Form An LLC
Step 1) Verify & Secure Your LLC Name
First off, in order to launch a successful New York LLC, you need to give it the right name. Your business name needs to be catchy for branding purposes and legitimate for legal purposes. We go into depth on this topic in our LLC naming guide, but we’ll go over the legal basics below.
Legally, your business name must:
- Contain the words limited liability company, limited company, or the abbreviation LLC or L.L.C.
- Not contain words like academy, bank, lawyer, mortgage, university, or doctor.
- Be distinguishable from any other entity or trade name registered in New York.
For a complete list of naming rules, you can visit New York’s Department of State's Division of Corporations, State Records and Uniform Commercial Code website.
If you’re having trouble coming up with a name that captures your brand, don’t let that stop you from forming your LLC. For now, you can focus on the legal requirements and consider applying for an assumed name after you’ve nailed down your branding.
What To Do:
Once you’ve decided what you’d like to call your LLC in New York, do a business name search to find out whether or not it’s in the cards. If your business name is available, you’ll be able to lock it down when you file your Articles of Organization.
Quick Note: Before you commit 100% to a name, you should see if there’s a decent URL available. Use Weebly to search for your options. If there’s a quality domain name for purchase, we advise buying it right away because even if launching a business website isn’t on your radar right now, it’s going to be soon.
Step 2) Appoint A Registered Agent
In New York, the Secretary of State acts as the statutory agent for service of process for all New York LLCs by default. In addition, you can choose to designate a registered agent for your New York LLC.
If you choose to designate a registered agent service, the Secretary of State will still be the first point of contact for the state and for anyone who might serve your LLC with legal action.
As your statutory agent for service of process, the Secretary of State will forward the following to your LLC’s principal address or to the address of your designated registered agent:
- All formation documents
- Any service of process information
- Documents regarding taxation and reporting
Your principal address must be published in a newspaper. To keep your information private and publication costs low, consider using a registered agent service.
Step 3) File Articles Of Organization
Now it’s time to officially form your LLC by filing your Articles of Organization with the state of New York. You can do this on your own, with the help of a lawyer, or through a professional LLC filing service.
What To Do:
If you choose to complete this step on your own, you can either file online or fill out a hard copy of the form and mail it in. The filing fee is $200. If you choose to mail in a hard copy, send the form and payment (payable to the Department of State) to the following address:
Department of State Division of Corporations
State Records and Uniform Commercial Code
One Commerce Plaza 99 Washington Ave.
Albany, NY 12231
Your filing will be processed instantly if done online or in 3 to 5 business days if done by mail, but this can be expedited by paying a fee.
Sure, you can handle this step on your own, but we still recommend considering the help of an LLC formation service. Why? Not only will they take the reins and make sure you file everything properly, but they’ll also provide other necessary products and services at very competitive prices.
One great option is Northwest. In addition to great service, they give you a free year of registered agent service when you sign up.
Step 4) Draft An Operating Agreement
In New York, the operating agreement is mandatory. And for good reason!
Creating an LLC operating agreement is the only way for you and your members to fully define your roles and lock down your LLC’s management and ownership structure. Having this document in place will also give you all something to return to if a dispute or lawsuit ever arise.
Your operating agreement should at least outline the following:
- each member’s responsibilities
- how new members will be admitted
- how existing members may transfer or terminate their membership
- how profits and dividends will be distributed
You can add as many provisions as you want to your operating agreement, provided they aren't in conflict with New York's business laws.
To access a free operating agreement and learn more about how this document works in New York, click here.
Step 5) Get An EIN
The Employer Identification Number (EIN), or Federal Tax Identification Number, is essentially a social security number for your company. State and federal agencies use this number to track your business activity.
Your EIN will come in handy when it’s time to:
- Open a business bank account
- File Federal and State taxes
- Hire employees
We think the best way to get an EIN is by using the free online application on the IRS website. We prefer this method because it's the most efficient, but you can apply by phone, fax, or mail. You can read through our guide to find out how.
Step 6) Publishing Notice of Articles of Organization
New LLCs must publish a copy of the Articles of Organization in two county newspapers for six weeks within 6 months of formation. One must be a daily paper and one must be a weekly, and both must be located where you operate.
Check with your local county for the list of county newspapers that have been approved for publication and shop around for the lowest prices before deciding on the newspapers.
Call or email the advertising department of the newspapers to schedule the publication. After the publication is done, you must file a Certificate of Publication along with an Affidavit of Publication provided by the newspaper with the New York State Department of State. Filing Fee: $50
Need more info about New York publication requirements? Check out TRUiC's guide.
Maintain Your LLC's Personal Asset Protection
Using dedicated business banking and credit accounts is essential for personal asset protection.
