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New York has a bustling economy, home to a multitude of small businesses across nearly every industry. If you’re thinking about starting a business in the state, an LLC is a solid entity choice.
This guide contains information on the forms you’ll need to file when starting an LLC in New York, as well as the rules that New York-based businesses must comply with.
What is an LLC?
An LLC, or limited liability company, is a type of business entity. LLCs can be founded by one person or multiple people, with its owners referred to as “members.”
Unlike a sole proprietorship or partnership—which make no legal distinction between a business and its owners—LLC members aren’t held financially responsible for a company’s debt.
Unlike a corporation, LLCs are pass-through entities. This means you won’t need to file federal taxes for the LLC itself. Instead, any profits pass through to LLC members who record them on their personal tax returns.
How to start an LLC in New York in 12 steps
- Name your New York LLC
- Choose a registered agent in New York
- File articles of organization in New York
- Fulfill New York’s publication requirements
- Get a federal employer identification number (EIN)
- Prepare an operating agreement within 90 days
- Obtain business licenses and permits
- Understand New York state tax requirements
- Create a business plan
- Examine business insurance options in New York
- Understand financial considerations
- Market your New York LLC
1. Name your New York LLC
Choosing a name to represent your LLC is a fun and important task. The key feature of a New York LLC name is its uniqueness—every new LLC must have a name that does not currently appear in the New York State Department’s Corporation and Business Entity Database.
it’s also a good idea to check for instances of your chosen business name in the U.S. Patent and Trademark Office’s site—and whether a closely-matching domain name is available for your business website.
As well as being unique, the state of New York requires one of the following identifiers in your LLC name: “limited liability company,” “LLC,” or “L.L.C.”
Decide whether to use an assumed name
As an LLC owner in the state of New York, you may operate your company under a different name than the one you register, using a “doing business as” (DBA) or assumed name certificate.
With an assumed name, you’ll use your LLC name for legal documents and tax purposes, and one or more assumed names for interfacing with customers.
Assumed names can be helpful if your LLC name is generic, but you want your storefront or service to be specific. For example, you could name an LLC “New York State Coffee Company,” and then create assumed names for cafes based on their city, neighborhood, or street.
To register your assumed name in New York, you’ll need to submit this form.
2. Choose a registered agent in New York
A registered agent is an entity authorized to receive legal documents on behalf of your LLC.
By default, the New York Secretary of State will be the registered agent when you first form your business. But in order to respond to state filings promptly, you should change that info to a local trusted contact.
Keep in mind that you will need a physical address—not a PO box—in the state of New York where someone is available to receive documents during business hours.
If you don’t have a residence or office that fits that description, you can hire a registered agent service.
3. File articles of organization in New York
Your LLC will be officially formed when you file articles of organization with the New York Department of State.
When you fill out the form, you’ll provide all the essential information about your LLC, including:
- LLC name
- County of operation
- Registered agent details
- Filer’s name and mailing address
In New York, articles of organization can be filed online or by mail with a $200 fee. If filing by mail, the correct address is:
New York Department of State,
Division of Corporations,
One Commerce Plaza,
99 Washington Avenue,
Albany, NY 12231.
4. Fulfill New York’s publication requirements
An additional state mandate for New York LLCs is the requirement to publish a notice about the LLC’s formation in two local county newspapers—one weekly and one daily—for six consecutive weeks.
The newspapers must be designated by the clerk of the county in which the office or registered agent of the LLC is located. Here are some example newspapers where you might advertise.
The newspaper publisher then supplies an affidavit of publication, which should be submitted to the New York Department of State along with a Certificate of Publication and a $50 filing fee.
New York LLCs must comply with these publication requirements within 120 days of filing articles of organization.
5. Get a federal employer identification number (EIN)
Just like people file their taxes under a Social Security number, LLCs file taxes under a federal employer identification number (EIN).
An EIN is also necessary for opening a business bank account or a business credit card, and when hiring employees.
Fortunately, obtaining an EIN is free and easy: You just have to fill out a form on the IRS website.
6. Prepare an operating agreement within 90 days
Within 90 days of filing the articles of organization, New York requires LLC members to adopt an operating agreement. Though it doesn’t need to be filed with the state, this document is a legally binding agreement outlining how your LLC will be run. A few items to consider including are:
- Basic company information, including legal name and address
- A description of each member’s rights, powers, duties, liabilities, and obligations
- Documentation of initial investments
- Voting rules
- Plans for member compensation
- Procedures for the departure or addition of members
- Requirements for amending the agreement
7. Obtain business licenses and permits
While you don’t need a general business license in the state of New York, some cities—including New York City, Buffalo, and Rochester—may require a local license for certain types of businesses.
Use New York State’s business regulations checklist to find out which licenses and permits apply to your LLC.
If your business requires licenses like the Alcoholic Beverage On Premises License, the tool will direct you to the necessary application processes.
8. Understand New York state tax requirements
One of the benefits of forming a New York LLC is its pass-through tax structure. This means any profits made pass through the business and onto its owners. Taxes are therefore also paid through your personal tax filings.
Depending on your business’s gross income, you may be subject to an annual filing fee, which ranges from $25 to $4,500. You can find the necessary tax forms for the current year on the New York State Department website.
Other taxes you may need to pay include sales tax. To collect sales taxes for your state and city, file a Certificate of Authority with the New York State Tax Department at least 20 days before conducting business.
If you’re not sure whether your LLC will be subject to sales tax, review Tax Bulletin ST-175 (TB-ST-175) to find out what goods and services are taxable.
