a notice of formation for my LLC?
New York no longer requires LLCs to publish a notice of formation in local newspapers, but it’s always good to check for any updates to state requirements.
What are the annual requirements for keeping an LLC in New York?
New York requires LLCs to file a Biennial Statement every two years and comply with state tax obligations. Ensure that your LLC stays in good standing by meeting these requirements.