Now that you’ve made it through the formation process for your LLC, you’ll need to take steps to protect your personal assets and establish your business as an independent entity.
When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your LLC is sued. In business law, this is referred to as piercing your corporate veil.
You can go a long way in protecting your assets with these three steps:
1. Open a business bank account.
A business bank account separates your personal assets from your company's assets, which is necessary for personal asset protection. A designated business bank account also makes accounting and tax filing easier.
Get $200 when you open a business checking account with Chase.
2. Get a business credit card.
A business credit card helps you separate personal and business expenses. A business credit card will also build your company's credit history, which can be useful to raise capital later on.
3. Designate an authorized representative.
Make sure all documents are signed by a representative of your LLC and not by you (or other LLC members) directly. This will help separate you from liability incurred by the LLC.
Reduce the Liability of Your LLC
Business insurance helps you manage risk and focus on growing your business. Carrying the right coverage protects your LLC from liability and keeps you safe in the event of a loss.
The most common types of business insurance are:
- General Liability Insurance: A broad insurance policy that protects your business from lawsuits. Most small businesses get general liability insurance.
- Professional Liability Insurance: A business insurance for professional service providers (consultants, accountants, etc.) that covers claims of malpractice and other business errors.
There are free services available that quickly assess your business’s insurance needs. These services suggest customized policies with various insurance carriers so that you can choose the best value. One such reliable service is CoverWallet.
You can reduce your LLC’s liability by being fully compliant with employment laws such as:
- Verifying new employees are allowed to work in the US.
- Reporting employees as "new hires" to the state.
- Withholding employee taxes.
- Printing compliance posters and placing them in visible areas of your workspace.
If you plan to hire employees, you might also be required to invest in Workers' Compensation Insurance. This type of policy provides coverage for employee job-related illnesses, injuries, or loss of life.
Find out more information from the New York Department of Labor.
As a new LLC, you will need to stay compliant with permits, licenses, taxes, and state filings. This is serious business; failure to comply can lead to fines, tax penalties, and dissolution (the end) of your LLC.
Business Licenses and Permits
To operate your LLC, you must comply with federal, state, and local government regulations. The details of business licenses and permits vary from state to state, so make sure you research carefully and plan accordingly.
Find out how to obtain necessary licenses and permits for your business or have a professional business licensing service do it for you:
Federal: Use the U.S. Small Business Administration (SBA) guide.
Local: Contact your local county clerk and ask about local licenses and permits.
This certificate allows a business to collect sales tax on taxable sales.
Sales tax, also called "Sales and Use Tax," is a tax levied by states, counties, and municipalities on business transactions involving the exchange of certain taxable goods or services.
Here’s a sales tax guide to find out more.
If you have employees in New York, you will need to register for Unemployment Insurance Tax through the New York Department of Labor. You will also need to sign up for Employee Withholding Tax through the New York Department of Taxation and Finance.
New York requires all LLCs to file a biennial report. If you miss state filings like the annual report, you could face fines or even automatic dissolution. A quality registered agent service can help protect your assets by keeping track of filing requirements for you.
New York State Department of State
Division of Corporations, State Records and Uniform Commercial Code
99 Washington Avenue 6th Floor
Albany, NY 12231
Due Date: Due every other year by the end of the month in which the LLC was formed.
Late Filings: New York will classify late-filing LLCs as “delinquent,” resulting in loss of certain rights and privileges. Your LLC could eventually be dissolved or revoked.
Reduce Administrative Burden
There will be many demands on your time once you start your business. With that in mind, it’s a good idea to streamline your workflow and reduce administrative overhead from the get-go. The two most important business tasks to get help with are:
Getting your books in order right up front will save you headaches in the future. At the very least, you can have a professional set up your bookkeeping and accounting for you. This will save you money and time in the long run.
There are all-in-one services that will do your bookkeeping/invoicing/tax filing for you all for one monthly fee. Mazuma ($95/month) is a reliable all in one tax service.
If you have employees, a payroll service will save you a lot of time and also save you from having to become an expert on state compliance or employee tax withholdings and filings.
Gusto is a reliable and good payroll service for small businesses.
Need Help Forming an LLC?
If you’ve got too much on your agenda to worry about all the paperwork and state-requirements, there are a handful of LLC formation services that can take care of everything for you.
Here are the two most popular:
– Northwest ($49 + state fee) = Best Price & Overall Value
– LegalZoom ($79 + state fee) = Best For Brand Recognition
Note that this guide for forming a New York LLC isn’t a legal document or legal advice. It’s for informational purposes and the information above is subject to change. For specific legal questions regarding how to form an LLC in New York, please consult with a business attorney. We recommend Umar Farooq.