Understanding the New York LLC fees and requirements is a crucial step for entrepreneurs looking to form an LLC in the Empire State. Whether you're considering a single member LLC or a larger entity, navigating the landscape of requirements, including drafting an operating agreement, understanding taxes, and preparing the annual report, can seem daunting. However, the benefits of forming an LLC—ranging from legal protection to tax advantages—make this journey worthwhile. This article serves as your roadmap, detailing not only the costs involved in both forming and maintaining an LLC but also the essential steps and legal necessities to ensure your business complies with New York state law. Dive in to equip yourself with the knowledge needed to seamlessly navigate the process, setting a strong foundation for your business venture.
If you’re looking for a business structure that provides personal liability protection, is simple to form, and provides flexible benefits and membership opportunities, then look no further than a Limited Liability Company (LLC). This hybrid business structure combines the qualities of a Limited Liability Partnership (LLP) and a corporation. It can be a single-member business entity, or have multiple members that can be individuals, corporations, foreign entities, or even other LLCs. Other entities have a limitation on the amount of members, but not an LLC!
Depending on where you form a business, your starting costs will change. New York has required fees when starting a business, and a required publication cost when starting a new business or operating a foreign business within the state. These costs change from as low as $50 to as high as $1500, depending on the county you have to publish in. If you are operating out of a personal address, then you are limited to the county your personal address is located. You can, however, find a registered agent service, and use the county that service is in, in order to minimize publication costs.
Operating a business costs money, just like most things. These costs include annual fees, filing fees, yearly taxes, and even sometimes publication requirements. Essentially every business has costs involved with operating, and these can basically fit into two groups: Initial starting costs, and recurring annual costs required to start a business and keep it running smoothly.
The first optional cost involved with forming an LLC in New York is reserving a name. If you are in the process of creating an LLC, you might find a suitable name available, and find out you’re not ready to proceed. Ensuring the name stays available is done by reserving the name, which comes with a $20 filing fee.
If you have an LLC that buys the rights to operate a franchise, you can file a Doing Business As (DBA) form to operate under a name different from your LLC. Filing this is a $25 cost.
The biggest startup cost is unavoidable. In order to form an LLC in New York you must submit your Articles of Organization, and the filing fee involved is $200. After that, New York state law requires within 120 days of formation that any new business must publish a copy of the Articles of Organization to both a daily newspaper, and a weekly newspaper.
The cost of publication varies depending on the county an LLC is centered in, from as low as $80 in Albany county, to upwards of $2000 if you live within New York City limits. After both articles have been published, you must submit a Certificate of Publication along with a $50 filing fee to the New York Department of State (DOS). Publication costs are the biggest uncertainties that come with forming an LLC in New York.
When you form a business you’ll need to acquire the correct business licenses. The cost of these licenses can vary, so it’s difficult to determine an exact price expectation. Thankfully, New York offers a searching tool to help you know which licenses you’ll need. If you are required to cover sales tax, then you’ll need a Certificate of Authority, which is free to register for.
The primary annual fee you should highly consider is the cost of a registered agent. When you create an LLC, you need a designated person to act as your service of process. This is the secretary of state by default in New York. The state’s inherent system is slow and can cost valuable time in the event of a lawsuit. Having a registered agent who can directly and discreetly contact you in a timely fashion can help you prepare for the worst.
The general cost of a New York registered agent can be anywhere from $100 - $300 per year. That might seem like a lot, but it could actually save money. When you publish in New York state, you’re restricted to the county you list as your address of business. That address can belong to your registered agent, meaning if you find the right service, you can literally save over$1000 in publishing costs.
Most states require that businesses submit some form of annual report in order for that state to hold a business accountable for reporting changes within structure, and activity updates. New York requires a biennial update, meaning a report every other year. The cost is $9. Here’s one of the positive financial reasons to form an LLC in New York.
