Starting LLC in New York: Peculiarities & Detailed Manual
Want to start an LLC in New York? It is a profitable decision for a business, as the state has waived corporate tax in favor of gross corporate income tax. So you’ve decided to start an LLC? Not sure how to initiate the process? To start an LLC in New York, you need to get ready for several stages.
We’ve prepared a guide for you with just six steps to form your LLC and to get success! You can also refer to the virtual LLC formation service.
Note: ZenBusiness is the best service to file the LLC. You’ll surely appreciate reasonable prices, company values, and other peculiarities.
An New York LLC: The Notion & Essence
Many New York business owners choose to start an LLC. So, unlike a corporation, they can take advantage of flexible management. We’re talking about the protection of personal assets that sole proprietorships and general partnerships lack.
The state of New York puts forward simplified requirements for registration and maintenance of LLC and invites business owners to choose the type of taxation. Do you still have doubts about the LLC?
6 Stages to Form an LLC Correctly
Stage №1: Choose Your LLC Name
The LLC name is a significant aspect, as it is the name of your company that makes the first and strongest impression on the audience of your potential customers! The name must be different from existing company names and must meet New York’s regulatory requirements. Now get started with the following aspects.
LLC name in terms of jurisdiction
The State of New York obliges business owners to include the abbreviation DDS or the phrase – limited liability company in the name. Please note that the terms corporation or registered are prohibited. In addition, you cannot use the designations of other forms of business: banks or law firms.
Take care of the explanations
You must include in the title an explanation of the nature of your business. For example, if you are engaged in the computers’ repairing, write in the LLC title – computer wizard. If you have any values or principles, also indicate this. For example, if you are farming, use the term natural, nitrate-free, etc.
So, you need to get a little creative and fully comply with New York’s legal requirements.
Stage №2: Hire a Registered Agent
A registered agent is called a statutory agent in New York and will help you to start an LLC. The agent can be an New York resident, natural or legal attorney responsible for sending and receiving legal documentation on behalf of the future company. A company representative can also be an employee of the company or its owner. The State of New York notifies:
To make it easier for a foreign entrepreneur to run a business, the states require to conclude a contract with a registered agent. This specialist transmits information, analyzes incoming documentation, and resolves issues with officials. Moreover, not everyone can become an agent of this type. After all, he need not only to live in the states but also to have all the necessary skills.
A registered agent guarantees an excellent reputation for your New York LLC. Also, if your business gets worse, New York can take legal action against it without notifying you. The registered agent will always receive appropriate notification and will be able to take timely measures to protect your interests as an attorney.
You should apply to the online service to get started a business in compliance with all regulations and requirements. So, you will have the opportunity to filter spam and protect your personal and contact information. If you use the ZenBusiness and Northwest Registered Agent to form an LLC, you will receive the free services of a registered agent.
Stage №3: Applying for Registration
To register a business in New York, you must file the Articles of Association with the New York State Secretariat. If you are anxious about your LLC formation, you can submit your documents for pre-processing, which will allow the Secretary of State’s office to advise you of the eligibility. It can be a good option if you get started for the first time in an LLC without consulting an attorney. Be sure to provide:
- The desired name of your business.
- Personal and contact details of the registered agent.
- Business management form.
- Personal and contact details of the manager of your company.
- Signature of the applicant and registered agent.
- Date of application submission.
The necessary information is specified below. You can fill in the data in the form online. You can also print a PFD file and send the desired document by mail. Unfortunately, in the state of New York, it will not be possible to simply send the file. On the Internet, you will still have to fill in some information about yourself. And the rest you can send by mail.
The amount of payment for the creation of a business: for the registration of a company, the states charge a fee of $ 200.
Application processing time: This process usually takes up to four weeks. In the state, when registering an application, people are waiting for all the documents to be received. And all of them must be properly designed and submitted. Otherwise, you will have to collect the documents from the beginning. It is worth noting that a part of the applications is considering within one day.
Stage №4: The Operating Agreement Background
While an operating agreement is not binding in New York, creating one could significantly improve the company’s climate. An operating agreement is a document that describes the structure of a project, the way it works, the rights and obligations of each partner.
