Featuring both the largest city in the country and a thriving agricultural economy, New York is a state with something for everyone. It makes sense, then, that there is a chance for almost any kind of business to thrive in the state. While the details of that business will be up to you, you will need to take a lot of steps before you can get started.
The first part of that process is making sure you have enough money. Starting a business in New York isn’t cheap, but it doesn’t have to break the bank. Here, we’ll take a look at the costs you can expect to incur as a new business owner, as well as some optional costs you need to think about.
This article will help you make a budget for starting an LLC in New York.
- The required costs for every LLC
- Extra costs we recommend you incur
- The different ways you can form your LLC, as well as the pros and cons of each
Total New York LLC Cost – about $489
New York is a bit unusual in that the required fees to start an LLC go to two places: the state and a newspaper. The government fees are what you would see for LLCs in other states, and the newspaper fees are necessary to publish the notice of your LLC’s formation under New York state law.
According to the New York Department of State, the filing fees for your LLC are as follows:
- Articles of Organization: $200
- Affidavit of Publication: $50
New York law also requires you to have an operating agreement, even though you don’t have to file it with the state. The cost can vary, but you’ll usually pay at least $39 to have one of these prepared.
Before you can file your certificate of publication, you will have to publish notice of your LLC in a newspaper. The cost for this can vary drastically based on the newspaper and the area in which your LLC’s registered agent is located. Generally, you can expect to pay about $200 in publication costs if you pick the right registered agent.
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How Much it Costs to Start a New York LLC
Starting an LLC in New York is about much more than just paying fees to the state and newspaper and opening your shop. Indeed, there are probably several more fees that you will want to consider paying to give your business the best possible start.
Articles of Organization Filing Fee – $200
Every LLC needs a “birth certificate” on file before it can do business. In New York, that piece of paper is called the articles of organization. Filing your articles with the Department of State is the only way your LLC can exist. It is thus the first step you need to get right.
New York law sets down all you need to have in your articles to make sure your LLC is properly and legally formed. If you want to get started as quickly as possible, the Department of State provides an easy fill-in-the-blank form you can use with spaces for all the required information.
Publication Fee – $150 to $1000 and up
New York law requires all LLCs to publish formation notices in two newspapers local to the area where your LLC’s registered agent is located. This rule is a bit of a throwback to a pre-Internet age when the only way the public could learn about new companies was through the local paper.
The publishing requirement also prevents you from forming companies in secret to hide assets from a spouse or creditor. In any case, it’s an ancient rule that does not have a lot of use today. The law gives you 120 days after you file your articles to publish your notices and then file the affidavit of publication (which is the next step).
Though the notice itself will not be very different from case to case, the location and newspaper that publishes the notice can change the cost greatly. If you have an agent in New York City (or are your own agent there), you could pay $1000 or more for your formation notice.
That expense is why most LLCs get agents in less expensive areas, like the state capital of Albany. There, you would pay closer to $150-$200 for the notice.
Affidavit of Publication – $50
Once you have published the notice in a newspaper, you'll need to file an affidavit of publication with the Department of State. Your agent should be able to help with this. If you are drafting it yourself, though, you can find a form statement included in the text of Section 102 of the Limited Liability Company Law. The filing fee for that affidavit is $50.
Operating Agreement – $39 and up
New York is one of the few states that requires its LLCs to have a written operating agreement. Note, though, that while your company has to draft and keep a copy of the agreement, it does not have to file a copy with the state.
An operating agreement is a contract that sets down the rules of your LLC. It says how the people in charge should do their jobs, when meetings must be held, how members can enter and exit the LLC, and almost any other matter you need to address.
Operating agreements are good to have because life and business are unpredictable. When something unexpected happens, it’s good to have the rules figured out in advance. That way, you can control the situation and minimize any disruption.
For example: how and when will your company pay profits to its members? Will you hire a manager for your business? How do you fire them if they do a bad job? What if you have partners who die or quit? What if you find someone who wants to buy into your LLC?
The only way to have a clear answer to any of these questions is to set the answers down ahead of time in a contract. You can write it yourself, but unless you are a lawyer or know what it’s supposed to have, a DIY job is not the best idea.
A lawyer would likely charge you an hourly fee to draft an LLC operating agreement. While that agreement would likely be a good one, that could also run you at least a few hundred dollars. A top-notch business lawyer in New York City could even cost as much as $1000 per hour!
You can have a good agreement drafted, though, for as little as $39 if you use a business formation service. We will discuss those cost options further below.
New York LLCs – Optional Costs to Consider
In many cases, just paying the bare minimum isn’t going to get you the best results. Depending on your exact circumstances, you may need to think about spending a bit more on some extra services to give your company the start it needs.
Expedited Filing Fees – $25 to $150
The Department of State website says that the average processing time for New York articles of organization is seven business days. If you need your articles processed more quickly, the Department of State offers three tiers of expedited processing.
