How to Register a Business in New York

by Jennifer Kiesewetter in

TLDR

  • Before registering your startup in New York, you first need to determine your business’s legal entity structure, such as a sole proprietorship, limited liability company, or corporation.
  • In addition to choosing an entity structure, you’ll have to choose your a business name and registered agent.
  • After completing the above steps, it’s time to submit your formation forms to the New York Department of State. For new entities, the State of New York provides sample forms to use or review.
  • The cost to register a business in the State of New York depends upon your startup’s entity structure. For example, if you choose to register your business as a limited liability company, the filing fee is $200. A certified copy of the filing is $10.
  • When budgeting for your new business, remember to consider any applicable New York state taxes, in addition to applicable sales tax requirements.
  • After registering with the State of New York, you still have organizational requirements to meet, depending on your startup’s structure. For example, if you are a corporation, you’ll need to appoint directors, issue stock, draft bylaws, and hold your first board meeting. If you’re an LLC, you’ll need to draft an operating agreement.

New York tops the United States list for having the most Fortune 500 companies headquartered within its borders, edging out California by one. As of January 20, 2021, New York had 54 Fortune 500 companies, where California had 53. Texas, Illinois, and Ohio rounded out the top five, according to Statista.

While that’s impressive, according to the U.S. Small Business Administration’s 2020 Small Business Profile, the United State’s 31.7 million small businesses make up 99.9% of all companies. New York is no different. The 2.2 million small businesses in New York make up 99.8% of all companies in the state.

When forming a new business, statistics like this may impact you. However, before deciding where to register your startup, you must understand its registration rules and how they impact your business. This article explores how and when to register a startup in New York while addressing the cost of registering a New York business. 

When Do You Need to Register a Business in New York?

When registering a startup in New York, several requirements must be satisfied to register your organization successfully and compliantly. Below, we’ve broken these requirements into a step-by-step process.

Determine Your Startup's Entity Structure

Before registering your startup in New York, determine your legal entity structure. For example, depending upon your business, you may choose a sole proprietorship. According to the U.S. Small Business Administration, a sole proprietorship is “the simplest and most common structure chosen to start a business. It is an unincorporated business owned and run by one individual with no distinction between the business and you, the owner.” However, in New York, you do not need to register a sole proprietorship with the state.

Suppose you choose a more complicated business structure, such as a corporation, a limited liability company (“LLC”), or a partnership. In that case, you’ll need to register your startup with the New York Department of State. Your chosen business entity determines the next registration steps. If you need help selecting your business structure, you can use the NYC Business Wizard to explore your options.

Choose Your Business’s Name

In addition to choosing an entity structure, you’ll also have to choose a business name. The name must not be similar to any other organizations on file with New York’s Department of State. As you are naming your startup, check your options against New York’s corporation and business entity database, searching your top name choices to see if a previously registered company has already taken them.

If you are not ready to register your startup, but you don’t want to lose your business’s preferred name, New York law permits you to reserve your corporate name. You may reserve your business’s name for up to sixty (60) days for $20.

Identify Your Registered Agent

The next step is to identify and obtain a registered agent. According to SCORE, a registered agent “is simply a person or entity appointed to accept service of process [i.e., notification of a lawsuit] and official mail on your business’ behalf.”

Like most states, New York requires you to identify and maintain a registered agent who may be an individual or an entity with a physical address and authorized to conduct business in the State of New York. Additionally, like in other states, you may act as your own registered agent if your business is physically located in New York, or you may hire an individual or entity in the State of New York to serve as a registered agent. If you don’t identify a registered agent, then the New York Department of State will serve as your default agent.

Submit Your Formation Forms

Finally, after you complete the above steps, it’s time to submit the formation forms to the New York Department of State. For new entities, the State of New York provides sample forms to use or review. For example, if you chose a limited liability, a limited partnership, or corporation structure, you can use the state’s official forms. These forms are pdf-fillable and can be filed online or via U.S. Mail with hard copies of the documents.

Let’s look at a specific example. Suppose you choose a limited liability structure for your startup. In that case, you will file an Articles of Organization with the New York Department of State to create your company, according to Section 203 of the New York State Limited Liability Company Law. Additionally, along with your Articles of Organization, you’ll submit your filing fee of $200.

