How to start your LLC in New York, NY

How to select a name for a New York LLC? Every new business needs to come up with a name. While marketing concerns are valid, you’ll also need to follow New York law.

New York’s LLC Law section 204 specifies the LLC naming requirements. Each LLC must include one of the following:

• Limited Liability Company
• L.L.C.
• LLC

The name of your LLC must be distinguishable from existing businesses. Use New York’s Business Entity Database to check for what is already used. Coming up with a unique name is wise and required.

There are many terms you must avoid using. You can’t hold yourself out as something you aren’t, such as a governmental organization. Also only use terms related to highly-regulated industries if authorized to do so. These include things like medical, financial, or legal services.

It can help to know that many LLCs operate under a name different from the legal entity name. These are doing-business-as (DBA) names. For example, “New York Delivery LLC” can use “NYC’s Fastest Courier.”

Another element to think about is the domain name (URL). Even if you don’t want to launch a website immediately, it’s worth securing the matching domain name right away.

What is a registered agent? Every business must provide a point of contact responsible for receiving important documents. The registered agent performs this duty.

A primary function of the registered agent is for legal service of process. This means that if someone sues the LLC, the paperwork goes to the registered agent.

Some business owners appoint themselves as registered agents. But seasoned owners understand the value of hiring a registered agent service.

Electing to use yourself as the registered agent has the following advantages:

• It’s cheap: You can dodge an extra expense by handling it yourself.
• It’s simple: There’s only one address to update.
• It’s reliable: Documents and notices come straight to you.

There are also some disadvantages to appointing yourself as the registered agent. These include:

• No privacy: The registered agent’s name and address are public information. The Division of Corporations posts them on its website.
• Junk mail/spam: The address will get junk mail. You’ll have to sort through that without missing the critical notices.
• No breaks: Registered agents must be available during business hours. They don’t get time off.
• Business interruptions: Your customers could witness you getting served with a lawsuit. This can be embarrassing and may tarnish your reputation.
• It’s your fault if you miss something: All responsibilities are yours. If you make a mistake or miss a key notice, it’s on you.

We recommend hiring a registered agent service to avoid these downsides. They’ll sort your mail and keep your address confidential. Registered agent services cost around $100-$150 per year. Attorneys can charge up to $500 per year for this service.

If you choose to start your LLC by using a business formation company, they often include a registered agent service in their packages. Feel free to take a look at our registered agent recommendations article for more information.

How do you file the Articles of Organization for a New York LLC? Hold on to your hat because this is the most powerful step in the process. Filing your Articles of Organization transforms your idea into a legal enterprise. The LLC doesn’t exist without it.

This task can seem complicated. In reality, it’s something most can handle on their own and only takes basic information to complete.

Section 203 of the Limited Liability Company Law provides the details. The LLC’s name, purpose, and contact information are some of the necessary components. You can use this fillable form provided by the state to make things even easier.

A $200 fee applies to filing the Articles of Organization. You’ll also need to pay a $50 fee for a certificate showing you’ve published newspaper notices.

The Division of Corporations must process your application for it to take effect. The average delay is seven business days, but you can pay for expedited service if needed. Here are the times and fees that apply to quicker processing:

• Within 24 hours: $25
• Same day: $75
• Two hours: $150

To save time and avoid the hassle of LLC filings, all seasoned entrepreneurs use LLC formation services. For recommendations, check out our article on the best LLC services.

Does my New York LLC need an operating agreement? This is optional in some states. But New York law requires all LLCs have an operating agreement. This private contract between the LLC members sets out the rules under which it operates.

This mandatory agreement helps avoid problems down the road. It specifies the rights and responsibilities of the members and managers. Operating agreements also lay out the methods for adding or removing members.

The best operating agreements cover any situation the LLC may find itself in. Owners can customize them according to their desires and expectations, including:

• They determine the rights and duties of LLC members. If one LLC member is responsible for running the business or managing the books, the operating agreement should say so.
• They say whether the LLC has a member or non-member manager and what the manager has the right to do. Managers also have special duties to the company and its members. The operating agreement should state these.
• They outline what the LLC is legally able to do. The operating agreement should also set down how the company is allowed to conduct its business from day to day.
• They say how new members can join the company. They also have rules about how exiting members can leave.
• They set down how and when profits are paid to members. They can also create different types of membership and payment schemes.
• They say whether members or managers are in charge. They also say how to hire and fire managers.
• They say how and under what circumstances the LLC should end. You might not want to dissolve your business now, but you might in the future. It’s best to think about it and plan before it becomes an issue.
• They say how to change the rules. You may need to amend your operating agreement in the future. The operating agreement should set down the rules for making changes.

Even though New York requires every LLC to have an operating agreement, you don’t have to file it with the state. It is a private contract between the members.

LLC formation services provide operating agreement templates for as little as $50. This cost is worthwhile to ensure your LLC operates as you want it to.

What is New York’s publication requirement? Newspaper notices are a traditional way to keep the public informed. Most states have removed this somewhat archaic need thanks to the internet. But New York still requires it.

New LLCs must publish notices of their formation with two local newspapers. You have 120 days to complete this step. There are three ways to tackle it:

• Do it yourself: You can save some money by doing this yourself, but it can take some time and effort. Speak with the local county clerk to find out where to publish the notices.
• Use an attorney: While most attorneys make the process easy, they’ll also charge top dollar to do it for you.
• Go through a registered agent service: This option usually costs less than attorney fees. Yet still gets the job done with great ease. This is often an excellent method to use.

The total cost also depends on the specific newspaper costs. Some outlets charge more than others and the differences can be dramatic.

Once published, file for a certificate with the Secretary of State. You can find a form statement in the text of Section 102 of the Limited Liability Company Law. A $50 fee applies.

Do I need to get an EIN? The Internal Revenue Service uses Employer Identification Numbers (EINs) to track the tax information of businesses for federal tax purposes. They are essentially like Social Security Numbers for businesses.

The IRS requires certain businesses to get an EIN. These include any of the following:

• If the LLC has more than one member;
• The LLC hires any employees; or
• It follows C-corporation or S-corporation taxation rules.

Even if you don’t fall under one of these qualifications, getting an EIN is beneficial for your business. For example, some states require having one for state tax purposes, and banks often require them to open a business bank account for your LLC.

The IRS has made the process easy through its online EIN application. It only takes about five minutes to complete and is entirely free of charge. It’s not worth hiring someone to do this unless it’s part of a wider LLC formation package.

Read More: How to get an Employer Identification Number in New York