This quick guide on how to form an LLC in NY will take you through the basics and necessary steps. Using a limited liability company for your business is a good idea to separate (and protect) personal and business assets.
Modern entrepreneurs can find several uses for their LLC. That’s especially true for a state like New York, where the big apple is wired to commerce around the world. While it’s unavoidable to think of NYC when talking about the state of New York, the state itself offers excellent business opportunities.
New York is somewhat different than most other states in terms of starting an LLC. While the general process remains the same, there are a few changes that make a big difference. Let’s get started!
1. Determining A Name To Start An LLC In NY
The first step to start an LLC in NY is to choose a name for your company. It’s a good idea to come up with several names so that you have other options if the top choice isn’t available. New York law requires that every entity have a unique name, noticeably different from other registered entities.
Finding And Confirming A Name For Your NY LLC
The first step to confirming the availability of a name is to perform a Business Entity Search on the Department of State, Division of Corporations website. This should provide a good idea for the availability of the name.
However, as the state says, the entity search is primarily meant for status inquiry. Its results don’t necessarily reflect the availability of a name. To get around this problem, you’ll have to submit a written request to:
Department of State,
Division of Corporations,
One Commerce Plaza,
99 Washington Avenue,
Filing this request will incur a fee of $5. When you submit a request, the department encourages clearly stating that the intention is to check name availability.
Interestingly, they also say that a check for availability doesn’t necessarily guarantee that the proposed name satisfies any requirement of the law. It isn’t equivalent to registration or reservation either. Simply put, it’s simply a search of the state records, without any other implications.
New York doesn’t make the name search available on phone. However, you may use the following contact information for general inquiries:
Phone: 518-473-2492 (Monday through Friday from 8:30 am – 4:30 pm)
Fax Information Unit: (518) 473-1654 (Searches, Certificates of Status and Copy Requests)
Naming Conventions And Designators For Your NY LLC
New York state law requires that the name must include the words ‘LLC’ or its legally accepted variations. The available designators for LLCs are:
- Limited Liability Company
Moreover, some words are restricted and/or prohibited and can’t be used in the LLC name. In case the word is restricted, permission may be requested for its use. A list of these restricted or prohibited words and phrases is available on the Department of State website.
It’s also a good idea to check the USPTO website to ensure that the suggested name doesn’t infringe on existing trademarks.
Reserving A Name For Your New York LLC (Optional)
Reserving a name for your NY LLC is optional. It is useful to exercise this option when you have a name in mind for your LLC but aren’t ready to fully commit and start the business immediately.
You can file an application for reservation of a name for your LLC. This form requires a filing fee of $20. On acceptance of the application, the name is reserved for 60 days. You may choose to get extensions on the name reservation twice. Each extension will last 60 days and require a $20 fee.
Name reservation is subject to the same requirements listed above. Extension requests for name reservation must be submitted before the reservation period ends.
The Department of State issues a certificate of reservation after processing the name reservation request. Should you move to register the LLC during this period, this certificate can be included with the Articles of Organization.
2. Using A Registered Agent
New York handles the requirements of a registered agent in a somewhat unique way. You don’t necessarily need a registered agent for your LLC in New York. By default, the Secretary of State is the registered agent of every LLC in the state.
Nevertheless, you must provide the state with a street address in New York where ‘service of process’ can be completed. Using a PO Box for an address is not acceptable.
‘Service of process’ includes the legal documents your LLC may receive. Generally, the registered agent receives these documents on behalf of the LLC, then forwards them to the relevant person. These include legal notices, lawsuits, subpoenas, etc.
While having the Secretary of State as your LLC’s registered agent is convenient and certainly sounds flattering, it is worthwhile to look into having a registered agent.
Any resident of New York over 18 years of age can be your registered agent, as long as a street address is available. Many people choose to have a commercial registered agent, which may provide cost advantages for the state’s publication requirements for LLCs (more on that later).
Using a commercial registered agent is also helpful for protecting your privacy. The name and communication details of the registered agent are a matter of public record. So not publishing your phone number and home address might be useful.
3. File Articles Of Organization To Register An LLC In NY
Articles of Organization is the single most important form in your journey to register an LLC in NY. Technically, your LLC is formed as soon as the state accepts the Articles of Organization.
Specific information may be needed depending on your requirements when filing the form. However, the following information is generally needed:
- The name of your LLC.
- An address where the Secretary of State (acting as registered agent) should send documents/communication.
- Name and signature of the organizer.
- Name and address of the person filing the form.
The form number used to submit the articles of organization is DOS 1336. The filing fee for this form is $200. You can use the following methods to file the Articles of Organization:
The Department of State offers a fairly useful guide on the process involved. You can pay the $200 fee via cash, check, money order, MasterCard, Visa, or American Express. Of course, the exact mode of payment depends on the method you choose to file the payment. Money orders and checks should be made payable to the “Department of State”.
