Many small business owners set up an LLC for the liability protection it provides. The limited liability company exists separately from its owners (known as members), and the owners are therefore not personally responsible for business debts. LLCs are quite easier to set up and more flexible than corporations, and they tend to have fewer ongoing reporting requirements. Here we have described How To Setup An LLC in NYC.

New York Business Permits and Licences

In order to operate your LLC in New York City, you must comply with federal, state and local government regulations. For instance. Restaurants need health permits, building permits, signage permits, etc. The details of business licenses and permits differ from the state to state. Make sure you read carefully.

Fees for business licenses and permits will vary depending on what sort of license you are seeking to obtain for starting and running your company.

Read This 7-Step Guide To Start An LLC In NYC

To set up an LLC in New York City, you will need to file certain amounts of paperwork with the state where your business is located. Every state has its own rules and procedures, but there are several steps which you will need to follow in order to get your LLC up and running in NYC or no matter where you live.

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Step 1: Choosing a Name for Your LLC

LLC name

Most states usually do not allow two different business entities to have the same name. So you cannot, for example, have “Smith’s Hardware, LLC” and “Smith’s Hardware, Inc.,” even if they are located in different cities. Many states also stop companies from using certain words in their names, such as “bank”.

You can look at existing business names online in many states to determine whether your proposed LLC name is available. You must always check name availability in your state before filing LLC paperwork.

In addition to state law restrictions, it is wise to research whether other similar businesses in your area are using the same name or a similar name. Selecting a unique name can help avoid confusion and trademark infringement claims. You can also consider whether a domain name is available that matches your business name.

Make sure to choose a name that complies with New York naming requirements and is easily searchable by potential clients.

(a) Follow the naming guidelines as stated under:

  • The name should include “limited liability company”, or one of its abbreviations (LLC or L.L.C.).
  • Your name must not include words that could confuse your LLC with a government agency (FBI, Treasury, State Department, etc.). Restricted words (e.g. Bank, Attorney, University) may need additional paperwork and a licensed individual, such as a doctor or lawyer, to be part of your LLC.
  • Restricted words (e.g. Bank, Attorney, University) ask additional paperwork and a licensed individual, such as a doctor or lawyer, to be part of your LLC.

(b) Check name availability in New York

Make sure the name you want does not exist already by doing a name search on the State of New York website.

(c) Check the availability of the URL (website domain address)

It suggests that you should check if your business name is available as a web domain. Even if you do not plan to make a business website today, you may want to buy the URL in order to prevent others from acquiring it.

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Step 2: Reserving a Name

If, however, the name of the LLC which you have selected is available, but you are not going to be filing your LLC documents right away, then you may want to reserve the name. Almost every state allows you to reserve a name by filing a form and paying a name reservation fee. The length of the reservation period, filing fees and renewal policies differ from state to state.

Step 3: Choosing a Registered Agent

Almost every state requires its LLCs to name a registered agent, sometimes also called a statutory agent.  A registered agent is a person who agrees to receive lawsuits, subpoenas and other official documents on behalf of the LLC and to pass them along to the appropriate person at the LLC.

Most states allow anyone who is a state resident over the age of 18 years to serve as a registered agent, including a member or officer of the LLC. There are also companies that provide registered agent services for a certain fee.

In New York, the Secretary of State acts as the registered agent for service of process for all New York LLCs by default. You can select to designate someone besides the Secretary of State as the registered agent for your New York LLC.

If you choose to use a registered agent service, the Secretary of State will still be the first point of contact for the state and for anyone who might serve your LLC with legal action.

The Secretary of State will forward the all following to your LLC’s principal address or the address of your designated registered agent:

  • All formation documents
  • Any service of process information
  • Documents regarding taxation and reporting

The corporate address of your business must be published in a newspaper upon formation. Since some LLCs are started at home.  And to keep your information private and publication costs low, consider using a registered agent service.

Reasons using Registered Agent Service in New York

(a) Reduce Publication Costs

New York requires newly formed LLCs to publish a notice of formation in local newspapers. Publication costs nearly $1,500 or more if the principal address is in New York City. A registered agent service located outside the city allows an LLC to use the registered agent’s address as the principal address which greatly reduces the cost of publication.

