How to start a business in New York

Fill in

this form

and then send it by mail using

these instructions

Apply by phone by calling the Internal Revenue Service on 1 800 829-4933

There are some other formalities that must be taken care of if you plan on hiring staff:

You must

Notify the State of all new hires by filling out a

New Hire Report

Validate the identity of all

new hires

Obtain relevant licences

Depending on the type of business you're launching you may need a license to operate it.

For a list of license requirements by industry types

Professionals working in New York need to obtain a license to prove their qualification. You can find licensing requirement details

To apply for a business license

You can find more information about a specific business license on

this website

The city of New York's

Business Wizard

portal can help you create a checklist of all the steps you need to take to start a business, including information on some of the licenses you might need.

Obtain relevant permits

Depending on the location of our business you may need to hold an appropriate

zoning permit

for your business operations, especially if you plan on running your

business from home

If you plan to renovate your home to accommodate a home office, you'll need to

file for a permit

Tax registrations

Depending on the nature of your business solution, you may need to register for a Sales Tax Certificate of Authority.

A few of the services subject to sales tax are:

Property maintenance, service and repair

Computer repair

Massage services

Tanning salon

For a more comprehensive list of items that are both subject to and exempt from sales tax

New York Business Express portal

You can register for sales tax on the

Open a business banking account

A business banking account keeps all your business transactions separate from your personal transactions. You can easily track all profits and losses and take the stress out of your tax prep.

You can find a list of New York banks for small business

Register a business name

If you plan on trading under a business name other than your given name, you'll need to register your business name.

In New York this registration is known as a “Certificate Under Assumed Name.” You'll obtain the certificate through your county clerk. You can find county clerk contact details

Corporation and Business Entity database

Before registering a business name, you need to check to see if it's available. You can do this by searching the

Now let’s dive into the specifics of establishing each business type in New York.

How to start a Sole Proprietorship in New York

If you're planning to run your business alone when you launch it, the simplest business structure to choose is a Sole Proprietorship.

The simplicity of setup and cost effectiveness of this structure comes at a price. The owner accepts full personal liability for all business debts.

But you shouldn’t let this deter you from choosing a Sole Proprietorship. You always have the option of upgrading to a different structure at any time.

You can also mitigate your risk as a Sole Proprietor by choosing strategic insurance policies.

To learn more about Sole Proprietorship insurance options,

Department of Taxation and Finance

If you follow all of the steps listed above (under “procedures for all business types”) you'll have successfully completed the steps of establishing a Sole Proprietorship. It’s that easy.

Tax details for Sole Proprietors in New York

Because Sole Proprietors are considered indistinguishable entities from their businesses, you'll report all your business income and expenses on your

personal tax return

For more details on your tax obligations as a Sole Proprietor, contact the New York

or consult with a professional accountant.

If you're hiring employees, you can read more about tax requirements as an employer

Certificate of Limited Partnership

How to form a partnership in New York

A partnership is a business with at least two individuals or entities. There are three different types of partnerships:

General Partnership

This is the standard form of partnership. All general partners share the full liability of any business losses (think of all the members of a general partnership as Sole Proprietors).

Limited Partnership

This type of partnership is comprised of both General Partners and Limited Partners. As the name suggests, limited partners limit their personal liability. This limitation depends upon the amount of money the Limited Partners have contributed to the business.

General Partners have the greatest amount of jurisdiction. A threshold is in place for Limited Partners when it comes to making business decisions.

A Limited Partnership is a good choice if you're only interested in collecting the profits of the business you invest in and not directing it.

If you choose a Limited Partnership, you'll need to file a

. There's a $200 filing fee.

Limited Liability Partnership

Limited Liability Partners are protected from any debts caused by other members. This is a good choice for high risk businesses that are structured as a partnership.

Form a partnership agreement

This is not a mandatory requirement of the state, but highly recommended.

A partnership agreement outlines the roles of each member and how the business is to be run.

It includes details such as:

Member decision making

WIthdrawal procedures

New partner admittance procedures

Bankruptcy procedures

Allocations of profits among members

A partnership agreement ensures that the business keeps operating efficiently throughout all circumstances. It can also help you secure investor funding and bank loans.

You can draft a partnership agreement yourself or use a

template

Tax details for partnerships in New York

Partnerships, like Sole Proprietors, are indistinguishable entities from their owners, so only one tax return needs to be completed (personal tax return).

You can find all the relevant forms at the

New York State Department of Taxation and Finance

and the

IRS

websites.

