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When you’re starting a business and choosing a business structure, forming an LLC (limited liability company) is one of the alternatives to consider. Establishing your business as an LLC provides credibility and certain legal protections, regardless of what state you file in.
However, registering an LLC in New York comes with some additional documentation and higher fees than other states require. For many business owners based here, though, filing for LLC in NY still makes the most sense. Not having to worry about inter-state paperwork keeps the process of filing and maintaining your business’s status simple.
This is a step-by-step guide on how to open an LLC in New York, along with state-specific details that will help ensure your filing process goes smoothly.
Below, you’ll find a detailed explanation to walk you through each step.
You begin by choosing a name for your limited liability company. Whether you already have a business name or are starting a new venture, the name has to comply with some basic New York business naming restrictions.
All LLC business names in New York must meet the following stipulations:
The NY Department of State (DOS) has more information regarding LLC names in New York. A searchable database of all names is also available.
Of course, your business name should also be highly visible online, so you think about your domain name and take it into consideration if relevant. Many web domain hosts offer convenient URL searches, which make it easy to confirm that a URL of your business’s name or a derivation is available.
Your chosen business name will be officially registered with the state when you file Articles of Organization (see Step 3 below). Because these articles are needed to reserve and register your chosen name, don’t wait too long between settling on a name and registering the business under it.
However, if you’re not ready to file yet for some reason, you can reserve your chosen business name in the state of New York for 60 days. You’ll need to submit this application and pay a $20 fee.
An assumed name, commonly referred to as a DBA (doing business as), allows your business to advertise and operate under a different name than its official name. Assumed names for LLCs in NY are filed with the Department of State.
The fees associated with filing for an assumed name are $25 for filing the Certificate of Assumed Name, and $10 for each certified copy of the document. If needed, rush fees are $25 for 24-hour processing, $75 for same-day processing, and $150 for 2-hour processing.
To register your assumed name, you’ll need to submit a Certificate of Assumed Name (Form DOS-1338-f) with Albany. Filing options for the certificate include:
Currently, there isn’t an online option for filing the certificate.
Business names in New York can also be trademarked with the Department of State, and doing so provides additional protection against another business owner registering a similar name. You may also trademark an abbreviation of the name in some cases. The fee is $50 for each classification claimed, and the trademark lasts for 10 years if approved.
To register a trademark for your limited liability company, file an Original Application to Register a Trademark (Form DOS-0241-f-i-a) with the DOS. The form must be accompanied by three specimens (examples) of the trademark being used in the real world, although the actual goods that the specimens are used on shouldn’t be sent in.
The application should be mailed to the following address: New York Department of State, State Records, One Commerce Plaza, 99 Washington Avenue, Albany, NY 12231. Note that this address is different from the one used for assumed name applications.
Aside from filing a state trademark, it may also be advisable to file a federal trademark if your business operates outside of New York or has expansion plans. Federal applications are filed with the United States Patent and Trademark Office.
A registered agent acts as the primary legal contact for an LLC. The registered agent receives notice of any legal action against the business and may receive other communications from the state, such as formation documents, service of process information, and tax documents.
Unless another entity is specified, the Secretary of State acts as the default registered agent for LLCs in New York. In addition, you can designate as a registered agent any one of the following:
Designating yourself or someone else can be the cheapest choice if publication costs aren’t high in your county. In that case, you must personally handle any legal communications that are sent to your business.
A registered agent service can manage all of a registered agent’s responsibilities on behalf of an LLC. Business owners choose registered agent services for two main reasons: privacy and publication cost savings (read more on this below).
The next step after appointing your registered agent will be to file the articles of organization in NY.
The Articles of Organization is a legal document that establishes your LLC with the state of New York. All NY LLCs are required to file articles of organization, in compliance with NY’s requirements.
You will need to fill out the articles of organization form and file as detailed below:
To actually file articles of organization, submit Articles of Organization (Form DOS-1336-f) to the Department of State. The articles can be submitted by:
In order to register an LLC in New York, businesses must publish a Notice of Formation in two local newspapers. New York’s publishing requirement is a step that few other states have. While it’s relatively easy to meet this standard, it can substantially increase the cost and time of forming an LLC in NY.
