Starting an LLC in NY
If you are looking to take the plunge and become a business owner in New York, you are likely contemplating starting a New York LLC. In this article, How to Start an LLC in New York Guide, we will cover the ins and outs and provide a simple 6 step guide that anyone can follow.
Step 1: Name Your New York LLC
The process is similar in most states but there are certainly quirky requirements in many of them.
It all starts with a name. While it might sound like a simple task, it’s not always that easy once you factor in the required company indicator and the fact that your name must be distinguishable from the names of existing businesses in the state.
Check out the guidelines below to ensure you meet the New York naming requirements and restrictions.
NY LLC Name Guidelines
- Company Indicator: New York Law requires all LLC names to end with the words Limited Liability Company, or an abbreviated version such as LLC or L.L.C. Current filing trends indicate that LLC is the most popular company ending for New York LLCs (Limited Liability Company).
- Distinguishable Name: You will want the name of your business to be catchy and memorable so you can stand out among the competition but, you will also need to stand out from the businesses already registered in New York to comply with NY naming requirements.
- Name Restrictions: No one likes to be duped, and that includes the state so do not include words in your name that might imply that you are a different type of entity. For example, a corporation, partnership, or a government agency like the Department of Treasury, Department of Education or FBI.
New York LLC Name Availability
Once you have narrowed your options down and have a name you would like to use, it is always advisable to run a business name search on the Department of State Business Entity Database.
Try a few different variations to determine if there are any existing companies with a name that would pose a problem or cause a delay in your filing. For a full list of restricted and prohibited words, head on over to the New York Department of State Website.
Step 2: Appoint a New York Registered Agent for Your LLC
This is one area where New York does things a little differently than they do in every other state. Every state requires that an LLC appoint a registered agent at the time of formation. However, New York is the only state that will appoint itself as the registered agent of your LLC by default.
Don’t worry, you can still appoint a different registered agent if you plan to act as your own or would like to hire a third party registered agent service instead.
Consider appointing a Registered Agent Service Company located in Albany County to shave hundreds of dollars off the cost of your LLC Publication.
New York Registered Agent Options
- New York Secretary of State (default appointment)
- An Individual Resident of New York
- A Registered Agent Service Company
New York Registered Agent Requirements
- A New York Registered Agent must have a physical address within New York where they are available during normal business hours, Monday-Friday.
- Individuals acting as a New York Registered Agent must be residents of New York and at least 18 years of age.
- If a Service Company is going to be serving as the Registered Agent, it must be registered to do business with the state of New York.
Submit LLC Articles of Organization to the New York Department of State
Once you have settled on an LLC name, verified that it is available, and decided on who the registered agent will be, the next step is to submit LLC Formation Documents to the State of New York for approval.
The necessary formation documents and the filing agency have different names depending on your state. In New York, the document you will need to submit is called Articles of Organization.
Additionally, the filing agency is called the Department of State, Division of Corporations which is in Albany, New York. The filing fee for a New York LLC is $200 and the Articles can be submitted by mail or online.
What’s Included in New York LLC Articles of Organization?
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- Name of the LLC.
- Name of the County within New York where the LLC will be located.
- Address where the state can forward copies of any service of process the receive for your company.
- Name and address of the registered agent if you decide to appoint one other than the New York Secretary of State. (Recommended for saving on the costs of publication)
- Name and Address of the Organizer, aka the person that is forming the company.
A full list of details regarding the formation of a Limited Liability Company in New York can be found here.
Fulfill the New York LLC Publication Requirement
New York is 1 of only 3 states that have a Newspaper Publication Requirement (Arizona and Nebraska are the other two states). The fees can range from a few hundred dollars to a few thousand dollars depending on the New York County the LLC will be in.
This is a two-step process that involves publishing newspaper ads and then filing proof of publication to the state.
Publish an Ad in Two Newspapers
When using BizFlash, you can rest assured that we take care of this for you. However, if you decide to do this without an LLC formation company, read on. Once the Articles of Organization are approved by New York, the LLC must publish an ad in two separate newspapers. One newspaper must have a daily circulation and the other must have a weekly circulation; both ads must run for 6 consecutive weeks.
