A limited liability company (LLC) offers liability protection and tax advantages, among other benefits for small businesses.
LLC formation in New York is easy. Just follow these seven 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.
- 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. Submit an address to which legal documents can be forwarded and choose your registered agent
In New York, the "agent for service of process" for every LLC is the New York Department of State. If your LLC is sued, the New York Department of State will accept legal documents and forward it to the LLC. All LLC's 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.
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 register your New York LLC properly. 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.
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.
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.
4. Publish your Articles of Organization in two newspapers
The LLC must publish in two newspapers a copy of the articles of 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.
LLC's 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.
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 adopt an agreement within 90 days after filing the Articles of Organization.
There is no requirement to file the operating agreement, 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 in place, the courts make determinations based on state law, not necessarily what is in the best interest of the LLC and its members.
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
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 7 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.
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 the 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 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.