The expedited processing speeds, along with their costs, are:
- Within 24 hours: $25
- Same day: $75
- 2 hours: $150
Resident Agent Fee – about $100 per year
New York doesn’t charge you a separate fee to name a resident agent. State law here is a bit unique in that it requires you to name the state itself as your LLC’s agent, though you will need to name a second, private agent as well.
That way, someone who is trying to contact or sue your company can either contact your private agent or go through the state, which will then forward all papers to your private agent.
Many owners are tempted to serve as their LLCs’ agents. This is usually not a good idea. It involves making the owner’s address public and being constantly available just in case someone wants to sue the company.
Also, when publishing your LLC’s formation notice in New York, you have to publish it in a newspaper that is local to the address of your resident agent. Let’s say you start a business in Manhattan, and it will cost you $1500 to publish your formation notice in the local paper. If you get an agent in Albany, it would cost much less – closer to $200. That is a huge discount!
Thus, it’s an easier and more cost-efficient plan to hire a New York registered agent service for your company. These agents usually charge $100 per year and take care of all your company’s registered agent needs. It’s money well spent.
For some of our recommendations, check out our Best Registered Agent Services article.
DBA fee – $25 + county fees
Section 204(c) of the Limited Liability Company Law requires your LLC to use its actual business name unless you file for an assumed business name (also known as a “doing business as” name or DBA) with the Department of State. You might want a DBA because it is easier to remember than your LLC’s legal name. It might also clarify who owns your company.
To get a DBA, you will have to file a DBA certificate with the Department of State. New York has an easy-to-use form certificate available on the Internet. The cost is $25 plus an extra fee for each county where your LLC does business. That extra fee is $25 per county, except for the following counties:
- New York
For these five counties, the cost per county for an assumed name is $100.
Name Reservation Fee – $20
Maybe you have your business plan and the perfect name, but you’re not quite ready to start yet. If you want to make sure that a certain name is still available, you can file an application for reservation of name with the Department of State for $20. Once you’ve made it, the reservation is good for 60 days.
If you need to get the name reservation on file as soon as possible, you can use the expedited filing system for a fee between $25 and $150, as described above.
Domain Name – about $20 per year
Your LLC can’t afford not to have a presence on the Internet. The first step in creating a website is to get your own domain name. While this might have been expensive in the past, it is now quite affordable.
We recommend you secure your domain name as soon as possible, even if you don’t have immediate plans for your website to go live.
For example, a competitor could buy your ideal domain and its variations to block you from using them. Even worse, domain squatters sift through newly registered LLCs and will buy their domains only to relist them with huge markups.
In general, a domain ending in .com will be more expensive than a .net or .info domain, and some names will likely be taken, meaning you will have to do some searching (and maybe compromising).
A domain name from GoDaddy.com or a similar registrar may cost you between $20 and $50 per year, with regular specials and sales where you can get substantial discounts.
Registering with the State Tax Office Online — Free
New LLCs should register online with the New York Department of Taxation and Finance so that they can pay the necessary taxes, like sales and use tax and employer taxes. Registration is free, convenient, and necessary.
Most importantly, if your LLC is going to sell goods or services subject to sales tax (and it most likely will), then you are going to need a Certificate of Authority to collect sales tax from your customers. Once you register with the Department, they will guide you through this process so that you can get your business set up properly.
Getting an Employer Identification Number (“EIN”) – Free
An EIN is a number created and assigned by the IRS to a business for paying taxes. (Think of an EIN as a social security number for your LLC.) Some LLCs need them and some don’t, but we recommend that you get one either way.
Many banks won’t allow your company to open an account unless they’ve got one. Having an EIN can also simplify the process of getting credit.
You can apply online and get an EIN for free in minutes, or you can apply for one through the mail or fax. Whatever you do, don’t pay someone else to get an EIN for you. It’s too easy to pay someone else to do it unless it is part of a broader service package.
Foreign LLC Qualification Fees – about $100 per extra state
If you do it right and have a bit of luck, your new business will be a wild success. When that happens, you may want to expand and open more locations. If one of those is in another state, you’ll have to pay for the privilege of doing business in that state. You won’t have to re-form your business, but you will have to register as a foreign LLC and pay some extra fees.
The exact fees will depend on where you are registering. As a rule of thumb, expect to pay about $100 in filing fees to register your LLC in another state.
Professional Licenses – varies depending on business and location
Make sure you double-check whether your business will need a professional license to operate in New York. If you are unsure what type of business license you need for your LLC, use the state website’s checklist to point you in the right direction.
Finally, keep in mind that you may need city or county permits for your business. New York City, for example, has a long list of required licenses and permits for its businesses. Other local governments will probably not have as many rules, but you still need to check to make sure you are compliant.