You will have 120 days from the date that your Articles of Organization are approved, to complete this requirement and keep your LLC in compliance.
Submit a Certificate of Publication
Once the published ads have run their 6-week circulation, each newspaper will provide you with an Affidavit of Publication. Additionally, it will have a snippet of the actual ad that ran in their newspaper.
You will need to submit each Affidavit and Snippet, a Certificate of Publication and a $50 filing fee to the Department of State, Division of Corporation. This will be where you filed the LLC Articles of Organization.
Step 5: Get a New York LLC Operating Agreement
LLCs in most states have the option of adopting an LLC Operating Agreement however, in New York it is a requirement. The New York LLC Operating Agreement must be in written form, but it does not need to be filed with any state agency. Instead, this document must be kept on file with the rest of the LLC’s internal documents and records.
Whether an LLC Operating Agreement is required or not, it is something I always recommend having in place. This will outline how the LLC will operate and define all the important details.
What to Include in Your New York LLC Operating Agreement?
There are no set requirements for what needs to be included in your LLC Operating Agreement. Likewise, what is included will ultimately depend on specific details about your LLC like how many owners it has. Likewise, the type of business it will conduct, and how the profits will be distributed, etc.
The items listed below are common elements contained within an LLC Operating Agreement, however, feel free to tailor the contents to fit your specific needs. If you aren’t sure, feel free to reach out to us.
- Company Name
- Company Address
- State of Formation
- Date Formed
- Registered Agent Details
- Business Purpose
- Duration of the Business
- Preferred Tax Treatment
- Management Structure
- Member Details
- Manager Details (if applicable)
- Member/Manager Duties/Responsibilities
- Ownership Percentages
- Member Contributions
- Voting and Approval Rights
- Procedures for Adding or Removing Members
- Dissolution Procedure
- Liability Statement
- Death of a Member Provisions
- Dispute Resolution Details
- Other provisions as needed
Step 6: Apply for an EIN for Your New York LLC
Once your Articles of Organization have been accepted and filed by the New York Department of State, you will want to obtain an EIN. This is also known as an Employer Identification Number, from the IRS (Internal Revenue Service).
An EIN is a unique 9-digit number assigned to your LLC by the Internal Revenue Service (IRS). This is vital for your LLC to open an LLC business bank account, hire employees, or to file/pay federal taxes.
There are many services you can use to obtain an EIN for your new LLC, or you can obtain your own EIN by applying online directly on the IRS website. The information you will need is outlined below.
Information Needed for an EIN
- Legal Entity Type.
- Reason for requesting an EIN.
- Number of LLC owners.
- Address of the LLC.
- Name and SSN/ITIN of the person who will be responsible for the LLC’s taxes (must be an LLC Member).
- State and County where the LLC is located.
- State where the LLC Articles of Organization were filed.
- LLC start date.
Default Tax Classifications
The IRS will use the total number of owners to determine how the LLC will be taxed initially. Below is a simplified explanation of the default classifications:
Single Member LLCs
An LLC with one owner is considered a “Disregarded Entity” and thus will be taxed as a “Sole Proprietorship” by default.
Multi-Member LLCs
If the company has more than one owner, then by default the IRS will classify the company as a “Partnership” for tax purposes.
In both cases, the LLC will not pay taxes on its own behalf.
Instead, each LLC owner will report their share of the LLC’s profits & losses and taxes will be paid on the individual’s tax return. This is what is often referred to as “pass-through” taxation.
Conclusion
Creating an LLC doesn’t have to be complicated. Reach out to us today for expert assistance in launching your New York LLC with confidence. Our experienced professionals take on the detailed tasks of New York LLC formation, freeing you to concentrate on your enterprise’s wider objectives.
Begin your business in NY backed by the assurance of reliable, skilled support. Entrepreneurship can be hassle-free with the right help.
