How to start an LLC in New York: Your 2024 guide

Embarking on how to start an LLC in New York in 2023 can be exciting and daunting. With countless steps to navigate, from choosing the perfect name to complying with tax requirements, it's easy to get overwhelmed. But fear not: This step-by-step guide will walk you through the entire process, ensuring you're well-equipped to establish and grow your New York LLC confidently.

Key takeaways

• Choose a name that meets New York LLC requirements and check its availability.
• File articles of organization with the N.Y. Department of State, meet publication requirements, craft an operating agreement, and obtain an EIN.
• Comply with taxes, maintain filings & stay current on licenses/permits for your LLC.

LLC formation in New York is easy. Just follow these steps, and you'll be on your way.

1. Name your New York LLC

You'll need to choose a name to include in your articles before you can register your LLC.

Names must comply with New York naming requirements. The following are the most important requirements to keep in mind:

• Your business name must include the words Limited Liability Company, LLC, or L.L.C.
• Your name must be different from an existing business in the state. You can do a search on the Secretary of State's website to determine if a particular business name is in use. For name availability in New York, check this link.
• The business name cannot contain words used to name a government agency (i.e., State Department, CIA, FBI, Treasury, etc.)
• Certain restricted words (bank, lawyer, attorney, credit union, etc.) may require additional documentation and licensure paperwork.

See a complete listing of New York's naming rules.

 

Additional considerations:

• URL availability. Even if you don't think you'll need a webpage, you probably will. At the very least, you should reserve the option of having one in the future by buying your domain name now. Before finalizing your LLC name, it's a good idea to check if the URL is available.
• Reserve your name. If you aren't ready to register your LLC but are concerned your name might be taken by someone else, you can reserve it for a small fee. In New York, names may be reserved for up to 60 days by paying the fee and submitting the proper form to the state authority.

2. Appoint a registered agent

In New York, every LLC's "agent for service of process" is the New York Department of State. If your LLC is sued, the New York Department of State will accept legal documents and forward them to the LLC. All LLCs must give their name and address to the New York Department of State.

You can also appoint a registered agent as an additional agent to receive service of process for your New York LLC.

A registered agent is the person or entity authorized to receive service of process and other official legal documents and notices on behalf of your LLC.

A registered agent can be a person (including yourself or an employee of your LLC) or an entity that offers a registered agent service. They must meet the following criteria:

• Entities (or companies) must provide registered agent services.
• The agent must have an address in New York.
• The agent must be on-site and available to accept documents during regular business hours.

Appointing a registered agent in New York

A registered agent is an individual or entity designated to receive official documents, such as legal correspondence and service of process, on behalf of your LLC. Designating a registered agent in New York is an important step in guaranteeing the prompt receipt of legal documents and adherence to state regulations.

Although you can serve as your own registered agent, consider using a professional registered agent service for added benefits like privacy, cost savings, and peace of mind.

Registered agent requirements

To serve as a registered agent for a New York LLC, one must meet the following requirements:

• Be a resident or a registered business entity in New York
• Be legally responsible for being available to accept legal documents
• Maintain a physical address in New York
• Forward received documents
• Ensure adherence to state requirements
• Serve as the point of contact for legal actions or inquiries.

The registered agent must be available during regular business hours and must be able to receive documents in

Using a professional registered agent service

Engaging a professional registered agent service can benefit your New York LLC. By using a professional service, you can maintain privacy, as your agent's address will be a public record instead of yours.

Additionally, these services can save you time and money by managing legal correspondence and ensuring compliance with state regulations. Costs for engaging a registered agent service in New York range from $49 to $300.

3. Prepare and file articles of organization

The articles of organization is a document that officially establishes your LLC by laying out basic information about it. New York has a form (DOS-1336 Form) that individuals can access to file articles of organization.

Prepare articles of organization and file them with the New York State Division of Corporations to properly register your New York LLC. Though it sounds like a big job, that simply means filling out a relatively simple online form and submitting it. You can also send it by mail.

This crucial step officially establishes your LLC as a legal entity and requires a $205 fee, which consists of a $200 filing fee and a $5 paper copy fee.

To prepare your articles, you'll usually need the following information:

• Your LLC name
• The county in New York where the LLC will be located
• A New York address where the Secretary of State should mail legal documents to the LLC
• The signature of LLC's organizer
• The person and address forming the LLC is required to sign the articles
• The New York articles of organization has an average seven business days processing time. This timeframe typically falls between administrative offices and other organizations in New York. Once you file your articles, the secretary of state will review the filing. If the articles are approved, the LLC becomes a legal business entity

Online vs. mail submission

Submitting your articles of organization can be done either online or by mail. While both methods have their advantages, online submission offers a faster turnaround time and instant confirmation of receipt. to file articles of organization, choose the method that best suits your needs.

Alternatively, submitting by mail can take longer, but you can opt for expedited processing for an additional fee if needed. Regardless of the method you choose, the annual filing fee due for submitting articles of organization in New York remains $200.