Organizers of the LLC prepare, sign, and file the Articles. According to the New York Department of State, ‘[a]ny person or business entity may be an organizer. Organizers may be, but need not be, a member of the LLC formed.” To learn more about the requirements for forming an LLC in New York, consult the Department of State’s website, which gives specific instructions on registering a New York limited liability company.

How Much Does it Cost to Register a Business in New York?

The cost to register a business in the State of New York depends upon your startup’s entity structure. For example, if you choose to register your business as a limited liability company, the filing fee is $200, and a certified copy of the filing is $10. If you choose to register as a corporation, then you will pay a $125 filing fee, with a $10 fee for a certified copy.

When budgeting for your startup, remember to consider any applicable New York state taxes required if you, for example, sell fuel, alcohol, tires, or tobacco products. Additionally, if your business is in New York City, you’ll be subject to additional business income and excise taxes. Before operating a business in the State of New York, you must register with the Tax Department.

In addition to the above taxes, you need to collect sales tax on any applicable services or products that you sell. To manage these taxes, you must register for a Sales Tax Certificate of Authority. According to New York law, this registration authorizes “the collection of sales and use tax on the sale of taxable tangible personal property, rentals, specific taxable services and purchases of tangible personal property for resale,” according to New York law. You can apply for this authorization online, and the authorization lasts for a three-year term.

If you are required to obtain a Certificate of Authority, you must display it at your startup's location, including any additional locations that you may have. If you fail to display your certificate properly, you could be subject to a $50 penalty. Additionally, suppose you fail to obtain a Certificate of Authority. In that case, you could face a maximum fine of $10,000, calculated at the rate of $500 for the first day you operated your business without the proper certification plus $200 per day for each additional day you operate without a certificate.

What to Do After You Register Your Startup

After registering your startup, you still have organizational requirements that you must meet, depending on your business’s structure. For example, if you are a corporation, you’ll need to appoint directors, issue stock, draft bylaws, and hold your first board meeting. If you’re an LLC, you’ll need to draft an operating agreement.

For any entity, you’ll need to obtain a federal Employer Identification Number (EIN) from the IRS and obtain a business license or permit, depending on your business.

Finally, depending upon your startup’s structure and purpose, you may need to file a Biennial Statement, often referred to as a Biennial or Annual report, confirming your company’s information with the New York Department of State every two (2) years. The Biennial Statement must describe: “(i) the name and business address of its chief executive officer, (ii) the street address of its principal executive office, (iii) the address to which the New York Secretary of State shall forward copies of process accepted on behalf of the corporation and (iv) the number of directors constituting the board and how many directors of such board are women.” The fee for filing a Biennial Statement is $9.

The Benefits of Registering a Startup in New York

Typically, one of the first questions by a new business owner is: Where should I register my business? When considering this question, be sure to weigh the benefits and limitations of filing in different states. Registering a startup in New York offers the following benefits:

  • New York is home to a talented and diverse workforce, strengthening the business community and driving success.
  • The state offers highly favorable tax incentives for new businesses registering in New York, such as those provided by Startup New York, helping to reduce the overall tax burden for new companies.
  • New York is considered to be one of the top business-friendly states, as evidenced by the tax incentives mentioned above.
  • New York has favorable commercial contract laws along with courts enforcing those laws.
  • Registering a New York business heightens a new business’s credibility--locally, nationally, and globally.

The Limitations Associated with Registering a Startup in New York

When making any business decision, weigh both the pros and cons before committing to a course of action, such as registering your startup in New York. Here are some limitations of registering your business in New York:

  • Outside of the tax incentives mentioned above, New York has a wide array of taxes and fees, potentially imposing a financial hardship on new businesses.
  • Compared to other states, New York has a high individual tax rate.
  • When you form a new LLC, New York requires that you publish notice of formation in two different newspapers, adding time and expense to your business registration.
  • If you are doing business in New York City, you are subject to additional taxes and filing requirements for your business.

We can help!

At AbstractOps, we help early-stage founders streamline and automate regulatory and legal ops, HR, and finance so you can focus on what matters most—your business.

If you’re looking for help on getting your business registered in New York State, we can get your documentation ready, overall shepherding this process to make sure it’s done right. Drop us a note at hello@abstractops.com.

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 Note: Our content is for general information purposes only. AbstractOps does not provide legal, accounting, or certified expert advice. Consult a lawyer, CPA, or other professional for such services.

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