Starting A Small Business in New York
*This blog post will refer solely to the process of opening a Limited Liability Company in New York State.
Part of the “American Dream” is to be financially independent and a big step towards that is working for yourself. And like buying a house in today’s real estate market, opening a business may seem impossible, however, it’s not as difficult as it seems. New York has some of the most helpful resources for small businesses and entrepreneurs, especially for minorities and women-owned ventures. And while there are several steps to undertake, it is certainly possible to open up your own business as long as you have the patience to navigate those resources and the right attitude to succeed.
The first part of opening a business is working out the particular details that apply exclusively to your venture, such as who will be involved, how you will operate, who will be in charge of what, etc. Those details are what will determine what kind of business to launch, and there are many options from which to choose. For the purposes of this blog post however, Limited Liability Companies are the only businesses that will be covered.
A Limited Liability Company (LLC) is a hybrid legal entity that combines certain characteristics of corporations and partnerships. It is not a corporation under US law, but is instead a legal form of a company that gives flexibility to business owners and is well-suited for a single owner. Unlike a corporation, LLC’s are organized with “Articles of Organization.” Owners of an LLC are referred to as “Members” rather than “shareholders” because they do not possess shares in the company and instead have a vested “interest.”
The process to organize an LLC in New York State is as follows:
The LLC needs a name before it can be organized. This is part of the set-up process, and along with choosing who will be involved, how it will be operated, who will be in charge, etc. is exclusively relevant to your venture. New York State’s Department of State (DOS) has an entity database search that allows search and confirmation that the name desired is available: https://www.dos.ny.gov/corps/bus_entity_search.html
The DOS requires that an account be created before any documents are filed: https://www.businessexpress.ny.gov/app/answers/cms/a_id/2443/kw/domestic%20LLC
The LLC is formed by filing Articles of Organization pursuant to Section 203 of the Limited Liability Law, which provides the relevant details of the business and its jurisdiction. The fee for filing the Articles is $200.00, and a certified copy can be requested for an additional $10.00. The DOS has a fillable version online https://www.dos.ny.gov/forms/corporations/1336-f.pdf., which can be printed and, along with the fee, mailed to the New York Department of State, Division of Corporations, One Commerce Plaza, 99 Washington Avenue, Albany, NY 12231; or are filed online at: https://www.businessexpress.ny.gov/app/answers/cms/a_id/2443/kw/domestic%20LLC
The DOS will immediately issue a confirmation for a successful processing of the application and within a few days, will issue a decision as to the formation of the LLC. If approved, the DOS will provide an original Certificate of Organization for the LLC.
Once the LLC has been confirmed by the DOS, an Employer Identification Number (EIN) with the IRS for financial purposes can be obtained. An EIN (also known as Federal Employer Identification or Federal Tax Identification Number) is a unique number assigned by the IRS to identify businesses operating in the US. The personal information of the initial member is required to apply and if approved, an EIN can be generated immediately online, or mailed to the business owner. https://www.irs.gov/businesses/small-businesses-self-employed/apply-for-an-employer-identification-number-ein-online.
Within 90 days of being approved by the DOS, the LLC must have created and executed the internal rules by which it will be governed, known as the “Operating Agreement.” This Agreement will dictate the terms of operation by which the LLC and its members will abide in doing business. This document does not need to be filed
Within 120 days of being approved by the DOS, the LLC must publish a copy of the Articles of Organization in two newspapers, or publish a notice related to the formation of the LLC. The county clerk in the county where the LLC is formed will designate which publications will publish, and will provide an Affidavit of Publication once the publication runs its course. That Affidavit, along with a Certificate of Publication, available and fillable here: https://www.dos.ny.gov/forms/corporations/1708-f.pdf, and a fee for $50.00 must be submitted to the New York Department of State, Division of Corporations, One Commerce Plaza, 99 Washington Avenue, Albany, NY 12231. The fee for filing the Certificate of Publication is $50.00.
Every two years on the calendar month in which the LLC was formed, the LLC must file a Biennial Statement with the DOS setting forth the name and operating address of the LLC and the address to which the New York Secretary of State can forward copies of process should there exist any. Failure to timely file a Biennial Statement would result in the status of the LLC reflected as “past due.” A notice from the DOS on the month in which it is due is sent to the email address provided when the LLC was filed. The fee for filing a Biennial Statement is $9.00 and it can be done with the DOS at https://appext20.dos.ny.gov/corp_ebiennial_public/corp_app.e_biennial.main_page.
Once the LLC is formed and its members have complied with all of the requirements pursuant to New York State’s Limited Liability Law, the LLC can begin conducting its business.
New York State’s Department of State FAQ’s page on their website outlines the process to create an LLC. They also answer questions about LLC’s and other business entities, as well as provide valuable resources for business owners: https://www.dos.ny.gov/corps/llcfaq.asp
Please note that the creation of websites, social media presence or advertising, promotional and marketing products are all exclusive to the particulars of the LLC and remain the personal choice of its Members. None of these are requirements of New York Limited Liability Law and do not need to be arranged through NYS Department of State.