How to form an LLC in New York

An LLC business structure will protect your personal assets in the event of a business lawsuit. It is also the minimal business structure you need to officially distribute stock certificates to investors. This official proof of investor ownership makes securing funding much easier for LLCs.

New York, unlike other states, does not require LLC owners to submit annual reports; another reason why launching a business in New York is a fantastic idea.

Naming your LLC

The name of your LLC must end in one of the following:

LLC

L.L.C

Limited Liability Company

There are also some

restricted phrases

you should be aware of when choosing a name for your LLC.

Elect a registered agent for your LLC

A registered agent is the middle entity between your business and all outside mail correspondence. The purpose of a registered agent is to guarantee the acceptance of all your business mail.

A registered agent must meet the following criteria:

Have a physical address in New York (cannot be a PO Box)

Guarantee availability throughout business hours

Accept the duties of accepting all mail on your behalf

Professional registered agent services

Here's a list of suggested registered agents in New York:

New York Registered Agent

Northwest Registered Agent

Submit Articles of Association

The

Articles of Association

form formalizes the formation of your LLC.

You can submit your Articles of Association

. You can find instructions on filing your Articles of Association

Certificate of Publication

Publicize LLC formation

You also need to publicly announce your newly founded LLC. This is done by publishing your Articles of Association in both weekly and monthly publications for 6 weeks.

Make sure you commence the publication process within 120 days of your Article of Association taking effect. You're free to contact newspaper publications yourself or hire a third party to reach out to them for you.

If you don't want to publish your Articles of Association, you can just publish an announcement of your newly formed LLC.

When your LLC has been publicized you'll need to fill out a

and list all of the outlets you published your LLC announcements in. There's a $50 filing fee.

Create an operating agreement for your LLC

This step isn't mandatory, but we highly recommend it.

You can craft an operating agreement yourself or use a

template

In your operating agreement, you'll need to decide if your LCC will be member-managed or manager-managed. A member-managed LLC is controlled by all of its members. All business decisions are made collectively via a voting system. A manager-managed LLC is controlled by an elected manager (or managers) that makes business decisions on behalf of all members.

Submit a Biennial Statement

The purpose of this statement is to ensure the State of New York has the most up-to-date records about your business.

You don't need to worry about accessing this statement yourself. It will be automatically sent to your registered agent, or you can file it

Tax details of LLCs in New York

A single member LLC can elect to be classified as a Corporation or a Sole Proprietor for federal tax purposes.

If an LLC is comprised of at least 2 members it can choose to be classified as a corporation or a partnership when submitting taxation forms.

In order to keep your LLC active in New York, you'll need to pay an

annual filing fee

. You must pay your fee on the 15th day of the 3rd month after the close of the tax year. Be sure to mark this deadline in your calendar because no extensions are granted.

You can find all the relevant New York tax forms

, and you can find the relevant IRS forms

How to form a Business Corporation in New York.

A corporation is the most complex business structure available. It's also the most accommodating structure if you decide to go public in the stock market.

There are two different types of Corporations:

C-Corporations

A C-corporation is the standard type of corporation.

This is also the most complex business structure so there's a lot of added administrative work involved.

Some of the benefits of a C-Corporation are:

No restriction to number of owners

Owners can be nonresidents

Readily transferable shares

Immortal life (unless otherwise specified in Certificate of Incorporation)

S-Corporations

S-corporations do not undergo the “double taxation” process of C-corporations. Taxation only occurs once at a personal level for each member.

If you choose to an S-Corporation identity, you'll need to elect this classification manually with the IRS (more on that in the taxation section below).

Some of the benefits of choosing an S-Corporation are:

Classified as a ‘Pass-Through-Entity” so taxation only occurs once at a personal level

Ease of ownership transfer without tax consequences

Members can receive tax-free dividends to the extent of their investment

Naming your Corporation

All Corporations in New York must add one of the following words to the end of their business name:

Limited

Incorporated

Incorporation

You can also check the availability of your prospective Corporation name in the Corporation and Business Entity

database

If you have a perfect business name in mind but you're not quite ready to submit any official documentation, you can

reserve your business

name for up to 60 days.

Elect a registered agent

This process of appointing a registered agent is the same as the process for LLCs.

Submit Certificate of Incorporation

This formalizes the establishment of your Corporation in New York. You can access the form

and submit it via mail, or complete the submission process

Complete a Corporate Records Book

A Corporate Records Book stores all of the important records of a Corporation, such as stock certificates and meeting minutes.

You can curate this records book yourself or pay a

professional

to create it for you.

