How to Start an LLC in New York in 6 Steps
Starting your own business is a monumental step that requires you to make numerous important decisions. One of these decisions is choosing the business structure that best suits your needs.
The Limited Liability Company, or LLC, often emerges as a favorable choice for budding entrepreneurs among the various options like sole proprietorships, partnerships, and corporations.
In this guide, we’ll delve into the world of LLCs and focus specifically on the advantages of forming an LLC in the business-friendly state of New York.
As you embark on this exciting journey of establishing your LLC in New York, remember that securing the right financial support is just as crucial as choosing the right business structure.
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What is an LLC?
An LLC, or Limited Liability Company, is a type of business structure with a unique blend of features of corporations and partnerships.
At its core, an LLC provides personal liability protection to its owners—or “members”—shielding personal assets from business debts and lawsuits.
This business entity is highly flexible in terms of taxation, management, and profit-sharing, making it a popular choice for a broad range of businesses.
Why Choose an LLC?
Why do so many entrepreneurs gravitate toward forming an LLC? For starters, it offers liability protection without the rigid structure and formalities often required in other business entities like corporations. In other words, you get the best of both worlds—a shield for your personal assets and the flexibility to run your business as you see fit.
Benefits of Forming an LLC in New York
The state of New York offers many benefits for LLCs, making it an attractive locale for starting a business. The Empire State provides a robust commercial infrastructure, a diverse market, and access to one of the world’s largest consumer bases. Additionally, New York offers several business incentives aimed at encouraging small businesses and startups.
Step 1: Choose your LLC business name
The first step in forming an LLC in New York is selecting a unique and compliant name for your business. The name you choose serves as your brand’s identity, so it’s essential to get it right.
According to the New York Department of State, your LLC name must:
- Be unique and not easily confused with existing businesses.
- Include the words “Limited Liability Company” or its abbreviations (LLC or L.L.C.).
- Avoid restricted words like “bank,” “attorney,” “university,” etc., unless you have the required permissions.
Before settling on a name, it’s vital to check its availability to ensure it’s not already in use. You can do this online through the New York Department of State’s website or by contacting them via phone.
If your desired name is available, you can either move on to filing your Articles of Organization or reserve it for 60 days by filing an application and paying a fee.
Step 2: Choose a registered agent
A Registered Agent acts as your LLC’s point of contact with the state. In New York, your registered agent will receive legal documents, tax notices, and other official government correspondence on behalf of your LLC.
Having a registered agent is legally required for your LLC in New York. They play a crucial role in ensuring you never miss any important notifications and that your LLC complies with state laws.
You can be your own registered agent, appoint someone you know, or hire a professional service to fill this role. Regardless of your choice, the agent must:
- Be a resident of New York.
- Have a physical address in New York.
- Be available during regular business hours to receive documents.
This information will be required when you file your Articles of Organization.
Step 3: Prepare an operating agreement
An operating agreement outlines the internal rules and procedures of your LLC. Although not a mandatory document in New York, it’s advisable to have one.
An operating agreement lends clarity to the roles, responsibilities, and financial contributions of each member. It’s a roadmap that helps you navigate potential conflicts or challenges that could arise during the course of business.
There are several ways to create an operating agreement:
- Use a template: Various online resources offer templates that you can customize to suit your needs.
- Hire a professional service: Some online platforms specialize in operating agreements tailored to your specifications.
- Consult a lawyer: For businesses with complex structures or specific legal requirements, consulting a lawyer for a customized agreement is advisable.
Once your operating agreement is created, keep it in a secure location and update it as necessary, especially when there are changes in ownership, management, or operating procedures.
Step 4: File your LLC articles of organization
The Articles of Organization serve as the foundation of your LLC, officially registering it with the New York Department of State. This document provides basic information about your business, including its name, registered agent, and business purpose.
Filing your Articles of Organization is mandatory for legally establishing your LLC in New York. It helps the state maintain records of businesses operating within its jurisdiction and ensures that you meet all regulatory requirements.
You can file your Articles of Organization online through the New York Department of State’s website or by mail. The filing fee is generally around $200, but it’s advisable to check the current fee structure on the state website.
Once your Articles are filed and accepted, you’ll receive a filing receipt and certificate of organization, officially marking the creation of your LLC.
Step 5: Fulfill the New York publication requirement
New York State mandates that all newly formed LLCs must publish a notice of their formation in two newspapers within 120 days of filing the Articles of Organization.
This requirement ensures public awareness of new businesses and aids in transparency. Failure to comply with this rule may result in your LLC losing its ability to bring forth any legal action within the state.
To meet this obligation, you must publish a notice of your LLC’s formation in two newspapers—one daily and one weekly—for six consecutive weeks.
Upon completion, you’ll receive an Affidavit of Publication from each newspaper, which you must then file with the New York Department of State to complete the process.
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Step 6: Get an employer identification number (EIN)
Finally, the last step is to apply for an Employer Identification Number (EIN). Your Employer Identification Number (EIN) is like a Social Security number for your LLC. The IRS uses this number for tax identification purposes.
An EIN allows you to open a business bank account, hire employees, and file tax returns. It’s a crucial step for legitimizing your LLC and complying with federal regulations.
Obtaining an EIN is a straightforward process and can be done in multiple ways:
- Online: The fastest method, usually providing your EIN immediately.
- By Mail: Fill out IRS Form SS-4 and mail it in. This can take 4-6 weeks.
- By Fax: Fill out IRS Form SS-4 and fax it. Your EIN will typically be faxed back within four business days.
- By Phone: For international applicants, you can obtain an EIN by calling the IRS.
Once you have your EIN, it’s used for various business activities such as filing taxes, applying for business licenses, and setting up payroll.
Congratulations on successfully navigating the steps to start an LLC in New York!
As your business progresses, remember to tackle additional tasks such as registering for state taxes, obtaining the necessary business licenses, and opening a business bank account to keep your venture running smoothly.
And if you need any additional help, Mantis Funding is here to support your business journey with various revenue-based financing options.
Reach out today and discover how we can help you achieve your business goals!