By the time you’ve decided on a business structure, you’ve already put in a good amount of work. From coming up with a business idea to creating a product or service, you’ve taken some exciting steps. Now it’s time to make it official by forming your LLC.
Dealing with the New York and federal government to create an LLC may seem intimidating at first. It’s important to make sure you complete each step properly to ensure you have no issues later on. We’ve broken the process down for you into 8 simple steps.
8 Steps to Start an LLC in New York
1. Pick and Reserve a Business Name
The first step to forming your LLC is choosing a name. The New York Secretary of State requires that your business name is discernible from the names of existing business entities in New York. You can check the availability of your desired name on the business name database with the New York Department of State Division of Corporations.
There are a few rules when it comes to naming your LLC. New York requires that you include the term “limited liability company,” “LLC,” or “L.L.C” at the end of your business name. You also can’t use words that could confuse your business with a government agency, like “treasury”. Other words, like “university” or “bank,” require additional permissions and paperwork.
You may choose to reserve your business name by filing an Application for Reservation of Name with the New York Department of State. You can complete this process via the mail and there’s a $20 filing fee. This ensures that the state will reserve your name for 60 days while you complete the other steps to form your LLC.
2. Decide on a Registered Agent
New York is unique in that the Department of State automatically acts as each LLC’s registered agent. A registered agent is a person or business entity that accepts mail on the behalf of the LLC, including legal papers in the event of a lawsuit.
If you choose to keep the state as your registered agent, you need to provide a name and address to which the state can send legal papers.
You may also choose to name someone else as your registered agent. This could be yourself, a lawyer, a trusted partner, or a registered agent service. In this case, the Department of State will still be the initial point of contact for anyone serving your LLC legal action, but they will forward that information to your registered agent.
3. File the Articles of Organization
At this point, you’re ready to file the forms that create the LLC, which are also known as Articles of Organization. The state of New York refers to this as Form DOS 1336-f. This is a simple three-page form in which you’ll include:
- LLC name
- Name of the county in New York where you’re forming the LLC
- Address for the state to send legal documents to
- Name and contact information for filer
You can file online or by mail. There’s a $200 filing fee that you must include when you submit the form.
4. Publish a Notice of LLC Formation
New York requires that you publish a notice of the formation of your LLC in two newspapers (one daily and one weekly) for six consecutive weeks. The county clerk of the county in which you registered your LLC’s office must designate the newspapers you use. The information in the notice must match the Department of State’s records exactly.
After publication is complete, the publisher or printer of the newspapers will give you an affidavit of publication. Then, you must submit a Certificate of Publication with the affidavits to the Department of State. There’s a $50 filing fee. If you fail to meet these requirements within 120 days of formation, the state will suspend your LLC and you can no longer do business.
5. Write an Operating Agreement
New York law requires that LLC members create a written operating agreement. You and any other members of your LLC may enter into the agreement before filing the Articles of Organization, or within 90 days of filing.
An operating agreement declares the duties, obligations, rights, powers, and liabilities of each member in regard to the other members and the LLC. Even if you are a sole owner, you’ll still need to create an operating agreement. It can offer some additional protection by showing the separation between you and the business in the event of a lawsuit.
While this is technically a legal document, it’s for internal use only. You do not need to file it with the state.
6. Acquire Additional Business Licenses
You may need to get licenses and permits from the state or local government, depending on what type of business you own. You can contact:
- The New York Business Express for information on licenses and permits issued by New York State.
- The county clerk for more information on licenses and permits required by your town or village.
7. Get an EIN
An EIN (employer identification number) is a tax identification number issued by the IRS (Internal Revenue Service). It’s similar to a Social Security number, but it's for businesses. There’s no filing fee to get an EIN. You can complete an online application with the IRS to obtain one.
The government does not require single-member LLCs with no employees to get an EIN. Whether you’re required to get an EIN or not, it can be useful. You can use it to open a business bank account and file your taxes. You’ll need an EIN if you hire employees or add members to your LLC. You’ll also need an EIN if you want to tax your LLC as a corporation instead of as a sole proprietorship.
8. Complete Annual State Filing
Some LLCs are subject to an annual state filing fee. This includes domestic and foreign LLCs that have elected to be federally taxed as partnerships or sole proprietorships. You must also have some sort of income, deduction, gain, or loss in New York to report in your yearly taxes in order to be subject to this fee.
You’ll need to pay the fee to the Department of Taxation and Finance each year. It can be as little as $25 but could be up to $4,500 depending on the income of your LLC.
The Next Steps After Forming an LLC in New York
Once you’ve formed your LLC, there are still a few key steps to complete in order to have a fully functional business in New York. Here’s a quick guide to help you get started.
1. Open a Business Bank Account
LLCs are an excellent way to protect your personal assets by separating them from your business. Another important way to make this distinction is by creating a separate business bank account.
You can set up a bank account online in a matter of minutes, just like you would open a personal bank account. For more information, read our step-by-step guide.
2. Set Up a Payment Infrastructure
Perhaps the most important step after forming an LLC is to select the right payment service provider. It’s best to choose one that provides a full payment infrastructure, payment gateway, merchant account, and payment processing services so that you have everything you need to start accepting payments.
Pay.com provides you with all of these elements so that you don’t have to get them separately.
With Pay.com, you can get started quickly with fast approval. Then, you can use the Pay Dashboard to start sending payment requests directly to your customers using Pay Links. Or, set up a customized checkout page that looks and feels just like your website. You can even take payments over the phone by manually entering your customer’s payment information.
It’s also important that you offer a variety of payment methods since each customer has different preferences. That’s why Pay.com offers a wide variety of payment methods, from credit and debit cards to digital wallets to ACH transfers.
3. Create a Website
You don’t necessarily need a website to sell a product or service, but it does help build trust and credibility. Most customers search for a business online before making a purchase. They want to learn more about what your business does and make sure it’s legitimate before sharing their payment information.
You don’t need any technical skills to make a website. You can use a variety of website builders, like Wix or Squarespace, to get started. You can also use SEO (search engine optimization) on your website to help potential customers find your offering.
4. Make a Marketing Plan
With your business fully set up, all that’s left to do is sell. It may be hard to find customers at first, so having a solid marketing plan is key. Your strategy should be highly tailored to your ideal customer.
If they tend to hang out in Facebook groups, for example, you’ll want to use targeted ads on that platform. If they’re in your neighborhood, you might spend time handing out leaflets. You can use our guide to learn how to launch a successful marketing campaign for more information.
The Bottom Line
Starting a new business presents some exciting opportunities. While forming an LLC and completing more formal steps can seem overwhelming, it’s actually quite simple. As long as you reserve your business name and turn in the appropriate documents, you can get started in no time.
Don’t forget to sign up for a payment service provider once you’ve formed your LLC. Pay.com is a simple, easy way to start accepting payments online. Whether you want a variety of payment methods or multiple ways to accept payments, Pay.com can help. Click here to get started now!