Writing Formation Costs Off
All of the costs you are paying as part of this process are vital parts of starting your company. For that reason, they can be deducted from your income taxes as business startup costs.
The IRS has a lot of guidance on this matter, and you should compare your specific costs to the materials on the IRS website.
Keep in mind that, in most cases, an LLC is taxed by both the IRS and New York as a pass-through entity. In other words, your income and deductions will go on your personal taxes, rather than a separate income tax for the business entity. Both New York and the IRS allow LLC owners to deduct $5,000 of their business startup expenses in the first year.
Nick forms an LLC in Albany to give historical tours. The LLC is called Empire State Historical Tours and Lecturing Service, LLC.
Even though he lives in a less expensive part of the state for publishing purposes, Nick still hires a resident agent company for his company because he does not want to compromise his own privacy.
Because he is required to do so by New York law, he pays a business formation service to help him draft an operating agreement for his LLC.
As he is working on that agreement, Nick realizes that the legal name of his LLC is too long for people to remember correctly. He thus applies with the state for a DBA to use on his promotional materials: Empire State Tours. As part of the registration, he pays a $25 state fee and a $25 county fee.
Finally, to make sure he gets word about his service to as many people in as broad an area as possible, Nick also buys a web domain.
His formation costs are as follows:
- New York LLC Articles of Organization filing fee: $200
- Newspaper publishing fee for Notice of Formation: $200
- Affidavit of publication filing fee: $50
- New York LLC Operating Agreement draft: $39
- Resident agent company fee (first year): $100
- DBA fees (state and county): $50
- Web domain costs (first year): $50
Total startup costs: $689
For income tax purposes, both the state and the IRS will tax Nick directly. In other words, Nick will get income from the LLC, and from that, he will pay his personal income taxes. Thus, Nick will report both his income and deductions for the business on a Schedule C to his federal tax return and on Form IT-196 of his state tax return.
The total amount of Nick’s deduction in this example is $689. Before the deduction, his total taxable income for the year was $40,000. After the deduction, the taxable income went down to $39,311.
For his state taxes, Nick stays in the 5.97% tax bracket. The deduction saves him $41.13 in state taxes. On his federal return, Nick is in the 12% tax bracket, so the deduction saves him
$82.68. His total tax savings as a result of the write-offs, then, is $123.81.
Keep in mind that if Nick had more than $5,000 in expenses, he would likely be able to claim those on his federal taxes, but not all in the first year. Instead, he would have to break out his deduction over multiple tax years.
Cheapest Way to Start an LLC in New York
Now that you know the amounts you will be paying to form your LLC, the main question you want answered is what the cheapest way is to get your LLC formed while still accomplishing all you need. Here are your options.
Formation Service – $39 + state fees
A business formation service is a popular and inexpensive way for new LLC owners to get started.
These companies are dedicated to helping entrepreneurs bring their visions to life. They have not only the knowledge of all the state laws you need to know, but also forms, documents, and procedures to make your life as easy as possible.
Formation services are quick and complete ways to handle formation needs for most LLCs.
- They’re easy. In most cases, a formation service will have helped hundreds of people through the exact process you are struggling with now. They have all the documents, information, and expertise you need right on hand.
- They don’t cost much. Because formation services have such a large volume of business, they don’t have to charge their clients that much money.
- They’re reliable. All of the formation services’ products and procedures have been tested hundreds of times over in the real world. That kind of experience should give you peace of mind and confidence going forward.
- They’re fast. Formation services have seen almost every business formation situation already. Chances are, they have many solutions for you that are ready right now before you even know you need them.
While formation services can be great for most people, they are not always the best choice. Some cons for these services are:
- They’re not the best solution for complex LLCs. If you are forming a complicated company or one in a heavily regulated industry, you will have concerns that probably need more focused expertise in that area of business.
- Even if a formation service is a good fit, you can expect upselling. Formation services have to make money too, and some of them may pressure you to buy formation products you don’t need. Even when you are using a formation service, you need to be a smart and informed consumer.
Using a professional LLC formation service can be a great way to set up a business. Check out our Best LLC formation services article for some of our suggestions.
Attorneys are licensed, reliable, and powerful resources for business formation. They are also quite expensive. New York City has some of the most experienced attorneys in the country, but they are also among the most expensive, with many costing over $1000 per hour. Therefore, most LLC owners will not be able to afford the high hourly fees of a lawyer.
A business owner with the money and a complicated business, though, might need a lawyer to make sure everything is set up correctly.
Despite the expense, sometimes hiring a lawyer is the best choice.
- Lawyers help you manage risk. An LLC with complicated legal issues needs a lawyer. If Nick were opening up a cannabis dispensary instead of an educational tour company, for example, he’d need to talk to a lawyer. Given the legal situation with such a business, he’d need a lawyer to figure out how to operate.