If you have multiple office locations, your Corporate Records Book should be stored in your primary location.

You should also keep your corporate bylaws in your Corporate Records Book

Create a list of Bylaws

Bylaws are the rules that govern your Corporation. This isn't a requirement in New York, but it's highly recommended.

Host Initial Director Board meeting

This is an opportunity for you to complete all the formalities that must be taken care of prior to commencing business operations, such as distributing stock and creating Bylaws.

You should also elect your first corporate directors during this initial board meeting. These directors are temporarily put in place until new members are voted in to serve during your first annual board meeting.

You must keep a record of all appointed directors in your Corporate Records Book as an “Incorporator’s Statement.”

Submit Certificate of Incorporation.

The submission of this document formalizes the establishment of your Corporation. You can file this document

or via

mail

If you are establishing a professional Corporation you will need to file a Certificate of Incorporation pursuant to Section 1503 of the Business Corporation Law.

The Certificate of Corporation form for professional services can be accessed

To check if your Corporation is classified as a Professional entity, refer to the New York State list of

licensed professionals

Submit Biennial Statement

The process of submitting a biennial statement for Corporations is the same as the process for LLC’s

Tax details for Corporations in New York

If you choose to be an S-Corporation, you'll need to notify both the State of New York and the IRS.

Notifying IRS of S-Corporation status

You'll need to submit

form 2553

to file for S-Corporation status with the IRS.

Notifying State of New York of S-Corporation status

To notify the State of New York of identity as an S-Corporation, you need to submit form

CT-6

Franchise tax

Depending on your business operations, you may be liable to pay

Franchise Tax

. You can estimate the amount of Franchise Tax payable using an online

Franchise Tax estimator

IRS taxation forms for Corporations

Tax forms for C-Corporations can be found on the IRS website

Tax forms for S-Corporations can be found on the IRS website

four different sub-classifications

How to form a Nonprofit in New York.

Nonprofits enjoy the benefits of tax exemption, but members need to prove their nonprofit's intentions before being granted these exemptions.

Forming a nonprofit in New York

Nonprofits in New York as classified as either a religious or nonreligious corporation.

There are

of nonreligious nonprofits in New York:

Type A

These include the following industries:

Athletic, agricultural horticultural, fraternal and social.

Type B

These include the following industries:

Educational, animal and children cruelty prevention

Type C

These include public operations performed by business corporations.

Type D

Other purposes

You can classify a nonprofit as a "multiple type."

Elect initial directors

You must elect at least 3 initial directors to oversee your nonprofit in New York. These directors must be at least 18 years of age. There are no residency restrictions for these directors.

Naming your Nonprofit

Your nonprofit's name needs to end in any one of the following:

Incorporated

Corporation

Limited

Inc

Corp

Ltd

Be mindful of

important restrictions

when choosing a name for your nonprofit.

Submit nonprofit Certificate of Incorporation

In this document you can specify the type of your nonprofit (eg, Type A, B etc). You can access the Nonprofit Certificate of Incorporation

Obtain New York agency consent

In New York, certain nonprofit activities require agency approval. Each written consent must be added to the Certificate of Incorporation.

You can find a list of nonprofit operations that require agency approval in New York

Complete a Corporate Records Book for your nonprofit

This records book should store all of your meeting minutes, bylaws and certificate of Incorporation.

You can create this records book yourself or pay a

professional

to create it for you.

Host initial board of directors meeting

During this meeting, all members should collaboratively create a list of bylaws to govern the nonprofit.

This is also an opportunity for all members to elect initial directors.

Tax details for nonprofits in New York

Nonprofits in New York need to file for Federal and State level tax exemption.

Applying for federal level tax exemption:

You will need to fill out

Form 1023

to register for Federal tax exemption. Smaller nonprofits with projected annual gross receipts of less than $50,000 and total assets worth less than $250,000 may be eligible to submit form

1023-EZ

Applying for State level tax exemption in New York:

To file for state income tax exemption in New York, you'll submit form

CT-247

To file for sale tax exemption, you'll submit form

ST-119.2

As a nonprofit in New York, you may also be eligible for a

property tax exemption

Register for fundraising activities

Before your nonprofit does any fundraising activities in New York, it needs to register with the state, and renew this registration on an annual basis.

Nonprofits in any of the following sectors are exempt from this registration process:

Charities with less than $25,000 in yearly donations, that do not solicit a professional fundraiser

Religious charities

Hospitals

Historical societies

Volunteer firefighters

Volunteer Ambulance services

Exemption from fundraising activity transparency is a one time process