A limited liability company (LLC for short) is a way to legally structure a business. It combines the limited liability of a corporation with the flexibility and lack of formalities provided by a partnership or sole proprietorship. Any business owner who seeks to limit his or her personal liability for business debts and lawsuits should consider forming an LLC.
Here are the steps you need to take to form an LLC in New York (NY). For more information on how to form an LLC in any state, see Nolo's article How to Form an LLC.
In New York, your LLC's name must contain the words "Limited Liability Company" or the abbreviations "LLC," or "L.L.C."
Your LLC’s name must be distinguishable from the names of other business entities already on file with the New York Secretary of State. Names may be checked for availability at the New York Department of State Division of Corporations business name database.
You may reserve a name for 60 days by filing an Application for Reservation of of Name with the New York Department of State Division of Corporations. The application must be filed by mail. The filing fee is $20.
In New York, the New York Department of State is automatically every LLC's "agent for service of process." The Department will accept legal papers on the LLC’s behalf if it is sued, and then forward the legal papers to your LLC. You must give the Department of State a name and address to which process (the summons and complaint for a lawsuit are called "process") and other legal papers can be forwarded. You can also appoint an individual New York resident or commercial registered agent as an additional agent to receive service of process.
A New York LLC is created by filling Articles of Organization with the New York Department of State Division of Corporations. The articles must include:
The articles may be filed by postal mail or filed online. The filing fee is $200. Follow the directions provided for completing and filing your articles.
All of the paperwork and procedural steps to start a limited liability company can be done online using Nolo's Online LLC Formation service.
Unlike most states, New York's LLC law requires LLC members to adopt a written operating agreement. The Operating Agreement may be entered into before, at the time of, or within 90 days after filing the Articles of Organization. The Operating Agreement is the primary document that establishes the rights, powers, duties, liabilities, and obligations of the members among themselves and to the LLC. The Operating Agreement is purely an internal document and is not filed with the Department of State. New York law is silent on the consequences of not adopting an Operating Agreement.
Within 120 days after its articles of organization become effective, the LLC must publish in two newspapers a copy of the articles or a notice related to the formation of the LLC. The newspapers must be designated by the county clerk of the county in which the office of the LLC is located, as stated in the articles of organization. After publication, the printer or publisher of each newspaper will provide you with an affidavit of publication. A Certificate of Publication, with the affidavits of publication of the newspapers attached, must be submitted to the New York Department of State, Division of Corporations. The fee for filing the Certificate of Publication is $50.
Additional tax and regulatory requirements may apply to your LLC. These may include:
EIN: If your LLC has more than one member, it must obtain its own IRS Employer Identification Number (EIN), even if it has no employees. If you form a one-member LLC, you must obtain an EIN for it only if it will have employees or you elect to have it taxed as a corporation instead of a sole proprietorship (disregarded entity). You may obtain an EIN by completing an online EIN application on the IRS website. There is no filing fee.
Business Licenses: Depending on the nature of your business, the State of New York may require that you either obtain a license or permit. For more information, see the state's New York Business Express website. You may also need a local business license from your municipality. For information on local licenses, contact the county clerk and the clerk of the city, town, or village in which the LLC's business will operate. For more information, see Nolo's Article How to Get a Small Business License in New York.
Annual State Filing Fee: Every domestic or foreign LLC that is treated as a partnership or disregarded entity for federal income tax purposes that has any income, gain, loss, or deductions derived from New York sources is subject to an annual filing fee. An LLC that elects to be treated as a corporation for federal income tax purposes is not subject to the filing fee. The fee is paid to the Department of Taxation and Finance (often just called the Tax Department) using Form IT-204-LL, Partnership, Limited Liability Company, and Limited Liability Partnership Filing Fee Payment Form (available on the New York State Department of Taxation and Finance website). The fee ranges from $25 to $4,500 depending on the LLC's income. For more information, see Nolo's article LLC Annual Filing Requirements in New York.
If you are just starting your business or have already been operating as a sole proprietor, you should consider forming an LLC. LLCs limit an owner's personal liability for business debts and lawsuits and offer a lot of flexibility when it comes to ownership, management, and taxation of the business. To learn more about LLCs and decide if it is the right business structure for you, see What is a Limited Liability Company (LLC)?
It is important to make sure that your LLC's name is distinguishable from the names of other existing businesses on file with the New York Department of State Division of Corporations. You can conduct a name search for free on the New York Department of State website to make sure your proposed name is available.
Filing on your own is often the cheapest option, but completing all of the forms and filing them yourself can be complicated. Hiring a lawyer is another option, but will often cost you hundreds, if not thousands, of dollars in the process. Nolo's Online LLC formation service can complete all of the paperwork and filings for you, with packages starting at just $49.00.
New York does not require LLCs to have operating agreements, but it is highly advisable to have one. An operating agreement will help protect your limited liability status, prevent financial and managerial misunderstandings, and ensure that you decide on the rules governing your business instead of state law by default. For more information, see The LLC Operating Agreement.
To do business in New York, all LLCs organized outside of the state must register with the New York Department of State Division of Corporation. Foreign LLCs must appoint a registered agent for service of process physically located in New York. To register, file an Application for Authority with the Division of Corporations. The application must be filed online using New York State-approved software if you do not use a tax professional to file, and have a computer and Internet access; otherwise, it may be filed by mail. The filing fee is $250 and the application must include a certificate of existence or similar document from the LLC's home state that is no more than one year old.
For most formation purposes, a New York single-member LLC is considered the same as a multi-member LLC. The steps to form a single-member LLC in New York are the same as those listed above.
Single-member LLCs do have additional flexibility when it comes to filing a tax return. To learn more, see Nolo’s article, How Single-Member LLCs Pay Federal Income Tax.
If you provide a licensed professional service in New York and want to form an LLC, you will be required to form a professional limited liability company (PLLC). Examples of professional services include architects, attorneys, dentists, certified public accountants, and more. Generally, if you provide a service that requires you to obtain a New York state license before practicing, then you are a professional service. Each member of the company must be licensed in order to form a PLLC. To learn more about forming a New York PLLC, see our article, How to Form a Professional LLC in New York.
If you reach the point where it is time to close your business and cease all operations, then you will want to properly dissolve your LLC to limit your liability for lawsuits and government fees. Learn about the steps you will need to take in How to Dissolve an LLC in New York.