Expedited processing options

For those in a hurry to form their New York LLC, expedited processing options are available. New York offers 24-hour, same-day, and 2-hour expedited processing services for additional fees. These fees range from $25 for 24-hour processing to $160 for 2-hour processing.

By opting for expedited processing, you can ensure a faster turnaround time for your LLC formation documents, helping you hit the ground running with your new business.

4. Publish your articles of organization in two newspapers

The LLC must publish in two newspapers a copy of the articles of the organization or a notice related to the formation of the LLC. This requirement must be fulfilled within 120 days after the LLC's articles of organization become effective.

LLCs are required to publish in newspapers designated by the county clerk in which the office of the LLC is located. Once published, the newspaper will provide an affidavit of publication. The Certificate of Publication, with the affidavits of publication of the newspapers attached, should be submitted to the New York Department of State.

New York has specific publication requirements for LLCs, which mandate publishing a notice or your articles of organization in two designated newspapers for six consecutive weeks.

To comply with these publication requirements, submit a Certificate of Publication, along with the required $50 fee and Affidavit of Publication provided by each newspaper, to the Department of State for review. Fulfilling these requirements is necessary to prevent your LLC from being dissolved or losing its authority to operate in New York.

Cost considerations

The cost of publication for New York LLCs can greatly fluctuate based on the county and the newspapers selected. The total cost can range from $600 to $1,200, so it's essential to budget accordingly.

Consider contacting newspapers directly to inquire about special advertising rates or package deals to save on publication costs potentially.

5. Create an operating agreement

An operating agreement is a document that outlines the way your LLC will conduct business. New York City requires LLC members to adopt an agreement within 90 days after filing the articles of organization.

Filing the operating agreement is not required, but it is an essential component of your business. Having a readily accessible, written operating agreement is helpful for various reasons, including settling disputes that may arise over financial agreements and other potential litigation. Without an agreement, the courts make determinations based on state law, not necessarily what is in the LLC's and its members' best interest.

The operating agreement can include, but is not limited to, the following:

• LLC's name and principal address
• Duration of the LLC
• Name and address of the registered agent
• Information about the articles of organization
• Purpose of the business
• Members and their contribution
• The way profits and losses will be divided
• Procedure for admitting new members, as well as outgoing members
• Management of the LLC
• Indemnification and liability clauses

To guarantee that your operating agreement is accurately constructed and adequately safeguards all members' rights, it is highly recommended to consult with an attorney, especially when the LLC has multiple members.

Legal requirements

Under New York state law, LLCs must have a written operating agreement. This agreement should be signed before, during, or within 90 days after filing your articles of organization. Failure to have an operating agreement can lead to disputes between members and potentially costly litigation.

Customizing your operating agreement allows you to address specific concerns and preferences, ensuring that it is tailored to your business's unique needs.

Drafting a comprehensive operating agreement

A comprehensive operating agreement should include crucial components like:

• Member financial interest
• Corporate governance
• Officer roles and compensation
• Non-compete and non-disclosure clauses
• Capital contributions
• Profit distribution
• Management and voting procedures
• Transfer of membership interests
• Dissolution and liquidation processes
• Dispute resolution mechanisms

By customizing your operating agreement, you can address specific concerns and preferences, ensuring a smooth operation and clear understanding among all LLC members. It's always a good idea to consult a legal professional to ensure your operating agreement is accurately drafted and adequately protects each member's rights.

6. Receive a certificate from the state

The state will issue you a certificate that confirms the LLC formally exists after the LLC's formation documents are filed and approved. It might take up to seven weeks to receive your certificate.

This certificate will allow the LLC to obtain an Employer Identification Number (EIN), business licenses, and business bank account.

7. Get an Employer Identification Number

The nine-digit Employer Identification Number (EIN) is assigned by the Internal Revenue Service to identify your LLC for taxes. You can obtain your EIN by mail or online through the IRS.

The purpose of an EIN is to assist with the following:

• File and manage taxes at the state and federal level
• Open a business bank account.
• Hire employees.

Benefits of an EIN

An EIN offers numerous benefits for your New York LLC. It facilitates tax compliance by providing a unique identifier for your company, enabling you to file federal income tax returns and accurately report business income and expenses.

An EIN also plays a crucial role in employee management, allowing you to hire employees and manage payroll taxes. Additionally, an EIN is necessary to open a business bank account and conduct other financial transactions, ensuring smooth operations for your LLC.

Next steps

Registering your LLC gives you a legal foundation to conduct business. Plan to keep your LLC compliant and in active status on the state's website.

This might include making quarterly tax payments. New York doesn't require an annual report for your LLC but might require an annual state fee. The amount depends on your LLC's gross income in the previous year. This fee must be remitted to the New York Tax Department. You also need to maintain a registered agent for your business.

A registered LLC also makes it possible for you to have limited liability companies to do the following:

• Obtain permits or licenses necessary to operate your business, including health department permits, zoning permits, home occupation permits, professional licenses, and more. Some states require a seller's permit to conduct sales
• Register your business with the state's tax agency
• Open a business bank account
• Apply for a business credit card
• Purchase insurance for your business
• Protect your name and logo with a trademark

Complying with New York state tax requirements

Comprehending and abiding by New York state tax requirements is critical to running a successful LLC. In New York, LLCs are classified as “pass-through" entities, meaning that they are not subject to corporate taxes, and profits are passed on to the owner's personal for federal income tax purposes.

