How to Incorporate in New York (August 2024 Update)
Incorporating a business in New York can seem daunting, but it is an important step to gain legal protections and legitimacy. Forming a corporation limits owners' personal liability, allows for easier transfer of ownership, and opens up options for financing. This article will walk through the key steps and requirements to properly set up a corporation in New York.
Why Incorporate in New York?
New York is one of the best states to base a business. It offers a huge customer base with a population of over 19 million. New York City is a global business hub. The state also has an extremely skilled workforce, business-friendly laws, and exceptional infrastructure. Overall the climate is ripe for entrepreneurs looking to grow a successful company. Incorporating also lends more credibility when trying to obtain financing.
Steps to Incorporate in New York
Follow these main steps to legally create your New York corporation:
Choose a Business Name
The first step is picking out a suitable name for your company. You’ll want to choose something unique and memorable. Prior to filing, you must check that another business isn’t already using your desired name. Conduct a name search through the NY Department of State database.
You also must follow these naming guidelines:
- Include a corporate designation like "Incorporated"
- Don’t use restricted words like "bank" without permission
- Ensure it is distinguishable from other names on file
If your name passes the search, you can choose to reserve it with the state for 60 days for a $20 fee. This prevents anyone else from taking it in the meantime.
Appoint a Registered Agent
You must designate a registered agent, which is a person or service that agrees to accept legal documents on behalf of your corporation. Your agent must be located in New York and available during business hours. Often company owners will serve as the registered agent when first starting out. But using a registered agent service can also help maintain privacy.
File Certificate of Incorporation
To legally form your business, you must file a Certificate of Incorporation (sometimes called Articles of Incorporation) with the New York Department of State. This form requires details like your corporation's name, registered agent, stock details, and incorporator name. The filing fee is $125.
Create Corporate Bylaws
Bylaws establish the internal rules for your corporation. While not legally required, adopting bylaws is highly recommended. Outline voting procedures, board of directors duties, shareholder rights, meetings, officer positions, amendments protocols and more. Keep your bylaws at your principal place of business.
Appoint Directors + Hold Organizational Meeting
Directors are responsible for overseeing the corporation. Appoint them by filing an Incorporator's Statement with your other business records and hold an initial meeting to adopt bylaws and elect officers. Discuss key corporate decisions and keep minutes showing actions taken during the meeting.
Issue Stock
Issue stock shares to founders and shareholders in exchange for assets invested into the corporation. Record shareholder information and distribute stock certificates. Certain securities regulations apply when issuing large amounts of stock - most small NY corporations are exempt.
Obtain Licenses + Permits
Look into whether your specific industry requires additional licensing or permits beyond filing the certificate of incorporation. The state, county and city all may require extra registrations.
File Biennial Statement
Every two years you must submit a Biennial Statement, which updates the Department of State on your ownership structure and contact addresses. This form has a $9 filing fee.
Get an EIN
An Employer Identification Number (EIN) functions like an SSN for your business entity. Apply online through the IRS and then use it when filing taxes and employing workers.
Types of Corporations in New York
- Professional Service Corporation: For certain licensed professions to incorporate while meeting industry regulations. Extra paperwork is required.
- Close Corporation: Ownership is limited to 35 shareholders and there are restrictions on stock transfers. Extra formalities apply.
- S Corporation: A federal tax election to be taxed similarly to partnerships. This is made separately from forming the corporation.
- C Corporation: Standard corporation without any special tax elections. The most formal business structure.
Conclusion
Forming a corporation requires planning but takes the proper legal steps to establish a formal company in New York. The process involves naming your corporation, designating a registered agent, filing the certificate of incorporation, creating bylaws, issuing stock and obtaining business licenses as needed. Stay up-to-date on biennial filings. Discuss your business needs with an attorney to choose the right corporation type. Use this guide to get started incorporating your New York business.