How to Set Up a Business in New York: A Step-by-Step Guide

Starting a business can be a thrilling and profitable venture, but it can also be a daunting task, especially if you are new to the process. If you are considering setting up a business in New York, it’s crucial to be well-informed and take the necessary steps to ensure your company’s success. In this article, we’ll take you through the process of setting up a business in New York, step-by-step.

Create a Comprehensive Business Plan

The first step to setting up a business in New York is to create a comprehensive business plan. A well-written business plan outlines your company’s objectives, target market, competition, marketing strategy, and financial projections would be nice, but honestly, it is not critical. What is meant here is to have as clear an idea as possible of what it is you are going to, for whom you are going to do it for, where you are going to do it from, how you are going to do it and how you are going to pay for it to get off the ground. Knowing why you are doing it, and for whom is rather useful as well. Just the process of thinking of those what, who, where, how and why questions will help make the remaining steps much easier.

Choose Your State of Incorporation

This may seem like a funny thing to say in a guide about setting up a company in New York, but one of the initial decisions you need to make is choosing your state of incorporation. You can choose to incorporate your business in any state, so it’s crucial to consider the benefits and drawbacks of incorporating out of state. The easiest and cheapest way for most businesses to get started is to set up an LLC or corporation in New York, but there may be reasons to form you company in a different state. Delaware is a popular choice because of its business-friendly laws and tax benefits, but incorporating in New York may have its advantages as well. If you set up outside of New York but conduct business in New York, it is extremely likely you will have to file a foreign registration in New York.

Choose Your Entity Type

The next step is to select the right entity type for your business. The most common types of entities in New York are a business corporation, limited liability company (LLC), not-for-profit corporation, professional limited liability company (PLLC), or professional corporation (PC). Each entity type has its own set of rules and regulations, so it’s essential to choose the right one that suits your business needs.

Choose Your Company Name and Alternatives

Choosing the right name for your company is crucial because it’s the first thing your customers will see. However, New York has strict regulations on what you can call your new company. Each new entity will have to do a name availability search at the time of filing. The Secretary of State is very particular about the names of new businesses and can reject filings for seemingly trivial reasons. To ensure your company name is acceptable, it’s best to seek the help of professionals who have experience in company formation in New York.

Prepare and File Formation Documents

Once you have chosen your state of incorporation, entity type, and company name, the next step is to prepare and file your formation documents. These documents include the articles of incorporation, operating agreement, and any other necessary documents required by the state.

Obtain Your Federal Tax ID Number (EIN)

To open a bank account or hire employees, you will need to obtain a federal tax identification number or employer identification number (EIN) from the Internal Revenue Service (IRS). You can apply for an EIN online, by mail, or by phone.

Register with the New York State Tax Department

All businesses in New York must register with the New York State Tax Department. This registration allows the state to collect sales tax, employee withholding tax, and other taxes.

Open a Business Bank Account

To separate your business and personal finances, it’s crucial to open a business bank account. It is generally required under federal law to provide a bank with your EIN and other business documents in order to open an account.

Obtain Any Necessary Licenses or Permits

Depending on your business type, you may need to obtain licenses or permits from the state or local government. These may include sales tax permits, health permits, or other special permits. It’s crucial to research the necessary licenses and permits for your business and obtain them before operating.

Lease Office Space and Hire Staff

If you need a physical location for your business, you may need to lease office space. You will also need to hire staff to help you run your business effectively. It’s essential to research the best location and hiring practices to ensure your business’s success.

A note about company names in New York
New York is very strict about what you can call your new company, and the officials at the Secretary of State are very happy to reject new filings for what will seem like trivial nonsense. Many filings are rejected because of the requirement to get special consent to use certain common words in your company’s name, or inconsistent spelling of the name on the filing document, or the use of a word from a foreign language without including a translation.

To ensure you of faster processing, each order receives a thorough review before submitting to the Secretary of State. With over 30 years of experience in company formation in New York, USA is able to spot most of the delay-causing problems and deal with them before they cost you lost time and money.

Resources for Entrepreneurs in New York State

Unique Features About Incorporating in New York

• Incorporating in New York is fast if you use expedited service. The 24-hour expedited service is well worth the $25.00 fee.
• Extensive list of restricted or forbidden words. Make sure to have an expert screen your name to see if there is some potential problem that will cause delay (for example, the word “exchange” is restricted and needs the consent of the Attorney General).
• Extensive list of corporate purposes for which other states must give consent prior to filing by the Secretary of State.
  This includes the cumbersome and needless process by which professional corporations and professional limited liability companies are formed.
• New York does not require a registered agent. The Secretary of State is your agent for service of process; you only need to give a postal address that the Secretary of State can use to mail any process served against you. However, you are allowed to have a registered agent, and if you are located outside the United States, you will need an agent to accept service of process for you
  inside the United States.
• Every New York LLC, limited partnership, professional limited liability company and registered limited liability partnership must publish notice of formation in two newspapers in the county where the office is located for six consecutive weeks then file the affidavits of publication with the Secretary of State within 120 days.
• If you are planning to practice a  licensed profession with your new company in New York State, then you will need to set up a Professional Corporation(PC) or Professional Limited Liability Company (PLLC).

New York Limited Liability Companies (LLCs)

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Professional Corporations
Professional Limited Liability Companies
Not for Profit Corporations