If the gross income of your LLC reaches certain levels, then the LLC will be charged an annual filing fee. An LLC doesn’t pay state or federal income taxes directly. That responsibility is instead passed on directly to the owners of said LLCs. This filing fee ranges from $25 to $4500. Here’s what your LLC might be expected to pay, based on income:
| Gross Income of LLC or LLPState LLC | Filing Fee |
|---|---|
| not more than $100,000 | $25 |
| more than $100,000 but not over $250,000 | $75 |
| more than $250,000 but not over $500,000 | $175 |
| more than $500,000 but not over $1,000,000 | $500 |
| more than $1,000,000 but not over $5,000,000 | $1,500 |
| more than $5,000,000 but not over $25,000,000 | $3,000 |
| more than $25,000,000 | $4,500 |
There are several differences when creating an LLC in one state or another. Sometimes it’s less expensive to file initially, and maybe recurring fees are low. New York’s initial filing fee is somewhat more expensive compared to other states. Depending on which state you form in, initial filing fees can be as low as $40, to as high as $500. The expected annual fees range from no cost to upwards of $820. These costs aren’t the only thing to consider, but they do make choosing the right state easier when you know about them. Here’s what the expected base costs are in each state:
| State LLC | LLC Filing Fee | LLC Annual/Biennial Fee |
|---|---|---|
| New Hampshire LLC | $100 | $100 (every year) |
| New Jersey LLC | $125 | $75 (every year) |
| New Mexico LLC | $50 | $0 (no fee and no information report) |
| New York LLC | $200 | $9 (every 2 years) |
| North Carolina LLC | $125 | $200 (every year) |
| North Dakota LLC | $135 | $50 (every year) |
A corporation comes with a rigid structure, involving a maximum number of members, people who serve as executive officers and a board of directors, and the tax laws only benefit them when certain requirements are met. Meanwhile, an LLC can be a single member, or multiple members with upper limits, and it provides the same liability protection. LLCs also have the flexibility to be taxed as a corporation, should that prove more advantageous. With an LLC, you can have your cake and eat it too.
Every business, no matter how large or small, must fulfill certain requirements in order to be made into an official entity. The following is a list of things every new business will need in order to operate within the state of New York:
Every business needs a name, and it’s the first thing you’ll need to consider when forming one. A sole proprietorship’s name by default is just your personal name. If you form an LLC, you will want to add something to that to designate yourself as such, by adding something like LLC to it (Example: John Doe, LLC).
You will receive some form of notification of a lawsuit, should one occur. This is the person who is designated as your legal representative to accept such notifications. In New York, it’s the Secretary of State by default. You will either want to be your own, or better yet, hire a professional service.
If an LLC had a birth certificate, it would be the Articles of Organization. A name is required in order to fill it out, and if you plan on using a specific registered agent service, you need to know ahead of time what you want.
You need two different newspaper publications, and once completed, fill out and submit this certificate. It can be quite pricey if you live within New York City limits, but there are ways to publish in less expensive counties.
If you have multiple members, it’s advisable to write an operating agreement. In New York, you have to have one by law. This establishes a guideline for dealing with disagreements with your company’s owners, as well as officially states the purpose and expectations of your business.
This is an IRS provided number that helps the federal government keep track of your business. You can apply for an official number online. This number is important to keep track of, especially when tax season comes around. Employees will use this number to identify their employer.
Depending on the nature of your business, you might need an array of licenses. The simplest and most common one needed in New York is the Certificate of Authority.
An LLC is the perfect starting point for anyone who wants to run a business and protect their personal assets. The limited liability protection provided by an LLC, as well as tax benefits and flexible business structure, makes an LLC ideal for anyone starting a new company. Unless you are operating as a sole proprietorship for a hobby, and you have low risks involved with your business, then an LLC is the perfect choice of business structures.
If you intend to operate, or expand into the kind of business that earns enough, or has more employees in your payroll, it might be more beneficial to form a corporation instead. There are benefits to a corporation, if the right criteria is met.
There are a lot of financial numbers and laws to keep track of. Having a business lawyer will provide you with the right person who has the experience and understands how each detail is important. Working with us, we can help ensure you know what to focus on. Reach out for a consultation and consider purchasing a new company through us. We can help you know what you need to start your business!