- Lawyers offer more customization when you need it. Do you need specific things put in an operating agreement? Is your company going to have a unique ownership structure? You may need an attorney to make sure these issues are handled properly.
For most people, getting an attorney comes with considerable downsides that outweigh any benefits.
- Lawyers cost more than any other option. The price tag alone should convince you that if you don’t need a lawyer, it’s not worth hiring one.
- Finding a lawyer takes a long time. Getting a lawyer who specializes in what you need, costs what you’re willing to pay, and can work with you well is a tall order.
- Lawyers also take longer to form a business than a formation service. Because lawyers are also very caring people, they will generally take much longer to form your company than non-lawyers would. Fortunately, most people don’t need a lawyer. In 90% of cases, a formation service will do just fine.
Do it Yourself
Many people, after searching the Internet for the information they need, decide to try forming their new LLCs themselves. This process can teach you quite a bit, but remember that time is money. If you are spending hours on your formation issues, that’s time you’re not spending on the substance of your business.
In most instances, then, it is more cost-effective to just pay an LLC formation service, with confidence that everything has been done correctly, rather than try to reinvent the wheel yourself.
- Personal knowledge. A DIY business owner will learn a lot about the process while forming their own business, and they probably will retain that knowledge for years to come.
- It costs less upfront. If you don’t figure out the value of your time, a DIY solution is the cheapest option.
- You’re losing money when you consider how much time it takes to DIY. If you figure out that your time is worth $30 per hour, and you take 20 hours to complete your business formation, you have essentially spent $600 on business formation.
- There’s the risk of making a mistake. DIY business owners can easily make a mistake with all the paperwork that then costs them more time and money.
- It’s a headache. State workers are very helpful, capable people. But they will also tell you that the laws and rules governing business formation are not easy, and they follow those rules for a living. It’s going to be even harder for you.
Annual New York LLC Fees: How Much Will it Cost to Maintain your LLC?
Section 301 of the Limited Liability Company Law requires your LLC to file a statement with the New York Secretary of State every two years. This short statement is due in the month that your LLC was formed. It just consists of a post office address to which the New York Secretary of State’s office should mail any service of process it receives for your LLC.
The biennial statement is not that expensive to file: only $9.
There is also an income-based filing fee for your LLC’s tax reports. The amount of this fee can vary significantly, from $25 to $4,500. To determine where your costs will fall, you should speak with your accountant or the New York State Department of Taxation and Finance.
Apart from the government fees, keep in mind that you will also have to pay an annual fee to private companies for items like a web domain ($20) and a registered agent service ($100).
How Much are LLC Taxes in New York
As discussed above, New York typically treats LLCs as pass-through entities, meaning that their income is taxed when it is paid to LLC members. In other words, the LLC itself does not pay income tax. Your LLC, however, may elect a different tax treatment. You should talk with your accountant about the best way to handle this issue.
Depending on whether your LLC is set up for tax treatment as a sole proprietorship, partnership, or corporation, you will have to file different tax documents with the state. Confirm with an accountant whether you need to file a partnership return (PDF) or corporation franchise tax return.
If your business has any employees, you will have to register with the state and pay New York’s employment taxes. Check with the Department of Taxation and Finance for further information.
New York LLC Formation Costs Quick Links
- IRS — apply for an EIN online
- IRS information regarding the federal tax treatment of LLCs
- New York City — License and Permit Index
- New York Department of State — Application for Reservation of Name
- New York Department of State — Certificate of Assumed Name (DBA)
- New York Department of State — Fee Schedules
- New York Department of State — Filing a Certificate of Publication for an LLC
- New York Department of State — Filing Information for Articles of Organization
- New York Department of State — Form Articles of Organization
- New York Department of Taxation and Finance — Register as a Sales Tax Vendor (Certificate of Authority)
- New York Department of Taxation and Finance — Tax Reports
- New York Employer Registration
- New York General Business Law Section 130 (DBAs/Assumed Names)
- New York Limited Liability Company Law
- New York Professional Licensing
- New York Professional Licensing — Checklist to Determine Which Regulations Apply to Your Business
New York LLC Formation Costs FAQs
How much does it cost to start an LLC in New York?
It costs at least $489. It can cost more, spending on the local newspaper in which you publish your LLC’s notice of formation.
What is the cheapest way to start an LLC in New York?
A do-it-yourself approach will have the lowest price tag, but it isn’t the cheapest in terms of your time. The best balance of price and time, for most people, is to use a formation service.
Do I need to hire an attorney to form an LLC in New York?
No. Most people will not need to invest the large expense and time of hiring a lawyer. An LLC formation service or a DIY approach will work for most business owners.
Can I pay to form an LLC more quickly in New York?
Yes. Formation services will generally complete formation tasks faster than business owners acting on their own. You can also pay the state to speed up any of your business filings.