Wednesday, March 21, 2018

4 Simple Steps to Step Up an LLC in NYC—Including 1 to Save You Hundreds of Dollars

Maybe you’ve been working on a side hustle in Brooklyn for a while and a client has asked you to make things a little more official for them. Or perhaps you’ve decided you’re ready to leave your traditional job in Midtown behind and work for yourself. Whatever it is, it’s exciting—but now you need to figure out the steps for how to set up an LLC in NYC.

If you feel like there’s something extra special about being in business in New York City, you’re not alone. It’s thrilling to set up shop here, and setting up an LLC as a freelancer isn’t that hard—so why not!

Of course, just as New York City feels a little extra, so too are their rules. Big surprise, right? Each state has varying requirements to set up an LLC, so the steps for setting up an LLC in New York are a little different than most.

There are so many benefits for setting up an LLC in NYC and protecting yourself and your liabilities. Let’s go through the steps you need to take in NYC to make sure your LLC complies with all the local laws.

And we’ll show you one thing you can do to save your business hundreds of dollars during the formation process.

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First, Make Sure You’re Eligible to Set Up a Business in NYC

The requirements for setting up an LLC in NYC are no different than the requirements for setting up an LLC in other parts of New York. You can get all the information you need to set up your LLC at the New York Department of State website. Unlike some other government sites, this one is relatively easy to navigate, and the instructions are written in (more or less) plain English.

How to Check that You’re Legally Approved to Run Business In NYC

Although setting up an LLC in NYC is the same as the rest of the state, there are dozens of licensing and other requirements you might have to meet have to meet to legally operate a business in NYC. And if you don’t, you could face a big cash penalty.

The good news, though, is that New York City tries to make it easy to comply with these requirements.

Head on over to NYC Business and click on the “Step By Step” link to determine exactly what you need to do to legally start a business in the city. In 10 minutes, you can have a customized list of requirements for your business. You can even save your progress and come back to it later.

And One More Note If You’re Running a Business from Home

You might have noticed that rent is high in the city, eh? And office space comes at an even heftier premium. For that reason, you might be thinking about running your business out of your apartment to save some money.

Be careful. Home-headquartered businesses are carefully regulated in NYC.

According to the NYC Department of City Planning, you can run a business out of your home, but:

Limitations apply. Section 12-10 of the Zoning Resolution defines “home occupations” and limits them to 25% of the size of home, or 500 square feet, whichever is less. Home-based businesses may only sell goods produced on site, and must not impact the character of the residential area. Additionally, the following business are not permitted as home occupations: advertising or public relations agencies, barber shops, beauty parlors, animal stables or kennels, electrolysis offices, interior decorators’ offices or workshops, ophthalmic dispensing, pharmacies, real estate or insurance offices, stockbrokers’ offices, or veterinarian’s offices.

And you absolutely need to check your lease to make sure it doesn’t include a clause prohibiting you from using your living space as an office.

Before setting up your LLC in NYC, make sure to check all the other requirements for doing business in your borough, neighborhood, and building.

→Too Long;Didn’t Read (TL;DR): Before you start setting up your LLC in NYC, make sure that you’re following other rules. You’ll want to check that you’re in good standing to set up shop in your borough, and that you’re not violating any lease agreements, etc.

How to Set Up an LLC in NYC

Let’s assume that all is well with your zoning and the licensing requirements for your business. Now how, exactly, do you go about setting up your LLC in NYC?

1. Choose a name for your LLC.

You’ll be glad to find out that there are relatively few requirements here. Your LLC name needs to follow these guidelines:

  • Must contain the words “LLC” or “Limited Liability Company”
  • Must not contain restricted words or phrases (these are mostly set aside for certain sectors, professions, or industries with pre-designations)
  • Must be unique from the names of other LLCs in New York

2. Choose a registered agent.

This isn’t strictly required, because the New York Secretary of State acts as your registered agent by default. But—and this is a big but—you might want to choose a registered agent located outside of NYC, anyway.

