How to start an LLC in New York?
A limited liability company, or LLC for short, is a business structure that provides the limited liability features of a corporation with the pass-through taxation of a sole proprietorship. It is one of the most popular legal structures for small businesses in New York State because it allows you to have complete control over your business while protecting your personal assets.
As many of us know, New York is a prevalent state where people start businesses. It’s one of the best places to do business in the entire country because it has an incredibly diverse economy and offers numerous incentives for entrepreneurs. For example, New York provides tax exemptions for new companies and deductions when purchasing equipment.
This is why we will discuss how to start an LLC in New York.
Benefits of starting an LLC in New York
There are many reasons why it is a great idea to start an LLC in New York. Below, we will mention just some of the most essential benefits of forming one here in this state.
Limited liability protection
One of the most essential benefits of forming an LLC in New York is limited liability protection. If you’re a sole proprietor and get sued, all your personal assets can be at risk. However, when you form an LLC in New York, this risk gets eliminated since the business structure provides you with the limited liability protection that comes with incorporating your business.
Starting an LLC in New York is not difficult, but it’s always easier when you have some help. Thankfully, plenty of professionals out there can assist you with forming your LLC. And since the state of New York offers some incentives for entrepreneurs, many accountants, attorneys, and financial planners offer their services for free to new business owners.
Another great thing about starting an LLC in New York is that it offers some tax benefits. You won’t have to pay income taxes or employment taxes when forming an LLC because this legal structure qualifies as a pass-through entity. This means that the profits and losses will need to be recorded by the owners on their personal income tax returns. If you want to learn more about how this works, look at our article detailing the differences between corporations and LLCs.
New York LLC Rules & Requirements
To start an LLC in New York, there are specific rules and requirements that you must meet. In this article, we will go over the most important ones to better understand what is needed to form your own LLC here in New York.
Best New York LLC Formation Services
Before you go out and try to start an LLC on your own, you should definitely explore the market for professional services that can assist you with this task. There are plenty of them out there that will do this job in no time. We have done the hard part for you and shortlisted the top formation services in New York City.
The following is a step-by-step guide of what you can expect when forming an LLC in New York:
7 Steps to Starting an LLC in New York
Step 1: Name Your New York LLC
The first thing you’ll need to do is choose a name for your LLC. It must include the words “Limited Liability Company,” “Limited Company,” or the abbreviations “LLC,” “LC,” or “LLC.”
The name cannot be misleading, contain special characters, or have legal significance. For example, you can’t opt for a term with the word “corporation” or any of its abbreviations.
Another thing you need to keep in mind is that your name cannot be the same or very similar to an existing LLC. When you have decided on a name, make sure to do New York State LLC Search of existing businesses for this purpose.
Make sure that you also find a domain name to make your website. You can use Namecheap to check for available names.
Step 2: Choose a New York Registered Agent
After you have decided on a name, the next step is to find a New York registered agent for your LLC before you file for LLC online. You can register one yourself or hire someone online to do it for you. Bear in mind that the state of New York requires all new companies to have an individual or business with a physical address here who serves as your registered agent.
This person must be at least 18 years old and a citizen of the United States. They must also reside in New York.
You can check out ZenBusiness for this purpose. You can form your LLC online or hire them to do it for you at their website. Keep in mind that they will act as your registered agent if you opt for the latter choice.
Step 3: File your Articles of Organization
Once you have a New York registered agent, you can file your Articles of Organization online at the NY State website. Your Articles of Organization should contain basic information about how much money will be invested in the company and the name and address of your LLC’s registered agent.
You can use Form DOS 1336, a simple form available for download on the New York State website. You can apply online, through the mail, fax, or in person.
Step 4: New York LLC Publication Requirements
New York is a publication state, which means that your business needs to publish a notice in two newspapers(or one daily and one weekly) for six consecutive weeks. After this period, you will need to file an affidavit with the state proving that these publications have been done.
Step 5: Create an Operating Agreement
Once you have your LLC set up, it’s vital to create an operating agreement. This document is the best way to protect yourself and your company.
Your LLC’s operating agreement contains important information: how many people will be part of the LLC, manage the company, and how profits and losses will be split among members.
This is not a legal requirement, but it has several benefits. An operating agreement governs the LLC and reduces confusion about ownership, management, and members’ rights and responsibilities.
Step 6: Get an EIN
After you’ve created your LLC, the next step is to get an Employer Identification Number (EIN). This number is also known as a Federal Tax Identification Number. It’s needed to open business bank accounts and gather taxes.
You can apply for it by filling out IRS Form SS-4. You can do it online or on paper and then mail it to:
Internal Revenue Service
Attn: EIN Operation
Cincinnati, OH 45999
Step 7: Biennial Statements
You’ll need to file a Biennial Statement with the New York Department of State every other year. In this statement, you should provide information about: your registered agent’s name and address, which officers were elected, and the general nature of your LLC’s business.
You should also provide a list of all members and managers. You can file this statement online or by mail. If you opt for the latter, then the filing fee ranges from $25 to $4,500, depending on the size of your business.
You will also need to update your contact information every two years which will cost you $9.
New York LLC Processing Time
If you apply by mail, it takes about three to five weeks for the state of New York to process all your LLC’s paperwork.
If you apply online, then it should be ready immediately.
Now that you know how to start an LLC in New York, it’s time for you to take action. The above steps are comprehensive and easy to follow. Once you have created your company, you can start doing business in New York.
New York LLC Frequently Asked Questions
How much does it cost to set up an LLC in NY?
The filing fee for an LLC in NY is $200. This is paid to the Secretary of State and the Articles of Organization.
How do I set up an LLC in NY?
- Step 1: Name Your New York LLC
- Step 2: Choose a New York Registered Agent
- Step 3: File your Articles of Organization
- Step 4: Publish Notice of LLC Formation
- Step 5: Create an Operating Agreement
- Step 6: Get an EIN
How long does it take to set up an LLC in New York?
If you apply by mail, the processing time for your New York LLC through the Secretary of State is between 3-5 weeks. However, expedited processing is available for an extra $25.
If you apply online, your LLC approval documents should be ready immediately.
What taxes does an LLC pay in New York?
If you earn less than $290,000 in annual net profits, you will pay a 6.5% ENI Tax.
If you earn between $290,000 and $390,000 in annual net profits, you will pay 7.1%.
If you earn more than $390,000 in annual net profits, you will pay 4.35% ENI Tax.
Do I need a registered agent in NY?
Yes. A registered agent is a representative who will receive legal papers on behalf of your LLC. The address you use for your registered agent must be in New York State.
How do I get an EIN number in NY?
You can get an EIN number online via the IRS website, by telephone at 1 800 829-4933, or by mailing an SS-4 application to the IRS.
Does New York allow single-member LLC?
Yes, New York allows single-member LLCs.
Can I use a PO Box for my LLC in NY?
No. The address for your LLC must be a physical location.
How much is a tax ID number in NY?
Applying for an EIN through IRS does not cost anything.
Do I need an NYS tax ID number?
You will probably need a tax ID number, also known as an Employer ID number, issued at the federal level.
How to Start an LLC in New York
A Beginner’s Guide to Starting an LLC in New York