The publication process for NY LLCs
The costs of the publication requirements
Publication costs vary greatly around the state. Newspapers in some rural counties may charge $100 or less for a 6-week notice run, while Manhattan-based papers might charge $2,000 or more for the same amount of time. Businesses that will be located in New York City and those using a registered agent, may be permitted to publish a notice in a different, cheaper county.
The fee for filing a Certificate of Publication is $50, paid to the state.
The purpose of an operating agreement is to legally outline an LLC’s ownership structure and operations. Creating a comprehensive operating agreement not only clearly defines rights and responsibilities at the outset, but can also lessen the risk of conflict in the future.
A well-composed operating agreement will cover the LLC’s organization, management, voting, contributions, distributions, dissolution, and making changes in stakeholders. Other details may be included as well (the Department of State doesn’t specify what must be included in an agreement),
Is an operating agreement a must?
New York is one of the few states that requires all LLCs to have an operating agreement, but the agreement does not need to be sent to the state, and it can be signed before, at the time of, or within 90 days after the filing of the Articles of Organization.
That being said, the issue is somewhat muddled within state law. The requirement for an operating agreement is clearly found in New York Consolidated Laws’ Section 417(a), but the Department of State notes that the law is silent on what (if any) consequences follow for LLCs that fail to draft an agreement.
Regardless of consequences, you should draft an operating agreement because it’s technically required and especially because it’s considered a best practice. The agreement can be written or verbal, and it’s an internal document that’s meant to help define your LLC.
The IRS requires all LLCs to file for an Employer Identification Number (EIN), regardless of what state the business files in. Sometimes an EIN is referred to as a federal employment identification number (FEIN) or a federal tax identification number (FTIN).
An EIN is a nine-digit number that uniquely identifies a business for tax and other purposes. It’s necessary in order to file federal and state taxes, open business bank accounts, hire employees, and for some other actions. The number functions much like a corporate Social Security Number (SSN).
EIN applications are sent directly to the IRS, and are free to file. You can easily apply by either of the following:
Applying online is the fastest and most convenient method. A series of prompts will take you through the form’s questions, and you’ll receive an EIN immediately after successfully finishing the prompts.
Once your limited liability company is set up, you’ll need to comply with multiple of NY’s state tax requirements.
Unlike other business structures, LLCs generally don’t pay any taxes themselves. They might have to make remittance payments on taxes received from others, but income from the business is normally paid by the individual recipients of it.
How your LLC will be taxed
How you and other business owners are taxed depends on whether you elect to be taxed as an LLC or an S Corporation. The choice can have a dramatic impact on LLC owners’ tax bills in some cases:
Not paying FICA taxes results in a 7.65% savings on any distributions received. FICA taxes encompass a 6.2% Social Security tax and a 1.45% Medicare tax, both of which are assessed on gross wages.
In order to operate under S Corp tax status, you’ll likely have to spend on bookkeeping, accounting, and payroll services. Therefore, your LLC will have to make a minimum amount of distributions in order to offset these additional costs. An accountant can help you calculate the minimum amount for your business’s particular situation.
The tax savings afforded by S Corp tax status apply to only federal FICA taxes, as states don’t charge these taxes.
Which forms will you have to file?
What tax forms your LLC must file depends on how it’s structured and its tax election:
Income tax must be paid on all money earned from an LLC. This includes all net profits in the case of LLC tax status, or both profits and distributions in the case of S Corp status.
Both federal and state income taxes are assessed. Federal income tax brackets range from 10% to 37% for 2022, while New York State income tax brackets are from 4% to 10.9% for 2021. (New York’s 2022 income taxes weren’t set at the time of writing.)
Sales tax must be collected and remitted on any non-exempt goods sold, and on select services. The state-assessed sales tax rate is 4%, but counties and municipalities can add on their own sales tax. The combined rate can reach 8% or more in many jurisdictions. There is no federal sales tax.
