Starting an LLC in New York

New York is one of the most complex states for LLC formation, with a mandatory publication requirement that catches many entrepreneurs and new business owners off guard. Before you move forward with officially forming your LLC, it's important to familiarize yourself with the required forms, deadlines, and overall formation process.

Use this guide to learn how to officially start your LLC in New York. It walks you through each of the six formation steps, the fees you'll be responsible for paying, and previews New York state-level tax obligations for your new LLC.

What Are the Benefits of Starting an LLC in New York?

Starting your LLC in New York has numerous benefits, including:

• Limited liability protection for members. This protection generally shields each member's personal assets from business debts.

• Pass-through taxation. LLCs pass income directly to each member with profits taxed at the appropriate individual rate. There's no double taxation at the entity level by default.

• Management flexibility. Businesses can be run by LLC owners (member-managed) or by hiring a professional to run the day-to-day operations (manager-managed).

How to start an LLC in New York

There are six steps to successfully start your LLC in New York, detailed in the following sections.

Step 1: Choose Your LLC Name

The first step to establishing your LLC in New York is to choose its name. You must adhere to three naming requirements.

First, your New York LLC name must include:

• LLC

• L. L. C.

• Limited Liability Company

Second, your LLC name must be available and distinct from other business entity names in New York. To check if your business name is available, you’ll go to the Divisions of Corporations within the New York Department of State (DOS) and do a name search. To reserve your LLC's unique name, complete and file the Application for Reservation of Name and pay a $20 fee to the DOS. This is a voluntary step that prevents other businesses from claiming that name for a specified period.

Third, to make sure your LLC name isn't misleading to the public, there are some phrases and words that you can’t use or may need additional paperwork to use.

You can’t use words that imply government offices and units, such as:

• Treasury

• State Department

• FBI

• CIA

• Village

• City

You will need professional business licenses and additional documents to include the following words in your business name:

• Engineer

• Attorney

• CPA

• Bank

• Trust

• Insurance

You’re also not allowed to use any derivative of an existing business name or add “ing” to forbidden words.

Step 2: Registered Agent Requirement

The second step to starting an LLC in New York is to work with a registered agent.

New York State operates as its own registered agent, but you have the option to choose a different New York registered agent service. A registered agent service will accept legal documents for your LLC if privacy is a concern or if you're not always available at your primary place of business.

Step 3: File Articles of Organization

Next, you’ll file Articles of Organization for your New York LLC using Form DOS 1336, which is issued by the New York DOS. Your LLC will designate the Secretary of State as the agent for the service of process.

You'll need the following information to complete this step:

• Your LLC name

• Your LLC’s county location

• Purpose of your LLC

• New York Registered Agent (if needed)

• Duration of your LLC

• Service of process designation

• Organizer signature

• Filer information

There are four ways you can send your LLC's Articles of Organization. You can submit these forms by fax, by mail, in person, or online. There's a $200 fee regardless of the submission method.

Step 4: Create an Operating Agreement

Creating an operating agreement is optional in most states, but New York legally requires this step, and doesn't provide a template. We recommend working with a tax attorney or accounting professional to draft one for your LLC. You'll have a 90-day window to draft and sign the agreement. Failing to create your agreement within this period can result in compliance risks and jeopardize your limited liability protection.

An operating agreement will determine how your New York LLC will operate its:

• Information about the members of the LLC

• Management structure of your LLC

• Buyout and buy-sell rules

• Distribution of profits

• Dissolution provisions

• Outline of voting procedures

• Duties and powers (for managers and members)

• Meetings

• Responsibilities and voting rights

Step 5: Apply for an EIN

Fifth, you’ll apply for your federal employer identification number (EIN). The Internal Revenue Service (IRS) issues EINs for LLCs and other small businesses, and the process is free. You can apply for an EIN in three ways: by fax, by mail, or online.

The fastest way to receive your EIN is online, but you’ll need to complete it in one session. If you apply for an EIN by fax, you’ll receive it within four business days. If you apply for your EIN by mail, you’ll receive it in approximately four weeks.

Step 6: Publication Requirements

The final step to start your New York LLC is to adhere to publication requirements. These costs vary by county, and you must publish in both daily and weekly newspapers designated by the county clerk. For counties in New York City, these costs can exceed $1,000 due to newspaper advertising rates, whereas costs are usually lower in upstate New York counties.

Once your LLC is officially formed, you have 120 days to fulfill this obligation. Failing to do so may result in the suspension of your ability to conduct business in New York.

You’ll publish either a copy of the Articles of Organization or a notice related to your LLC in two newspapers for six consecutive weeks. Here's what to know about New York LLC publication requirements:

• You’ll receive an affidavit of publication from the newspaper printer or publisher.

• You’ll attach the affidavit of publication to your Certificate of Publication when submitting it to the DOS.

How much does it cost to form an LLC in New York?

The total costs of starting an LLC in New York will vary. It costs more if you expedite the process, and publication fees vary by region. You will pay fees to the state for filing your Articles of Organization and Certificate of Publication, and fees to designated newspapers to comply with the publication requirement.

There are several optional fees, including name reservation, expediting processing (within 24 hours, same day, or within 2 hours), and registered agent fees if you prefer to use someone other than the New York DOS.

How long does it take to form an LLC in New York?

The exact time it will take to form your LLC in New York can vary. It may take a few weeks when setting up an LLC in New York City if you don’t have a business name in mind or an EIN.

If you choose expedited processing for your documents, starting a New York LLC will take less time.

New York LLC Tax Obligations

It's important to understand your ongoing state-level LLC obligations. New York imposes an annual filing fee on LLCs ranging from $25 to $4,500, based on the amount of gross income from New York sources. Visit the New York State Department of Taxation and Finance for the most up-to-date fee schedules.

• Single-member LLCs are treated as disregarded entities federally and file Schedule C (Form 1040), Profit or Loss from Business (Sole Proprietorship), or Schedule E (Form 1040), Supplemental Income and Loss for rental income at the federal level. New York follows this treatment.

• Multi-member LLCs are treated as partnerships federally and file IRS Form 1065, U. S. Return of Partnership Income. New York requires a corresponding state partnership return through Form IT-204.

• LLCs that elect S corporation status with the IRS must also make a separate New York S corporation election with Form CT-6 to be treated as an S corp at the state level.

Setting Up Your New York LLC the Right Way From the Start

There are many benefits of doing business in New York, but officially establishing your LLC there is complex, with more moving parts than in other states. If you don't plan correctly, you may experience setbacks, with the publication requirement alone creating unexpected costs and timing challenges. While some owners and entrepreneurs attempt to form on their own, pairing a clear understanding of each step with professional support makes the process considerably more manageable.

If you're ready to officially establish your business, explore 1-800Accountant's full-service entity formation solution to ensure your New York LLC is set up correctly from day one.