In New York, establishing your business as a limited liability company provides validity and certain legitimate securities, regardless of what state you file in. For many business owners based in New York, incorporating as an LLC there makes the most sense, not having to worry about inter-state paperwork keeps the procedure of filing and maintaining your business’s status simple.
Below is a step-by-step guide on how to form an limited liability company in New York, United States of America, along with details that will ensure your filing process goes smoothly.
Step 1- Name your New York LLC
Start by choosing a name for your limited liability company. Whether you already have a business name or are starting a new venture, the name has to comply with some basic New York business naming restrictions. All LLC business names in New York must Contain the words, limited liability company, or the abbreviation, LLC, within the business name.
Also, The LLC name must be unique and distinguishable from all other New York LLC businesses and corporations.
Business names in New York can also be reserved with the Department of State, and doing so gives additional protection against another business owner registering a similar name.
Step 2- File articles of association
An article of association is the legal document that establishes your limited liability company with New York State. All LLCs in New York are required to file articles of association.
A non-refundable fee of $200 is charged for filing LLC articles of association in New York. In addition to the registration fee, LLCs should also be prepared to pay for publication.
Requirements for filing an article of association
- Basic Details: The Articles of association form seeks basic details, including the LLC’s name, county of location, and mailing address. The filer’s name and mailing address must also be provided. To file articles of association, you should submit the Articles of association to the Department of State. The articles can be submitted online to the Department of State website, by Mail, In-Person, or by Fax.
- Publication: New York is one of the few states to require that LLCs publish their formation.
Businesses must publish a Notice of Formation in two local newspapers. The Local papers must be located within the county where the LLC’s address is, and the notice must be published once per week for a total of six consecutive weeks. The full six-week run must be completed within 120 days of filing the articles of association.
Once the notice’s publication run is finished, the paper will issue an Affidavit of Publication to the filer. The two affidavits can then be filed along with a Certificate of Publication. All three documents are to be sent to New York Department of State, Division of Corporations, One Commerce Plaza, 99 Washington Avenue, Albany, NY 12231.
Step 3- Choose a registered agent
A registered agent acts as the main legal contact for an LLC. The registered agent receives notice of any legal action against the business, and they also receive other communications from the state.
The Secretary of State acts as the default registered agent for LLCs in New York, except another entity is selected, which can be any person affiliated with the business or a registered agent service.
A registered agent service can manage all of a registered agent’s responsibilities on an LLC’s behalf. Business owners choose registered agent services for two main reasons, privacy, and publication cost savings.
Step 4- Create an operating agreement
The main purpose of an operating agreement is to legally define the ownership structure and operations of an LLC. Creating a detailed operating agreement not only clearly defines rights and responsibilities at the outset, but can also reduce the risk of conflict in the future.
A well-formulated operating agreement will cover organization, management, contributions, distributions, and changes in stakeholders. Other details may also be included.
Step 5- Apply for an EIN
The IRS requires all LLCs to file for an Employer Identification Number (EIN), regardless of what state the business files in. Occasionally an EIN is referred to as a federal tax identification number (FTIN).
An EIN is a nine-digit number that uniquely identifies a business for tax and other purposes. It’s necessary to file federal and state taxes, open business bank accounts, hire employees, and some other actions. The number functions much like a corporate Social Security Number.
EIN applications are sent directly to the IRS and are free to file.
Step 6- Comply with New York’s tax requirements
Once your New York LLC is set up, you’ll need to comply with multiple state tax requirements.
Under standard LLC taxation, you’ll have to pay both income tax and FICA taxes on all money earned through the business.
- Income tax- Income tax must be paid on all money earned from an LLC, this includes all net profits. Both federal and state income taxes are assessed.
- Sales tax- Sales tax must be collected and remitted on any non-exempt goods sold, and on select services. The state-assessed sales tax rate is 4%.
- Self-employment tax- If using LLC taxation status, the FICA taxes assessed are actually paid as self-employment tax.
Assuming an LLC is profitable, owners must submit estimated income tax payments every quarter.
After you setup your New York limited liability company
After your LLC is officially filed, there are a couple of extra things to take care of. These things will ensure that your LLC is set up to operate smoothly and for progress.
- Open a business bank account
An important step in setting up an LLC is having a separate bank account for your finances.
Having a separate business bank account makes business expenses and incomes clear, which helps in the event of an audit. A separate account also ensures business owners receive proper distributions, provides legitimacy when writing checks, and may help in maintaining the LLC’s corporate veil.
- Obtain relevant business licenses and permits
Depending on where your LLC operates and what industry it’s in, you may need to obtain licenses and permits.
An attorney or your local municipality can help identify any licenses or permits that your LLC might need.
Incorporating an LLC in New York can be a tricky process, but to save yourself the hassle of what to do, how to do it and when to do it, contact your Damalion expert now.
