Forming a limited liability company in any state can be expensive and extensive, and New York has hardly the easiest or cheapest process. Before you file Articles of Organization, first ensure that you have an accurate understanding of how much opening an LLC in NY costs.
You’ll want a solid grasp of all associated fees and expenses, including both initial and ongoing ones. A New York LLC formation service can tell you what expenses to budget for and how much the entire process should cost. Alternatively, you can wade through the many fees and expenses yourself.
If you prefer the self-serve approach, here are the various filing fees and other expenses that you should budget for.
The multi-step process of forming a New York LLC comes with several distinct costs. While some steps have no associated fee, the fees for other steps can be hundreds of dollars.
Here’s what you should do to form an LLC in the state and how much each step should cost.
Your New York LLC must have a name that can be distinguished from all other business names used in the state. The easiest way to check whether a name is distinct enough is by conducting a name search using the Department of State – Division of Corporations’s Business Entity Database. There is no cost for using the database to conduct searches.
Although there isn’t a cost to search for a business name, keep in mind that you might want to reserve a name and/or obtain a “doing business as” (DBA). Both of these do have costs associated with them:
Estimated Cost of Naming Your LLC: $0 – $45
In order to actually form your LLC, you’ll have to file Articles of Organization (Form 1336-f). The articles are what officially register your LLC with the state, and the New York LLC filing fee is paid when you file these articles. The filing fee is $200, and there is no way to reduce it.
Estimated Cost of Filing Articles of Organization: $200
All businesses in New York must have an agent for service of process, which is the state’s terminology for a registered agent.
The Secretary of State takes on this role by default, but you have the option to instead designate another person or business to be your LLC’s registered agent. You can designate yourself, another individual, or a commercial registered agent service, so long as the designated person or service has a street address in New York.
There is no cost if you have the Secretary of State act as your LLC’s agent or if you take on the responsibility yourself. Hiring a commercial registered agent service can cost anywhere from $199 to $400, depending on the specifics of your business.
There are good reasons (e.g., privacy, convenience, compliance, publication savings) to hire a registered agent service, even though it is an added cost. This is one place where you’ll have to evaluate the expense and the benefit.
Estimated Cost for a Registered Agent: $0 – $400
New York uniquely requires all LLCs to have an operating agreement, although the state is silent on the consequences of failing to have one. The operating agreement is to be a written internal document.
A good operating agreement covers a business’s organization, management and voting, capital contributions, distributions, membership changes, dissolution, and any other major event.
While you can write an operating agreement yourself, this is one document that you should strongly consider getting assistance with. The operating agreement is most needed when tension arises within an LLC, and that’s not the time when you want to find out that the operating agreement is invalid or insufficient.
If you’d like assistance with an operating agreement, you can either use an operating agreement service or hire an attorney. A service will be more affordable than most attorneys, as costs for attorneys can vary.
Estimated Cost for an Operating Agreement: $0 – $1,000
New York is also unique in that the state requires all LLCs to publish notifications of their formation. The notifications must run in one daily and one weekly publication that circulates in the county where a business maintains its principal location or registered agent. (Additional LLC publishing requirements must also be met.)
The LLC publishing requirement adds on two expenses:
If your business is in a city with high publishing costs, you might yield a net savings by hiring a commercial registered agent service located somewhere where publishing costs less.
Estimated Cost of Publishing; $150 – $2,050
According to these estimates, you can expect to spend anywhere between $350 and $3,695 to form an LLC in New York. How much you spend will largely depend on how you approach the registered agent, operating agreement and publishing requirement.
If you use an LLC formation service that includes a commercial registered agent and operating agreement, you can likely still keep your all-in filing fees well below $1,000. Even then, much of the cost still stems from New York’s mandatory filing fee and publishing requirements.
In addition to the initial filing fees, there are some ongoing fees to be aware of and prepared for.
One ongoing fee is the cost of a registered agent if you’re using a commercial registered agent service. You can decide on a year-by-year basis whether this service is worthwhile for your business. Many business owners do decide to retain a commercial registered agent service.
Other additional and ongoing fees include licenses and permits, annual reports, and annual fees.
