How to Start an LLC in New York

Starting a business can feel like an overwhelming task, especially when you’re dealing with legalities and paperwork. If you’re thinking about forming a Limited Liability Company (LLC) in New York, you’re in the right place. Let’s walk through the process step by step to make it as simple as possible. From picking a name to getting the necessary paperwork in order, we’ve got you covered.

What is an LLC?

Before diving into the how-to, let’s clarify what an LLC is. A Limited Liability Company is a type of business structure that offers personal liability protection to its owners, known as members. This means your personal assets—like your house or car—are protected, unlike in other forms of business structures such as sole proprietorships. Additionally, LLCs offer flexibility in management and taxation, making them a popular choice for many entrepreneurs.

Step 1: Choose a Name for Your LLC

Choosing a name for your LLC is an essential first step. The name you select should be unique and distinguishable from existing businesses in New York. Here are a few things to keep in mind:

• Your LLC name must include the words “Limited Liability Company” or the abbreviation “LLC” or “L.L.C.”
• Avoid using restricted words like “Bank,” “Insurance,” or “University” without special approval.
• Check the name availability on the New York Department of State’s website to ensure it’s not already in use.

Once you’ve decided on a name, you might also consider reserving it. This way, no one else can use it while you’re getting your LLC set up. New York allows you to reserve a name for 60 days by filing an Application for Reservation of Name and paying a small fee.

Step 2: Designate a Registered Agent

In New York, every LLC is required to have a registered agent. A registered agent is a person or business entity responsible for receiving legal documents on behalf of the LLC.

You can act as your own registered agent, or you can hire a service to do it for you. The key requirement is that the agent must have a physical street address in New York and be available during normal business hours. This ensures that your business can always be reached for legal purposes.

Step 3: File the Articles of Organization

The next step is to officially create your LLC by filing the Articles of Organization with the New York Department of State. This document includes basic but critical information about your LLC such as:

• Your LLC’s name
• Your LLC’s registered agent’s name and address
• The management structure of your LLC (member-managed or manager-managed)

You’ll need to pay a filing fee when submitting this form, so check the Department of State’s website for the latest fee information. You can file online, by mail, or in person, depending on what is most convenient for you.

Step 4: Fulfill New York’s Publishing Requirement

New York is one of the few states that requires new LLCs to publish a notice of formation in two newspapers for six consecutive weeks. This step must be completed within 120 days of your LLC’s formation.

Your local county clerk will typically designate the newspapers for this purpose. After publication, you’ll need to submit an Affidavit of Publication and a Certificate of Publication to the New York Department of State, along with the associated filing fee.

Step 5: Create an Operating Agreement

While not mandatory, it is highly advisable for your LLC to have an operating agreement. This document outlines the ownership and operating procedures of your LLC, essentially serving as a tailored set of rules for how your business will be run.

Even single-member LLCs benefit from an operating agreement as it helps maintain credibility with banks, potential investors, and the IRS. Your operating agreement can cover aspects such as:

• Division of ownership among members
• Voting rights and responsibilities
• Profit distribution
• Meeting guidelines

Step 6: Obtain Business Permits and Licenses

Depending on your business activities, you may need specific permits or licenses to legally operate in New York. These can include zoning permits, health permits, or professional licenses. It’s important to research which ones apply to your business type and ensure you have everything in order before you start operating.

The New York Business Express website is a great resource for determining which licenses and permits your business may require.

Step 7: Register for State and Federal Taxes

Most LLCs will need to register for taxes at both the state and federal levels. Here’s how to get started:

Employer Identification Number (EIN)

First, you’ll need to apply for an Employer Identification Number (EIN) through the IRS. An EIN is like a social security number for your business and is necessary for opening a bank account, hiring employees, and filing taxes.

The application can be completed quickly online at the IRS website and is free of charge.

State Taxes

In New York, your LLC may be subject to several state taxes including sales tax and, depending on your LLC’s structure, employment taxes. You will need to register for these taxes through the New York State Department of Taxation and Finance.

Step 8: Keep Your LLC in Compliance

Once your LLC is up and running, maintaining good standing with the state is crucial. This means staying on top of ongoing requirements:

• Filing a Biennial Statement: Due every two years, this update lets the state know any changes to your registered address or agent.
• Paying any state taxes or renewals on licenses and permits timely.
• Keeping accurate financial records and minutes of organizational meetings.

By following these steps and staying informed, you’ll be well-prepared to start and operate a successful LLC in New York. While the process entails various intricacies, breaking it down into manageable steps can make it a rewarding journey. Happy business planning!