Starting a business in New York offers tremendous opportunities but requires careful planning and attention to legal requirements. This guide covers the essential legal considerations for launching your business.
Choosing Your Business Structure
The legal structure you choose affects taxes, liability, and operational flexibility. Common options include:
Sole Proprietorship
Pros: Simple to start, complete control, pass-through taxation
Cons: Unlimited personal liability, harder to raise capital
Best for: Low-risk businesses, testing a business concept
Limited Liability Company (LLC)
Pros: Limited liability protection, flexible management, pass-through taxation
Cons: More paperwork than sole proprietorship, biennial filing fees in NY
Best for: Most small businesses seeking liability protection
Corporation (C-Corp or S-Corp)
Pros: Strong liability protection, easier to raise capital, perpetual existence
Cons: More formalities, potential double taxation (C-Corp), S-Corp ownership restrictions
Best for: Businesses seeking investors or planning to go public
Registration Requirements
For LLCs:
- Choose a unique name ending in "LLC" or "Limited Liability Company"
- File Articles of Organization with NY Department of State ($200)
- Publish formation notice in two newspapers for six weeks (costs vary by county)
- File Certificate of Publication after completion
- Create an Operating Agreement (not filed but legally required)
For Corporations:
- Choose a unique name ending in "Inc.," "Corp.," or "Incorporated"
- File Certificate of Incorporation with NY Department of State ($125)
- Create Corporate Bylaws
- Hold organizational meeting, elect directors, issue stock
- Obtain necessary permits and licenses
Tax Registrations
- EIN: Obtain from IRS (free) - needed for bank accounts, hiring employees
- NY Tax Registration: Register with NY Department of Taxation
- Sales Tax Certificate: If selling taxable goods or services
- NYC Business Tax: Additional registration if operating in NYC
Essential Legal Documents
- Operating Agreement/Bylaws: Internal governance rules
- Contracts: Client agreements, vendor contracts
- Employment documents: Offer letters, employee handbook, confidentiality agreements
- Intellectual property: Trademark applications, NDAs
- Insurance policies: General liability, professional liability
Compliance Requirements
- Annual/Biennial filings with Department of State
- Tax filings (federal, state, local)
- Industry-specific licenses and permits
- Employment law compliance
- Record-keeping requirements
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