Each member of the LLC must pay taxes on the business' income. This includes self-employment, state, and federal income taxes. Staying informed on the various taxes applicable to your New York LLC, such as income, sales tax, self-employment, payroll, and other industry-specific taxes, will help ensure your business remains compliant and avoids penalties.

Post-formation steps for a New York LLC

Once you have established your New York LLC, there are numerous subsequent steps to solidify your business's foundation. Opening a business bank account is crucial for separating personal and business finances, simplifying tax filings, and adding credibility when dealing with clients and vendors.

Be aware of ongoing fees associated with your LLC, such as filing fees for biennial statements, taxes, and fees related to licenses and permits. To correctly manage your LLC's finances, it's advisable to consult with an accountant, tax advisor, and/or attorney when you start an LLC.

Lastly, ensure that your LLC complies with any licensing and permit requirements set by federal, state, and local governments.

Complying with New York Tax requirements

As a New York LLC, adhering to various tax requirements is an obligation. These include:

• Income tax
• Sales tax
• Self-employment tax
• Payroll taxes
• Other state taxes, depending on your business's structure and activities

In New York, multiple-member limited liability companies assume the taxation status of a partnership, while a single-member limited liability company is treated as a disregarded tax entity, with members responsible for paying taxes on the LLC's income.

The sales tax rate in New York is 4%, with counties and municipalities adding their own taxes, resulting in combined rates of 8% or more in some jurisdictions. Be sure to stay informed about the tax requirements and rates specific to your industry and location and the frequency of sales tax remittance.

Maintaining your New York LLC

Maintaining your New York LLC, keeping abreast of reporting requirements, annual filing fees, and keeping a registered agent for your business are vital. New York LLCs must submit a biennial statement every two years to update or confirm the mailing address to which the New York Secretary of State can send a copy of any process accepted on the LLC's behalf.

The annual filing fee for LLCs in New York state ranges from $25 or more, depending on the LLC's income. By adhering to these requirements and maintaining a registered agent, you can ensure that your LLC remains in good standing and operates smoothly.

Licenses and permits for your New York LLC

Your New York LLC might need additional licenses and permits to operate legally, depending on your location and industry. To determine the specific licenses and permits needed for your New York limited liability company, consult with an attorney or your local municipality.

Certain industries in New York are regulated by the New York State Department. Some of these include:

• Cosmetology
• Barbering
• Athletic training
• Home inspection
• Real estate
• Sales of goods

Such companies may require additional licenses and permits, which can be obtained through the NYS Business Wizard or the New York Business Express website. Making sure your LLC has all the required licenses and permits will help dodge potential legal complications and interruptions in your business operations.

Growing and managing your New York LLC

With your New York LLC starting to prosper, concentrating on growth and management strategies becomes crucial. Establishing an online presence through a website, social media accounts, and online directories can help you reach a wider audience and attract more customers.

Hiring employees for your LLC is another essential aspect of growth and management. Here are the steps you need to follow:

1. Obtain an Employer Identification Number (EIN).
2. Adhere to federal, state, and local regulations, including registering employees with the State Labor Department.
3. Obtain workers' compensation insurance.

By following these steps, you can ensure that you are hiring employees in compliance with the necessary regulations.

Lastly, obtaining business insurance is vital to shield your business entity, the New York LLC, from possible legal actions initiated by those you collaborate with. By focusing on these areas, you can effectively grow and manage your New York LLC, setting it up for continued success.

Summary

In conclusion, forming an LLC in New York involves several crucial steps, from choosing the right name and appointing a registered agent to filing articles of organization and obtaining an EIN. By adhering to these guidelines and fulfilling your legal obligations, you can build a solid foundation for your company and reap the benefits of a well-established New York LLC. Remember, staying informed on state tax requirements and taking care of post-formation steps will ensure your business remains compliant and successful in the Empire State.

Frequently asked questions

How much does it cost to start an LLC in N.Y.?

Forming an LLC in New York costs $200, payable for the articles of organization to the New York Department of State. Once approved, your LLC will become active.

What do you need to start an LLC in New York state?

To start an LLC in New York, you must name your LLC, choose a registered agent, file articles of organization, fulfill the publication requirement, create an operating agreement, apply for an EIN, and comply with the state's tax requirements.

Can I open LLC by myself in NYC?

You can legally register an LLC in New York City by yourself, however, you should consider utilizing a lawyer to ensure that your articles of organization and operating agreement are properly completed and enforceable. The New York Department of State provides great resources on registering an LLC in New York City.

Is it hard to get an LLC in New York?

Forming an LLC in New York is relatively straightforward; you must submit the articles of organization and a $200 fee to the Department of State.

What are the publication requirements for a New York LLC?

New York LLCs must publish a notice of formation in two designated newspapers for six consecutive weeks, with one being daily and the other weekly located in the same county as their principal address or registered agent.