Local, state and federal governments may require certain businesses to obtain licenses and/or permits. These documents allow a business to carry out specific functions, which can be anything from operating a nuclear reactor to building a one-bedroom addition.
While you should be financially prepared for any federal licenses or permits that your business needs, federal licenses will be a necessary expense no matter where within the United States your business operates. With regard to the specific cost of running an LLC in New York, local and state licenses are more pertinent.
Most businesses in New York need at least a Certificate of Authority, which is colloquially referred to as a seller’s permit. The permit allows a business to collect and remit sales tax on taxable goods and services that the business sells. There is no fee for obtaining a Certificate of Authority.
Other business licenses commonly do have fees associated with them. These can range from $10-$25 for a specific local permit to hundreds or thousands for a liquor license from the state.
You’ll have to contact a local clerk, a county clerk, and any overseeing state agency to determine whether your business needs any licenses or permits. You can find out how much the required licenses/permits will cost once you know what your business needs.
Some licenses require only a one-time fee, while other licenses have an ongoing annual fee. Permits likewise might be needed only once, or your business may have to pay for a new one with each project.
You might spend anywhere from a negligible amount to four figures on licenses and permits.
Estimated Cost for Licenses: $0 – $1,000+
What’s normally called an annual report is actually a biennial report in New York. This is a simple form that updates the official address of a business or its registered agent.
The biennial report must be filed every two years, and the associated filing fee is $9.
Estimated Cost for Annual Report: $9 (every 2 years)
Although the biennial report is due only every two years, an annual LLC fee must be paid every year. The annual fee’s amount depends on the gross income that an LLC generates within New York:
New York Gross Income | Annual Fee |
$0 – $99,999 | $25 |
$100,000 – $249,999 | $50 |
$250,000 – $499,999 | $175 |
$500,000 – $999,999 | $500 |
$1,000,000 – $4,999,999 | $1,500 |
$5,000,000 – $24,999,999 | $3,000 |
$25,000,000+ | $4,500 |
New York has an annual franchise tax, but it only applies to other types of corporations. The LLC fee takes the place of the franchise tax for limited liability corporations.
Estimated Cost for Annual LLC Fee: $25 – $4,500
These expenses do provide some financial relief come tax time. Since many of these fees and costs are directly and solely for your LLC, many can be written off as legitimate business expenses.
You generally can write off LLC filing and annual costs such as the following:
Still other fees and costs might qualify as write-offs. A tax professional can help you evaluate other expenses to see whether they meet the requirements for a business deduction.
Fee/Cost | Amount |
Articles of Organization Fee | $200 |
New York Publication Fee | $50 |
Newspaper Publication Costs | $80 – $2,000 |
Annual LLC Fee | $25 – $4,500 |
Biennial Report Fee | $9 |
Local Business Licenses (e.g., building permit, basic business license) | $10 – $100* |
State Business Licenses (e.g., barber license, liquor license) | $30 – $1,000+ |
Registered Agent Service (optional) | $199 – $400 |
Operation Agreement (optional) | $100 – $1,000 |
DBA (optional) | $25 |
Business Name Reservation (optional) | $20 |
*This is a general range for municipalities outside of New York City. New York City licensing costs can be much higher, possibly reaching hundreds or even $1,000+
Establishing a new LLC in New York isn’t cheap, but these costs shouldn’t prevent you from getting a business started. Budget accordingly for these various fees and costs, and you soon could have your own business despite the costs. The business’s potential success could far exceed these expenses one day soon.
This portion of our website is for informational purposes only. Tailor Brands is not a law firm, and none of the information on this website constitutes or is intended to convey legal advice. All statements, opinions, recommendations, and conclusions are solely the expression of the author and provided on an as-is basis. Accordingly, Tailor Brands is not responsible for the information and/or its accuracy or completeness.
Shai Shmarel started his life as a corporate lawyer before switching to being an SEO and Content Manager at Tailor Brands. He has experience in managing companies, rankings SERPs and covering a content-driven approach for all things legal, business and marketing. When off work, you’ll usually find him chilling with a cup of coffee and a book in the desert.
Products
Resources
@2024 Copyright Tailor Brands