How to form an LLC in New York in 5 easy steps
In New York, 99.8% of all businesses are small businesses. If you’re looking to join the ranks as a NY small business owner, you should consider forming an LLC. LLC stands for Limited Liability Company. It’s a type of business structure that affects how you and your business manage day-to-day operations, including paying taxes.
Many one-person businesses operate as sole proprietors by default. But owners often discover more advantages—such as liability protection for their personal assets—by transitioning from a sole proprietorship into an LLC. Ready to launch your New York LLC? Follow this step-by-step guide to start an LLC.
1) Check if your business name is available
Starting a new business is an exciting time. After you have your idea fleshed out, your next task is to choose a name. The name of the LLC should describe your product or service or quality you provide—and be easy for customers to remember. For example, TrueLine Construction is easier for customers to recall than R&H Construction.
Follow naming guidelines
New York has specific requirements when it comes to naming an LLC. Because you will register your LLC formation with the state, make sure it follows their naming guidelines:
- It must include the words “Limited Liability Company” or the abbreviation "L.L.C." or "LLC."
- It must be unique and easily distinguished from other NY LLCs, foreign LLCs (out of state LLCs), companies, corporations, or partnerships.
- It must avoid using words that could confuse your business with a government entity.
- It must avoid prohibited or restricted words and phrases.
Search for your business name
Because your business name must be unique, you can’t use a name that another company is already using. To determine if a name is available, you can:
- Check telephone listings in your area for similar business names
- Ask the county clerk’s office if it has similar names on file
- Use business directories, city directories, and chamber of commerce lists to name search
- Review trademarks on file with the U.S. Patent and Trademark Office
New York’s Department of State has a simple tool that can speed up your search. Search the Corporation and Business Entity Database at NY.gov for your preferred name to see if it’s available.
Reserve your business name
If your name isn’t already being used, you can submit a request to reserve the name. The application will ask for:
- Your name and address
- The business name you want to reserve
- Your printed name and signature
Filing the form requires you to pay a $20 fee. Once processed, you’ll get a certificate of reservation as proof of your request, and the state will hold your LLC name for 60 days.
File for a trade name
Although it isn’t required, some LLCs benefit from using a trade name. A trade name is a fictitious name that is sometimes called a DBA (“doing business as”). When you file a trade name, it falls under the umbrella of your LLC.
For example, suppose you run a handyman service in New York City. Because your name—Jim Smith—is common, you may not want to use your legal name. In that case, you can name your LLC “Jim Smith LLC” and then file for a trade name to brand yourself under a name like “The Hero Handyman” instead.
You can also use a DBA if you operate multiple brands or work in different industries. For example, a contractor may have a DBA name for their tile work services business separate from their storefront handmade furniture shop.
File for a trademark
If applicable, you can also file for a Trademark in New York. A trademark protects your business and product names at a federal level. Check the federal trademark database to find out if the name is available. Keep in mind that most small businesses do not need trademarks, but it is an option if you want to pursue it.
Register your website name
Most small businesses—71%—have a website. Your website uses a domain name as the internet address where customers can find you online. For example, you might register www.HeroHandyman.com for your handyman business.Staking your claim online can help you keep up with customer expectations and demand. That’s why reserving a domain name early in the process is a smart move.
2) Claim your name
Choosing a name is only half the battle. You must also claim your name officially in the state of New York by filing your LLC Articles of Organization. Articles of Organization is the legal document required to form a New York limited liability company, and it’s a one-time registration requirement.
The New York Division of Corporations has an Articles of Organization template you can use to draft your document. However, it’s legally binding, so seek legal advice to clarify any questions you might have before signing it.
File Articles of Organization
The New York Department of State has a convenient online system to file your Articles of Organization. To apply, you must provide the following information:
- Name: Make sure the business name is typed exactly the same in every instance.
- County of location: Designate the county, not the address. If in NY City, use the correct county. Keep in mind that Bronx and Queens are both borough and county names.
- Designation for Service of Process: Legal contact person to serve as the registered agent for the state.
- Signature: Sign and print your name.
- Filer information: Most LLC owners file the paperwork themselves. However, if a service or attorney’s office filed it for you, their name and address go here.
New York accepts online applications, as well as by mail, fax, and in person. The cost is $200, and you can pay by credit, debit, check, money order, or cash (cash is only an option for in-person filings). After applying, the average processing time is 7 business days.
If you need your application processed in a rush, you can pay an additional $25 to $150 fee for expedited service.
Choose a registered agent
You may have noticed one requirement of filing your Articles of Organization is choosing a registered agent. A registered agent is the legal point-of-contact for your business—they’ll receive any legal notices or documents on behalf of your business. So, if someone sues your business, your registered agent will be the first to know.
You can name yourself or another LLC member to act as a New York registered agent. However, many small business owners choose to hire a professional service to handle this task.
Registered agent services scan and provide online copies of all documents sent to your LLC so you can access them from anywhere.
Additionally, registered agent services can handle your biennial report filings—the state requires LLCs to submit a biennial statement every two years with current information about your company.
3) Write your operating agreement
While many states in the U.S. do not require LLCs to generate an operating agreement, New York mandates it. An operating agreement is a formal document that spells out the rules and expectations of the LLC members. It’s crucial for the peaceful operation of a company because it:
- Protects the company’s limited liability status
- Clarifies verbal agreements to prevent misunderstandings or miscommunications
- Creates rules that govern your business rather than lying on the default rules of the state
As you can see, a New York LLC operating agreement can stop many conflicts before they start in multi-member LLCs. However, it’s still helpful to your business formation if you have a single-member LLC.
