How to Form an LLC in NY: Start Your Business in 8 Steps
Starting a business in New York comes with exciting opportunities, but many entrepreneurs don't know how to form an LLC in NY. An LLC, or a Limited Liability Company, is a unique business structure that provides flexibility, protection, and favorable tax treatment. It’s an attractive option for many entrepreneurs and small business owners.
If you want to start an LLC in New York State but don't know how to do it, we'll break down the entire process into eight straightforward steps so you can get your new business up and running in no time.
Please note that the content of this article is not legal advice. If you need help determining which legal entity will provide the most legal protection for your business, contact an attorney. If you're unsure what options are right for you, reach out to Desi Tax.
Key Takeaways
Forming an LLC in New York gives you limited liability protection, separating your personal assets from your business liabilities.
LLCs benefit from pass-through taxation, meaning your profits are only taxed once on your personal tax return.
The process of forming an LLC in New York involves several steps, including filing necessary legal documents and, in some cases, applying for business licenses, but it is manageable with proper guidance.
What Is an LLC?
A Limited Liability Company (LLC) is a unique business structure that combines aspects of a corporation with those of a sole proprietorship or partnership. LLCs protect their owners, known as members, from personal liability for business debts and claims.
Unlike corporations, LLCs are not subject to double taxation. Instead, profits and losses pass through to the members' personal tax returns. This makes it a fantastic option for entrepreneurs and small business owners in New York!
The Benefits of Forming an LLC in New York
Limited Liability Protection
One of the biggest benefits of forming a New York LLC is the limited liability protection it gives its members (AKA, you!). When you have an LLC, you're not personally liable for your business's debts and obligations. If your LLC faces a lawsuit or financial difficulties, your personal assets—such as your home, car, and personal bank accounts—are generally protected.
Imagine you own a small coffee shop that operates as an LLC in New York. One day, a customer spills their coffee, slips, and sues your business for $50,000. Because your coffee shop is an LLC, only your business's assets are at risk. Your personal assets, such as your home or savings, remain safe even if your business faces legal claims.
Pass-Through Taxation
LLCs are often taxed as pass-through entities, which is a significant tax advantage. You can report your LLC’s profits and losses on your personal tax return instead of having to pay taxes at both the corporate and personal levels. With a limited liability company, you avoid double taxation and simplify your tax filing process.
Management Flexibility
LLCs are flexible when it comes to the management structure. You can choose to manage your LLC yourself or appoint a manager to handle your business operations. This flexibility allows you to choose a management style that suits your needs and vision. Other business structures, such as corporations come with more rigid management structures.
Ready to Form an LLC in NY?
The idea of forming an LLC might seem daunting, but breaking it down into manageable steps can make the process straightforward. If you don't want to form your New York LLC yourself, we can also easily do it for you 😊
Follow These 8 Steps to Form an LLC in NY
1. Choose a Business Idea and Draft Your Business Plan
The first step in forming an LLC is choosing a great business idea. Think about your passions, skills, and market demand when figuring out what kind of business you want to start. Research your potential clients and customers to understand your target audience, competitors, and potential challenges.
Once you have a solid idea, draft a comprehensive business plan. Your business plan should outline your business goals, target audience, financial projections, and other relevant areas of your business vision. This document will serve as a roadmap for your business growth in the future! You'll also need a business plan if you are planning on getting financing from investors or lenders.
2. Select a Business Name for Your New York LLC
One of the most important decisions you have to make when starting an LLC in New York? Choosing your business name. Your business name should be unique, easy to remember, and reflect your brand. In New York, your LLC name must include the words "Limited Liability Company" or the abbreviations "LLC" or "L.L.C." to conduct business.
Before finalizing your business name, ensure it is distinguishable from existing businesses registered in New York. You can search the New York Department of State’s database to check for name availability. If you have a perfect name in mind but aren't ready to file your LLC, you can reserve it for 60 days by filing an Application for Reservation of Name and paying the required fee.
3. File Your Articles of Organization
You need to file the Articles of Organization with the New York Department of State to officially form your LLC. This document includes essential information about your LLC, such as its name, purpose, location, whether it's a single-member LLC or a multi-member LLC, and the name and address of your registered agent.
You can file the Articles of Organization online or by mail. Once filed, the New York Department of State will review and, if everything is in order, approve your application, officially recognizing your LLC as a legal business entity under New York law 🥳
4. Appoint a NY Registered Agent
A registered agent is a person or business entity that receives legal documents and official notices on behalf of your business. In New York, your registered agent must have a physical address in the state and be available during regular business hours. All limited liability companies need to appoint a NY registered agent.
