Form An LCC
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 or limited company, or the abbreviation LLC or L.L.C.
- Not contain the words like academy, bank, lawyer, mortgage, university, or doctor.
- Be distinguishable from any other entity or trade name registered in New York.
For an exhaustive 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 filing for a fictitious 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 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
Your NY Registered Agent is a sort of legal representative of your brand, but not in a lawyer or attorney-sense. It’s their job to officially receive/process important business documents like state filings, legal notices, tax forms, and so forth.
This is why they have to be either a NY resident individual or a registered business entity and be reliable during all regular business hours M-F (9a.m. to 5p.m.).
That said, you can hire a 3rd party professional and expect to pay up to $160/year, or get a registered agent free for the first year when you start an LLC through IncFile. They handle this along with much more depending on your startup package.
Step 3) File Articles Of Organization
Download and print out the Articles of Organization which will need to be filed with the Division of Corporations of the New York Department of State when you’re ready to set up shop and go into business.
The official form only addresses the basic requirements and may not include some of the optional provisions such as business purpose, limitations on the powers of the manager or members and any other provision in the operating agreement.
It’s an important declarative document about the basics of your brand for the public record – county where the LLC will be located, name and address of brand, registered agent info, hours of operation, etc. You can file through mail or by using the state’s Online Filing System.
When using mail, send mailings to New York Department of State, Division of Corporations, One Commerce Plaza, 99 Washington Avenue, Albany, NY 12231. You can mark “expedited processing” on the mailing envelope and pay the applicable expedited processing fee if you need a rush filing.
You can also fax the Articles of Organization (along with a Credit/Debit Card Authorization Form for payment of filing fees) to +1(518) 474 1418. Credit/Debit Card Authorization is available here: https://www.dos.ny.gov/forms/corporations/1515-f.pdf.
Important: Make sure to always include the back page for the Certificate of Incorporation form that has the document title and the filer’s name and address.
For certain LLCs that will provide professional services such as medicine, law and other services that require professional licensing in New York, you will need to subject additional certifications from your licensing body to properly set up a professional LLC.
LLCs can have one-member of multiple-members. It can be managed by members or managers.
LLC Filing Fee: $200
Step 4) Draft An Operating Agreement
An LLC operating agreement sets forth the ownership structures and classes of membership interests or units. It also outlines the financial and managerial relationships between owners.
An operating agreement protects your limited liability status and overrides state-default rules, which may not be applicable to your platform at all. The operating agreement may contain a number of rights and obligations. Examples of this include a right of first refusal, obligations for additional capital contributions, pre-emptive rights, and certain buy-sell provisions.
In other words, if you don’t take the time to write down the ‘rules’ of your LLC, then the state’s default rules take over. If there’s a dispute, those rules may work against your business. You can draft your own free of charge using one of these operating agreement templates that are fully customizable.
You can decide to issue certificates for membership interests or units, although it's not required. Sometimes the LLC may also issue certain “profit interests” or “incentive units” as an alternative way of compensating service providers. Such “profit interests” must be authorized in the operating agreement.
If you don’t authorize such interests on initial formation, you can always amend the Operating Agreement later.
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 if you’d prefer to apply via phone, fax or mail, 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.
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 protect your business with these two steps:
1. Opening a business bank account:
- Separates your personal assets from your company's assets, which is necessary for personal asset protection.
- Makes accounting and tax filing easier.
2. Getting a business credit card:
- Helps you separate personal and business expenses.
- Builds your company's credit history, which can be useful to raise capital later on.
Reduce the Liability of Your LLC
Business insurance helps you manage risks and focus on growing your business. 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 against claims of malpractice and other business errors.
- Workers' Compensation Insurance: A type of insurance that provides coverage for employees’ job-related illnesses, injuries, or deaths. In New York, businesses with one or more employees, including LLC members and corporate officers, are required by law to have workers' compensation insurance. Get a free quote with ADP.
We strongly recommend utilizing a professional to avoid any costly mistakes when dealing with licenses and taxes. If you need help, consider professional Business License Research packages that can quickly source all needed documents for you.
If you are set on doing this solo, bookmark the New York district office of the Small Business Administration and the state’s Small Biz Development Center because they’re likely going to be go-to sources.
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 setup 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.
2) Employee Payroll
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.