A typical document outlines:
- Ownership percentage for each member
- A list of assets contributed by each member
- Member liabilities and obligations within the LLC
- Member voting rights and responsibilities
- How the LLC will be managed
- Duties and powers of managers and members
- How profits and losses are distributed
- Structure for holding meetings
- Buy-sell and buyout rules
- Dissolution instructions or guidelines
The New York State Bar Association has LLC operating agreement templates you can use. Keep in mind that an operating agreement is legally binding—always consult a legal and financial advisor before signing a document that can impact your rights.
4) Pay your taxes
As a business, you will pay income taxes on profits. However, there are a few other places taxes can creep in and become necessary to account.
Register for a federal tax ID number
First, you should apply for an Employer Identification Number (EIN) from the Internal Revenue Service (IRS). There’s no cost, and the IRS issues most EIN requests almost instantly. Your EIN is used for a variety of reasons:
- Tax purposes: State and federal taxes are tracked using your EIN.
- Hiring: To hire any employees, your LLC must have an EIN. All hiring forms and paperwork require the EIN for tax collecting, reporting, and payment purposes.
- Apply for business loans: If your business needs equipment or capital to start up, you may need a loan. Lenders will ask for your EIN before lending you money.
- Apply for bank accounts and credit cards: Banks need the EIN to establish a business bank account since the funds are for your LLC’s operation and not for personal use.
Prepare for local, state, and federal income taxes
Your LLC may be responsible for local, state, and federal income taxes. However, according to the Department of Taxation and Finance, your LLC doesn’t file its own tax return. Instead, the federal and state tax obligations flow through to the business owners to claim on their individual tax returns.
You should consider working with an accountant or a tax advisor to set aside funds to pay income taxes and set up quarterly payments if necessary.
Additional tax obligations
Finally, keep in mind that your business might have additional tax obligations. For example, depending on your business, you may need to set up sales tax, franchise tax, state employer tax, and state business tax.
6) Wrap up other regulations and requirements
Business licenses and permits
You may need business licenses or permits before you can conduct business. The state's New York Business Express website can provide more information about your industry’s requirements.
In addition, your city or county likely requires that you apply for a business license. Contact the city or county clerk where your LLC will operate with questions about local licenses or permits.
Certificate of Good Standing
Your LLC may need to have a Certificate of Good Standing. For example, financial institutions often require a good standing certificate before you can open a business bank account. Getting one is simple—submit a written request to:
New York State Department of State, Division of Corporations
One Commerce Plaza
99 Washington Avenue
Albany, NY 12231
You can also request one by fax. The state charges a $25 fee payable by credit or debit card.
New York LLC publication requirements
For most LLCs, New York requires you to publish a copy of the Articles of Organization or a notice related to the formation of the LLC. State law mandates that you post it in two newspapers for six consecutive weeks. Check with your county clerk to find out which newspapers meet the publication requirements.
When complete, each newspaper’s publisher provides an affidavit of publication. You must submit the affidavits to the Department of State, along with a $50 state filing fee and your application for a Certificate of Publication.
You should consider protecting your company with LLC insurance. Plus, New York requires all businesses to have workers’ compensation insurance. There are a few exceptions. For example, sole proprietorships and LLCs without employees are exempt from carrying coverage.
If you plan to hire employees, now is a good time to write job descriptions and start posting openings. Outsourcing your accounting, bookkeeping, or other administrative tasks is another way to hire help. It can free up more of your time—giving you more time to focus on growing your new business.
Get LLC insurance in minutes by following these steps
Congratulations! You’ve invested a lot into starting up your LLC in New York, and you’re ready to reap the rewards. Now, it’s time to protect your hard work—Huckleberry can guide you through a custom New York business insurance policy that protects your company from liability, property damage, and business interruption.
Here’s how to get started:
- Visit Huckleberry.com and click the “Instant Estimate” button. That’s your ticket to getting quotes for various insurance coverage types that suit your business needs—it only takes a few minutes.
- Type in your industry to see the specific coverages that might apply to your business.
- Answer a few questions about yourself and your business, like your location, estimated payroll, and revenue estimates. You can leave the spreadsheet out of this—we won’t make you do any tricky calculations, we promise.
- In less time than it takes to buy a Metrocard, Huckleberry delivers quotes for multiple small business insurance options.
- Still not convinced? Our quick rate estimator provides a ballpark estimate for small business insurance. And if you’re shopping specifically for NY workers’ compensation coverage, use our handy calculator to see how much it would cost.
Launching your LLC in New York doesn’t have to be complicated, but it does require your commitment to the process. As you probably know by now, New York does things a little differently than other states, so it’s essential to follow all of the requirements the state mandates.
Protect all the time and money you invested in starting your small business in New York with LLC small business insurance. For example, if a fire burned down your building and took all of your computers and equipment with it, your policy can help your business get back on its feet. Likewise, if a customer sued your company, a policy can safeguard your personal liability from loss.
Whether you’re in the market to enroll in workers’ comp coverage online or you need a general liability policy for your storefront, Huckleberry can help. Most business owners receive quotes in about 60 seconds and find our rates are far more affordable than alternative options.