How to Form an LLC in New York
02 November, 2018
In New York, most of the business entities chose to form a limited liability company (LLC) because of all that it offers. This type of business structure is considered to be the most preferable for small and medium-sized business because it protects against personal liability for any debt of the company.
To be more precise, the personal assets of the owners are not at risk in case the business goes-out-of-place. If a business entity goes bankrupt, or faces a lawsuit, then only the assets of the business would be at risk.
It takes about 6 to 7 weeks to fulfill the requirements for forming an LLC in New York. It is a state with ample opportunities for forming an LLC since it is a city with a combination of diverse cities, vibrant cultures, and healthy economies. New York is the powerhouse for emerging technologies, tourism, finance, and social media entertainment and investments, etc.
Moreover, limited liability companies are not only easier to form, but are very inexpensive and provides flexibility to the owners. Forming an LLC offers tax flexibility by limiting the personal liabilities.
There are state-specific requirements for forming an LLC as it varies by state. Thus, if you require to form an LLC in New York, the following steps will help you to undertake the process:
1. Pick a Name for Your New York State LLC
In New York, your LLC's name must be distinctive, which cannot be used by any other company in New York. The name should be original and unique. It is also important to check if no other business has used the same name. You would be able to check the availability of it from the business name database by the New York Department of State Division of Corporations.
Once you find out that the name is available, you can reserve the name for using it in the future. There is a provision for reserving a name for about 60 days by filling an application via email( $20/form ), for the reservation of name.
Here are the other essential things to keep in mind, before choosing and filing the form for reservations:
- To choose a name ending with the abbreviation LLC or limited liability company. Further, limited can be abbreviated as Ltd. and company as Co.
- Do not choose any word, which can be confused with a government entity in your business name.
- There is a requirement of additional paperwork in case any licensed individual wants to keep their name as a part of the business name, for example, doctors.
- Check for the availability of the chosen business name in the New York Department of State website.
- Since the online website may not include every name, you can get an official determination of the availability of your desired name. Send a written notice to the Department of State, Division of Corporations for checking the availability of your desired business name at $5 for each name, as a standard fee.
2. File Articles of Organization
The next step to create an LLC in New York is to fill the Articles of Organization and mail it to the New York State Department of State, Division of Corporations.
Here are the critical points you have to keep in mind while filling the Articles of Organization:
- It should include the information about the available LLC name along with the county information, where this LLC would be located.
- You have to pay $200, as a form filing fee, in the form of cash, check, money orders, or credit cards to the Department of State, New York.
- The New York State LLC requires a designated street address( home/office address or any other physical location in New York).
- As per the LLC requirements in New York, the address cannot be a P.O. Box or even outside the New York.
- After the form submission, wait for your filing receipt, which will include every information stating the name of the business, fees paid(invoice), date of filling the form and the other information provided in the Articles of Organization, via email.
The registered agent, for your New York LLC, will be the person in authority to receive official legal and tax correspondence. This person could be a managing director, third-party agency or even you, and will be responsible for filling the reports with the New York Secretary of State.
Here are the points to be noted:
- You can also hire an additional agent, who could be an individual New York resident.
- The registered agent should have a physical street address, where you are about to form the LLC(intended state).
- You may receive the essential documents for your business during business hours, Monday to Friday, from 9 AM to 5 PM (Legal Correspondence).
- You require to set up a newly registered agent service, in the new state, if, you move out of state or change your New York business address.
3. Operating Agreement
To form the LLC in New York, the LLC members have to adopt a written operating agreement. This agreement establishes the powers, liabilities, rights, duties, and obligations of the members. The Operating Agreement is an internal agreement, which should be entered, within the 90 days of filing the Articles of Organization.
4. Requirements for Publication
Once, the articles of organization become effective, LLC's have to publish a copy of it in two designated newspapers of the state (which can be determined by meeting the county clerk of the county who selects them) within 120 days. LLC's can also publish the notice regarding the formation of the LLC.
An affidavit is provided by the publishers of each newspaper, once the notice or article is published. Whereby, a certificate of publication ($50 as a fee for filing the Certificate of Publication) is required to be attached along with the affidavits of publication. Further, both of them should be submitted to the New York Department of State.
5. Tax and Regulatory Requirements
The LLC's have to abide by the additional tax and regulatory requirements. These may include:
- Employer Identification Number: You have to obtain an EIN or Employer Identification Number from the IRS, if the LLC formed by you has more than one member.
In case of the one member LLC, the EIN has to be obtained only if you have employees, or you may have to obtain an EIN if you elect to be taxed as a corporation but not as a disregarded entity or sole proprietorship.
No fee is set for filling the form of getting an EIN, and it can be filled through an online EIN application that is on the IRS website.
- Obtain a Business Permit: Based on the type of your business structure, the State of New York issues a license or the business permit to you. For further guidance, New York Business Permits Assistance Program website, is recommended. Or you can contact with the clerk or county clerk of the intended town, village or city.
- Annual State Filing Fee: If an LLC (domestic or foreign) has any income as a disregarded entity or partnership, it is important to file the annual report and pay an annual fee. Moreover, if the business also has any losses or gain derived from New York sources, it is subjected to file the annual report and pay annual fee, which is to be paid to the Department of Taxation and Finance.
The total fee to be paid ranges from $25 to $4,500, entirely depending upon the income of the LLC. The LLC's, which are elected for federal income tax purposes or as a corporation are not subjected to this annual fee.
6. Regulations for Foreign LLCs:
All the foreign LLCs have to register with the New York Department of State Division of Corporation, and for that, they have to head toward the agency, situated in New York. For the registration process, you have to file an Application of Authority with the Division of Corporations, which is available at its official website. To fill this form, a processing fee of $250, along with a certificate of existence from the LLC's home state is required.
Nowadays, in New York, entrepreneurs are choosing to form an LLC, when they plan to start any new small and medium-sized business. It provides flexibility to the owners, protecting them against any personal liabilities for the company's debt.
Since only the company's assets are considered to be at risk in case the company goes bankrupt, the personal assets of the owner do not subject to any liability. Forming an LLC is the most inexpensive option, which varies by states.
This is why, one should go through the proper guidelines as required by the specific state. Are you ready to form a business in New York? If so, feel free to contact IncParadise to have your company incorporated or registered.
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