(b) Privacy

New York’s LLC publication necessities mandate that your principal LLC address is publicly shared. Hiring a professional registered agent service will allow you to use their address instead of yours which will protect your personal privacy.

After the publishing requirements are met, you can change the location of your principal office to anywhere in New York State, for which you will not need to publish additional notices.

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Step 4: Prepare an LLC Operating Agreement

LLC aggrement

An LLC agreement is a roadmap that describes how your LLC will be run. It specifies such things as the ownership interests and voting rights of the members, how profits and losses will be allocated, how meetings will be held, how the business will be governed, the rights of the members if one of them dies or leaves the business and the way the company will be dissolved if it goes out of business.

The operating agreement is typically not filed with the state and not required by your state’s laws. However, it is a significant way for business owners to define their rights and responsibilities and minimize future disagreements. All New York LLCs needs to have an operating agreement. This may be a verbal or written agreement.

What is an operating agreement?

An operating agreement is a legal document with the ownership and operating procedures of an LLC.

Why are operating agreements important?

A complete operating agreement ensures that all business owners are on the same page and reduces the risk of future conflict.

Step 5: File Organisational Paperwork with the State

To register your New York LLC, you will need to file the Articles of Organisation with the State of New York. This can be done online or by mail. When filing the Articles of Organisation, you will need to decide if your New York LLC will be member-managed or manager-managed.

Each and every state has its own form and procedure for establishing an LLC. In general, you must file articles of the organization that lists things, such as:

  • Name and address of the LLC
  • Length of its existence, if not perpetual
  • Name and address of the registered agent
  • The purpose for which the LLC was formed
  • The paperwork must be signed by the person forming the LLC, and in some states, the registered agent must also sign

In most states, you must file LLC formation documents with the secretary of state, but some states have a different department that handles business filings. All states charge a filing fee, but the LLC cost differs from state to state.

Step 6: Obtain a Certificate from the State

After your LLC’s formation documents are filed and approved, the state will issue a certificate or other document that confirms that your LLC formally exists. Once you receive the certificate, you can take care of business matters like obtaining a tax ID number and business licenses and setting up a business bank account.

The Employer Identification Number (EIN), or Federal Tax IdNumber, is used to identify a business entity. It is essentially a social security number for the company.

Why do I need an EIN?

Generally, an EIN is mandatory for the following purposes:

  • Opening business bank account
  • For Federal and State tax purposes
  • To hire employees for the company

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Where do I get an EIN?

After forming your company, you can obtain an EIN from the Internal Revenue Service (IRS), which is free of charge. And you can get EIN through online process or by mail.

Step 7: Register to Do Business in the Other States (optional)

If your LLC does business in more than one state, you may need to register to do business in other states as well. To do this, you will need to fill out and submit paperwork that is similar to the paperwork you fill when you form your LLC. You will also need a registered agent in each state where you get authorization to do business.

New York LLC Tax Requirements

According to the nature of your business, you may need to register for one or more forms of state tax. This is online through the portal.

Sales Tax

If you are selling a physical product, you will typically need to register for a seller’s permit, known as a Sales Tax Certificate of Authority, with the New York Department of Taxation and Finance. This certificate let the business to collect sales tax on taxable sales.

Sales tax, also known as  “Sales and Use Tax”, is a tax levied by states, counties, and municipalities on business transactions involving the exchange of certain taxable goods or services.

Employer Taxes

If you have employees in New York, you will need to register for Unemployment Insurance Tax with the New York Department of Labour and Employee Withholding Tax with the New York Department of Taxation and Finance.

Industry-Specific Taxes

If your business falls within a specific industry, additional state taxes can apply.

Annual Fee

There is a final Filing Fee for each LLC formed in New York which varies depending upon your LLC’s income.

Setting Up An LLC In New York Bottom Line

An LLC is a popular business option that works well for many small business owners. In most states, LLCs are easy to set up and maintain. However, it is important to fill out the paperwork properly and have an operating agreement that defines the members’ rights and responsibilities.

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