Other LLC formation tasks
9. Create a business plan
A business plan is a written document outlining the purpose and strategies of your business. Though creating a business plan is not required for an LLC in the state of New York, doing so can be a valuable exercise for new business owners to step back and consider the big picture. Having a solid and actionable business plan can also make your new business look and feel more legitimate to outsiders, including investors you may want to attract and workers you may want to employ. Before writing your business plan, be sure to review a few examples and templates.
10. Examine business insurance options in New York
While not legally required in the state of New York, business insurance—like general liability insurance or professional liability insurance—helps protect against lawsuits.
Depending on how your LLC operates, you may need to purchase some type of insurance:
- Liability insurance. Whether general (for reputational harm, bodily injury, and property damage) or professional (for errors, omissions, and negligence), liability insurance protects your business against lawsuits.
- Workers’ compensation insurance. If any of your employees are injured at work, workers’ compensation insurance will cover it.
- Unemployment insurance. For employees who are laid off or let go through no fault of their own, unemployment insurance provides temporary income.
- Disability insurance. In New York, you are also required to provide disability benefits to employees who are ill or injured, even if the incident occurred away from work. Paid family leave insurance is often included with disability insurance.
- Health insurance. If your business hires 50 or more employees, federal law requires you to provide health insurance.
- Property insurance. Theft, vandalism, and natural disasters can be devastating to a business. Property insurance can help protect you from those damages.
11. Understand financial considerations
Securing capital to get your LLC up and running is often one of the most challenging parts of starting a business. So, make sure to consider a variety of traditional and nontraditional options for funding. A few places to start:
- Personal savings. It’s common for founders to use their own money when starting a business.
- Funds from friends and family. If you have people in your life who are willing and able to invest in your venture, leaning on them could work for your business. To deter complications, consider having all parties sign a written agreement outlining how they will be repaid.
- Crowdfunding. Some startups use crowdfunding platforms like Kickstarter to raise money.
- Private investors. Whether from an angel investor, venture capitalist, or any individual investing their own money, a person or company sometimes turns to using money from other investors to help with startup costs, making private investors a popular resource in finding capital for a new business. Keep in mind, however, that pass-through entities can complicate the taxes of these investors.
- Traditional small-business loans. Offered by banks and backed by the federal government, small-business loans are hard to come by but can be a great way to fund a new venture.
- Nontraditional small-business loans. Programs outside of the banking system may be able to offer funding that is easier to obtain and allows for more flexibility in payment plans.
12. Market your New York LLC
Finally, it’s time to reach out to potential customers and build your business. When creating your marketing strategy, you’ll want to consider a few elements:
- Brand strategy. The foundation to all your marketing efforts, your brand strategy makes your business’s identity clear.
- Content. Whether it’s an Instagram post or a billboard, your business’s content is how it speaks to its consumers.
- Advertising, social selling, and public relations campaigns. What do these three have in common? They all involve getting your business’s content out to potential customers, which is a vital part of any marketing strategy.
- Customer acquisition and retention. Consider what it takes to get a new customer and how you will measure customer engagement, among other interactions. Just as importantly, once you have that customer, how will you keep them?
Is an LLC right for you?
LLCs combine the best features of sole proprietorships and corporations, making them a popular choice for small businesses in New York. Here are a few pros and cons of LLCs to consider:
Liability
Pro: Members enjoy legal protection. Forming an LLC means your personal assets are protected against any defaulted loans or lawsuits brought against your business.
Con: Liability protection isn’t absolute. In most cases, LLC members aren’t liable in lawsuits brought against their business. However, this might not hold true if protocols for separating business and personal finances are not followed.
Taxes
Pro: Avoid double taxation. Double taxation happens when corporations are taxed on their profits and then those profits are taxed again when distributed as dividends to shareholders. Because LLCs qualify as pass-through entities, you get to skip the corporate tax altogether, only paying taxes based on your personal filings.
Con: Limitations for investors. LLCs that are taxed as pass-through entities require their investors to pay through their personal tax returns. While some angel investors might be OK with this, you may have to change your tax structure to attract venture capitalists.
Regulations
Pro: More flexibility. Corporations are subject to regulations that do not apply to LLCs. For instance, corporations must have a formal management structure and are required to hold annual shareholder meetings to retain their status. LLCs, on the other hand, are not required to hold these meetings or have a board of directors.
Con: There’s some paperwork. While LLCs are much more flexible than corporations, they do still require more paperwork and filing fees than a sole proprietorship.
*This post is for information only. You are responsible for reviewing and using this information appropriately. Requirements are updated frequently and you should make sure to do your own research and reach out to professional legal, tax, and business advisors, as needed. Businesses outside of New York will have different steps and requirements. To sell products using the Shopify platform, you must comply with the laws of the jurisdiction of your business and your customers, the Shopify Terms of Service, the Shopify Acceptable Use Policy, and any other applicable policies.
Starting an LLC in New York FAQ
How much does it cost to start a New York LLC?
It costs $200 to file your articles of organization, which legally form an LLC.
Do you need a registered agent for your New York LLC?
Yes, you are required to have a registered agent for your New York LLC. You can choose to keep the default Secretary of State as your registered agent, or pick another person, business, or agency with a New York street address. This requires someone who will be available to receive legal documents at that location during business hours.
How do state taxes work for an LLC in New York?
By default, New York LLCs do not pay state taxes. Instead, members pay taxes for the business through their personal tax filings.