LLC owners can act as their own registered agent, but this course of action often comes with logistical challenges. If you serve as your own registered agent, it means that you have to be present at your physical address during regular business hours without any breaks or vacation. For most LLC members, this is an extremely limiting requirement - you probably didn't start your own business to be told where you can and can't be during business hours, right?!
This is why most business owners decide to engage a registered agent service. When you form your New York LLC with Desi Tax, we appoint a registered agent for your business free of charge!
5. Pay the Filing Fee
You will have to pay a filing fee to the New York Secretary of State when filing your Articles of Organization. As of 2024, the filing fee is $200. You can pay the filing fee online or by mail with a check or money order. Make sure to verify the current fee on the New York State Department website as it may change!
6. Create an LLC Operating Agreement
An LLC Operating Agreement is an important document that outlines the ownership and operating procedures of your LLC. New York LLCs are not required to create a written operating agreement, but it's highly recommended to have one in place because it provides clarity and structure for your New York business and helps prevent disputes if you have a business partner.
👋 I recommend using this LLC Operating Agreement Template!
7. Get Your Employer Identification Number (EIN)
An Employer Identification Number (EIN), also known as a Federal Employer Identification Number, is necessary for tax filing and hiring employees. You can obtain an EIN from the internal revenue service (IRS) for free by applying online, by mail, or by fax. Having an EIN is also essential for opening a business bank account and applying for certain business licenses and permits.
8. Celebrate!
You now own a limited liability company in New York! Take a moment to celebrate, and then roll up your sleeves and get busy marketing your business and getting new clients 🤩
What to Do After Forming Your New York Limited Liability Company
Forming your LLC in New York is the first step to running a business. Once the LLC formation process is over, there are additional steps you need to take to ensure your business remains compliant and operates smoothly.
1. Apply for Business Licenses and Permits
New York State law doesn't require LLC to apply for a general business license, but, depending on your industry and location in NY, you may need specific licenses and permits to operate legally.
Research the requirements for your business at the federal, state, and local levels. Common licenses and permits include health department permits, professional licenses, and zoning permits. Make sure that you apply for and maintain all necessary licenses to avoid fines and legal issues!
2. Open a Business Bank Account
You need to separate your personal and business finances to keep clean financial records and ensure personal liability protection.
Open a business bank account to manage your LLC’s finances efficiently. Most banks will require your EIN, Articles of Organization, and possibly an Operating Agreement to open an account. Having a dedicated business account also simplifies tax preparation and bookkeeping.
3. Stay on Top of Your Taxes
As a small business owner, you're responsible for knowing when and how to pay your business taxes. In New York, you’ll need to pay various taxes, including state income tax, sales tax (if applicable), and employer taxes if you have employees. You'll also need to pay federal income tax.
Your local county or city may also have additional tax requirements. Reach out to your county clerk to figure out what they are. Register with the New York Tax Department and stay informed about your tax filing deadlines and requirements.
FAQs
How much does it cost to form an LLC in NY?
The cost to form an LLC in New York includes several fees. The main cost is the $200 filing fee for the Articles of Organization. You may also need to cover additional costs, such as name reservation fees, registered agent fees, and any professional services you use for assistance. There may also be ongoing fees for maintaining your LLC, such as an annual filing fee and taxes.
How long does it take for an LLC to be approved in NY?
The processing time for LLC approval in New York can vary. Online filings are generally processed more quickly than mail filings. On average, it can take a few days to a few weeks to receive approval. You can pay an additional expedited processing fee if you need your LLC to be approved faster.
How do I form an LLC in NY by myself?
Forming an LLC in NY by yourself can feel like a daunting challenge, but you can do it with the right information. There are several steps you need to take: choose a unique business name that complies with NY business name regulations, file your Articles of Organization, appoint a registered agent, and obtain an EIN from the IRS. You should also consider drafting an LLC operating agreement. Depending on the nature and location of your business, you may also need to apply for business licenses and permits. You should also open a business bank account to manage your finances and taxes. If you need support forming your New York LLC, we can help!
Does an LLC need a business license in NY?
New York State doesn't require all LLCs to apply for a general business license, but you may need to apply for certain business licenses and permits depending on the nature of your business and its location. It’s important to research the requirements for your industry and obtain all necessary licenses to avoid penalties.
Form an LLC in NY with Desi Tax
If you’re ready to form an LLC in New York but want professional guidance to make sure that everything is done correctly, use Desi Tax’s business formation services. For just $200 + state fees, we help you with:
Drafting and submitting your LLC formation documents
Creating your LLC operating agreement
Obtaining your EIN
Employer registration
Providing a registered agent for your New York business
Alerts for annual compliance filings
With us, you can set your LLC properly without having to spend long hours trying to figure out how to correctly file the necessary paperwork. Learn more and get in touch!