In case you choose fax, also include the Debit Card/Credit Card Authorization form. The fax number is (518) 474-1418.
Don’t send cash if you mail the form. The address to mail the form is:
New York State Department of State,
Division of Corporations,
State Records and Uniform Commercial Code,
One Commerce Plaza,
99 Washington Avenue,
Albany, New York 12231.
You can use the same address if you choose to walk-in and submit the Articles of Organization. It’s usually recommended to file the Articles of Organization online, as it’s the most convenient option.
Approval time can vary after you submit the Articles of Organization. Usually, it takes about 7 business days. However, it’s also possible to expedite the process. This requires an additional ‘Expedited Handling Fee’. The amount of the fee can vary depending on the requirements.
How Much Does It Cost To Set Up An LLC In New York?
Oddly enough, there is no exact number on how much does it cost to set up an LLC in New York. This is largely due to the requirement of publishing in newspapers. But, the basic costs are:
- New York LLC filing fee (Articles of Organization): $200
- Certificate of Publication: $50
- Publication/Newspaper fee: Varies by county
- Biennial Statements (every two years): $9
4. Publication Requirements For New York LLC
Once the Articles of Organization are approved, the LLC will have to complete the publication requirements within 120 days. A copy of the Articles of Organization or a notice related to the formation of the LLC must be published in two newspapers.
Both these newspapers must be designated by the county clerk of the county where the office of the LLC is located. Your ad must run in both newspapers for six consecutive weeks.
Costs of running this ad/publication can vary by quite a bit between the counties. For example, the five boroughs of NYC are likely to have a much higher cost of publication as compared to other counties of New York state.
It might be a good idea to do your research or hire a commercial registered agent to save related costs.
Filing The Certificate Of Publication
After the completion of the publication requirement, the newspaper printer or publisher will provide you with an affidavit of publication. You must file this affidavit along with the Certificate of Publication with the New York Department of State.
The filing fee for this certificate is $50. Failure to file this certificate within 120 days of the approval of the Articles of Organization will result in the suspension of the LLC.
5. Prepare An Operating Agreement
An Operating Agreement provides information on the operating procedures and ownership of an LLC. It could, for example, provide information on the management and distribution of profits and losses, approach to taxation, details on management of the LLC, and more information.
For multi-member LLCs, the Operating Agreement must be shared with all members. Having this document ensures that all members are on the same page. It also provides a good mode of conflict resolution between members. Additionally, it may be used as evidence to signify the separation of assets between the member(s) and the LLC.
That could prove valuable if you ever find yourself in court or if the LLC is sued.
LLC Operating Agreements are internal documents. You don’t need to file this with the New York Department of State or any other agency.
The State of New York mandates that every NY LLC have an operating agreement. However, it doesn’t elaborate on the penalties for not having an Operating Agreement.
6. Filing Biennial Statement For Your NY LLC
Every New York LLC must file a statement with the Department of State every two years. The main purpose of this exercise is to keep the state updated with your information. You’ll need the following to file biennial statements:
- Name of the LLC
- Your address for service of process
- DOS ID number
The DOS ID number (Department of State ID number) is usually available on the filing receipt of your Articles of Organization. In case you no longer have it, you can retrieve it from the state’s online database by searching for your LLC.
When filing the biennial statement, you can update the address for service of process (if required). Otherwise, you simply file the statement without any changes and pay the $9 fee.
Once you’ve completed the statement online, you’ll see a success message for your filing. Currently, the department doesn’t provide an additional receipt for a successful filing.
7. Get Necessary Permits Or Licenses
Your company may have to deal with separate local, state, and federal permits/licenses for doing business. These three tiers of government (local, state, federal) are true for consideration of most licenses and taxation.
These permits will depend on the type of business you choose and where you decide to run it. Take a look at the New York BusinessExpress website for more details.
8. Taxation For Your NY LLC – Local, State, And Federal
Getting An EIN (Federal Tax ID) For Your LLC
The EIN is a Federal Tax ID issued by the IRS. You should consider getting the EIN (Employer Identification Number) as soon as the state approves the LLC’s Articles of Organization. While it isn’t necessary to have an EIN, it is needed for the use of several services.
For example, your LLC will need the EIN to open a bank account, collect taxes, hire employees, etc.
There is no fee for requesting an EIN. You can apply for it online.
However, filing online is not possible in some cases. In such situations, you can use Form SS-4. You can submit the form via mail or fax.
Local, Federal, And State Taxes
Local, state, and federal taxes depend on several factors. The location, type, and revenue of your company come into play when considering taxation. How you structure your LLC for taxes is also important.
As an example, you may elect to have the LLC taxed as a corporation for federal taxation. Similarly, the LLC may be liable for Annual State Filing Fee with the state of New York.
Taxes and structuring can be complex. It’s important to stay compliant with the law. You may want to consider your options and speak to professionals for managing your NY LLC taxes.