This document reflects the consistency of partners and thereby reduces the chance of controversy and disputes. Therefore, it is significant that all members of the future LLC carefully read this document before joining the company.
An attorney can help draw up an operating agreement and determine the way income and liabilities will be distributed among the owners of your LLC. You will find more information about the operating agreement here. Prepare to enter the following information:
- Names of all participants.
- The rights and obligations of each of the listed participants.
- Description of procedures for voting or resolving differences between members.
- Regulations on the financial share of participation of LLC members.
- Description of the way you’re going to manage the LLC.
So, do not neglect this stage of LLC formation. It largely guarantees your safety and the observance of your rights by all members of the business project.
Stage №5: Tax Compliance
To conduct a business that you want to register as an LLC successfully, you need to comply with several tax requirements at various levels.
Requirements of Federal Significance
Does your LLC involve multiple owners? Then you need to take care of the EIN! The EIN, or Employer Identification Number, is a unique nine-digit number assigned by the IRS to US corporations. This number must be obtained by all business owners under whose leadership the hired employees work. A business owner can obtain an EIN from the IRS in person or by mail.
Your state’s cess requirements
For sure, you are interested in what taxes there are in New York. Can say this in the states, the percentage of taxes and their number depends on the type of enterprise. Individual entrepreneurs who register as sole proprietors pay money on individual human tax returns.
Those who register as a corporation pay corporate tax, and it is fixing. Its amount is 6.5% in 90% of cases. If you want to find out more information about state taxes, click here.
Businesses engaged in the sale also pay taxes. You need to give 4% of the total amount of profit to the state. If you want to find out the requirements, the amount of tax, etc., click here.
Businessmen who have created a limited liability company, together with their employees, must pay certain taxes. Entrepreneurs are responsible for paying withheld taxes from the salaries of their employees. You deduct a certain percentage from the wage of employees.
You transfer all the funds received to the state account. Thus, you pay income tax. You can read more about this here. Also, entrepreneurs must contribute money to state insurance. This payment is not a tax, but it is necessary to pay it. For more information about the fund and rates, please contact the New York Department of Labor.
There are also additional taxes in the states. They are associated with specific branches of public life. For example, these are taxes on tobacco products, gambling establishments, and so on. Full access to the description of taxes you can be obtained here.
Local Tax Business Demands
It does not matter where your company itself, office, and other objects are locating, because in any case, you need to pay local taxes. The most common of them is the sales tax. In New York, the local tax is 4.5%. You can find out about the rates and other useful information here.
Stage №6: Getting Business Licenses & Permits
There is no general license in the states, but every businessman must-have. It to legally carry out his activities.
New York supports a federal license that applies to certain professions and certain industries. These include aviation, agriculture, and so on. We recommend that you read the lists of small businesses for federally regulated industries. All of them must be licensed.
The state has tax requirements, but at the same time, it issues permits and licenses. In most cases, they apply to many areas. For example, it can be from anesthesiology to social work. With a 96% probability, one of the licenses applies to your company.
We advise you to read the licenses and their description here. Remember that the state can check your license at any time. We also advise you to consult the government’s website to find out about the taxes you need.
Other Stages for Business Owners After LLC Registration
After completing the six mandatory steps towards starting an LLC, you need to take care of the following.
Opening a business bank account
Separate your personal and LLC accounts. Thus, you will be sure of the safety of your personal and financial data. Besides, you won’t have any hassle when filing your charge returns. Your EIN will help you open a business account quickly, no matter what you choose a bank or credit union.
Business Insurance
All owners of companies/corporations, regardless of their form of management that attracts employees, must go through the compensation insurance procedure. All basic and detailed information is available with the New York Bureau of Workers’ Compensation.
This policy aims to protect the rights of workers who are injured at work and unable to work. It will not be superfluous to get a civil liability insurance policy, as well as pay attention to some other types of insurance.
Income reporting
Profit report – this is the general document of the enterprise for one year. You must fill out a form with the data from this report and send it to the states, as this is a mandatory procedure. This should be done even if you did not have a profit. All data and access to it can be obtained here.
Referring to the services of a qualified accountant
You also need to send a two-year report. It served online here. The amount of the fee is $ 9. Necessary for this report to update the database about your business.