Sales tax may have to be remitted monthly (Form ST-809 and Form ST-810 series), quarterly (Form ST-100 series) or annually (Form ST-101 series).
If using LLC taxation status, the FICA taxes assessed are actually paid as self-employment tax. The self-employment for 2022 is 15.3% in total, which breaks down to 12.4% for Social Security and 2.9% for Medicare.
The combined 15.3% is double the FICA rates that businesses pay. This is because self-employed LLC owners are responsible for both their personal and their business’s FICA taxes. When a business pays the 7.65% FICA rate, the employee pays the same rate out of their personal taxes.
Payroll taxes are the 7.65% FICA taxes that businesses pay on their employees’ gross wages. These are paid on the reasonable salary if using S Corp tax status. Owners who use the LLC tax status don’t have to worry about these taxes, since they pay the same amount as self-employment tax.
New York State doesn’t assess any other taxes on LLCs, but there is an annual filing fee that must be paid (see Understanding Annual Fees).
Assuming an LLC is profitable, owners normally must submit estimated income tax payments each quarter. These are paid by submitting Estimated Tax Payment Voucher for Individuals (Form IT-2105) along with payment. The vouchers can be mailed to NYS Estimated Income Tax, Processing Center, PO Box 4122, Binghamton, NY 13902, or submitted online.
After your limited liability company is officially filed, there are a few additional items to attend to. These items will ensure that your LLC is set up to operate smoothly and for success.
Business and personal finances should be kept separate, and an essential step in maintaining separation is to have a different bank account for your LLC’s finances.
Maintaining a separate business bank account makes business expenses and revenues clear, which helps in the event of an audit. A separate account also makes calculating profitability easier, ensures business owners receive proper disbursements, provides legitimacy when writing checks, and may assist in maintaining the LLC’s corporate veil.
Opening a business bank account takes only a few minutes, and can be done with a small deposit. Many banks don’t charge a fee for opening an account, and you can usually do so online or in-person. You may want to open a savings account alongside the business checking account.
LLCs in New York must pay an annual filing fee, which ranges from $25 to $4,500 depending on a business’s gross income. The breakdown in fee amounts is as follows:
Earnings | Fee |
$100,000 or less | $25 |
$100,000-$250,000 | $50 |
$250,000-$500,000 | $175 |
$500,000-$1,000,000 | $500 |
$1,000,000-$5,000,000 | $1,500 |
$5,000,000-$25,000,000 | $3,000 |
more than $25 million | $4,500 |
A Partnership, Limited Liability Company, and Limited Liability Partnership Filing Fee Payment Form (Form IT-204-LL) must be submitted along with payment. This form can be mailed to State Processing Center, PO Box 15310, Albany, NY 12212, or LLCs can complete the form and submit payment online.
With a business bank account in place, you’re ready to set up your LLC’s finances. This may include creating a process for making payments, receiving payments, paying employees, paying disbursements, and tracking everything.
You should consult with an accountant, tax advisor and/or attorney, in order to make sure you’re taking advantage of every legal financial benefit that’s available. A qualified professional will be able to help you identify cost savings tactics, and they can tell you what documents must be saved to take advantage of these tactics.
The filing fee for registering an LLC in New York is $200. In addition and as mentioned, there is a publication requirement that adds costs to the LLC formation, which can be between dozens of dollars to more than $2000, depending on the county in which you register. There’s also a $50 fee for filing a Certificate of Publication. Read more here.
As detailed above, you are required by law to create an operating agreement within 90 days after the filing of the Articles of Organization. However, you do not need to file the agreement with the state, just keep it within your records and business documents.
Depending on where your LLC operates and what industry it’s in, you might need to obtain licenses and/or permits. These can include anything from general local licenses that municipalities and counties issue, to specialized permissions such as building permits or a locksmith license.
An attorney and/or your local municipality can help identify any licenses or permits that your LLC might need.
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.