Okay, so, why would you go through this extra step if it’s not required?

Hang tight, keep reading, and it’ll make sense in a second.

3. File your articles of organization.

The articles of organization is the document that makes your LLC its own legal entity. (You know, the reason you’re doing this in the first place.) You don’t have to have an attorney to create or file the articles of organization, but since it’s a legal document, you should consider using one.

What you do need for sure is $200.

You can pay this nonrefundable filing fee can by cash, check, money order, MasterCard, Visa, or American Express. You can file in person or online.

4. Publish notice of your formation in 2 newspapers with the LLC’s HQ county.

Nope, not kidding!

In order for your LLC to be official, you really do have to publish a copy of your articles of organization in one daily and one weekly newspaper, for six consecutive weeks, within 120 days of the formation of your LLC. In lieu of the articles of organization, you can instead publish a related notice announcing the formation of your LLC.

Once the publication requirement has been fulfilled, you must submit a Certificate of Publication, along with a $50 filing fee, to the New York Department of State.

Yes, this requirement seems archaic—and that’s because it is.

It harkens back to the days when newspapers were the only reliable way to notify the public that a new business had been formed. No one seems to know exactly why New York (as well as Arizona and Nebraska) holds onto it, but failure to comply will result in the suspension of your LLC.

If nothing else, you can laugh about it with others who have set up an LLC in NYC—or, hey—find out about a cool local newspaper you didn’t know about.

And this relates to choosing a registered agent… how?

The publication requirement states that you have to publish in a newspaper designated by the county clerk in the county where your LLC is located, right? Well, if your LLC is located in New York City, this means your LLC notice must be published in an NYC newspaper. And that could easily cost you several thousand dollars before the requirement has been fully met.

If, however, you choose a registered agent outside of NYC, you can use the registered agent’s address as the address of your LLC. This means you can avoid the prohibitively expensive NYC newspapers while still fulfilling your publishing requirement. Smart!

Here’s more information regarding the publication requirements for LLCs in NYC in plain English.

→TL;DR: Pick a name, file some paperwork, and pay some fees—not bad! The weirdest thing is the publication requirement, which you can’t skip, even if you’re tempted to.

One More Thing—Make Sure You Keep Your LLC Active

You’ve gone to all of this trouble to set up your LLC in NYC. Now, make sure that it doesn’t get suspended.

You’ll be required to pay an annual fee to keep your LLC active. This fee ranges from $25 to $4,500. A big range—we know. It’ll depend on your income from the LLC, but you’re likely to fall on the lower end of the fee spectrum. And you can find out here.

There’s more information straight from New York State as well as instructions to determine if you must e-file, on the New York State DTF website.

→TL;DR: Don’t forget to keep your LLC active in NYC once you’ve set it up. You’ll need to file a form yearly and pay an upkeep fee, depending on how much revenue you’ve generated.

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Setting Up an LLC in NYC Is Actually As Easy as (Big Apple) Pie

Although there are dozens of licensing requirements and other restrictions surrounding starting a business in NYC, setting up an LLC in NYC is surprisingly simple. The biggest stumbling block is the publication requirement, which can get expensive. With a little planning, though, even this requirement is not overly onerous.

Your steps for how to set up an LLC in NYC:

  • Pick a name that follows New York state’s guidelines
  • Decide whether you’ll use the state as your registered agent, or whether you’ll use one outside of NYC
  • File your articles of organization
  • Publish your newspaper notices
  • Pay all of your filing fees
  • And make sure to keep your LLC active each year

As is the case with most small businesses, setting up an LLC in NYC might be the best business decision you make. Don’t let the filing fees—and that strange publication requirement—deter you from taking this vital step to protect yourself and your personal assets.

The post 4 Simple Steps to Step Up an LLC in NYC—Including 1 to Save You Hundreds of Dollars appeared first on Fundera Ledger.



from Fundera Ledger https://www.fundera.com/blog/how-to-set-up-an-llc-in-nyc

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