You just came up with a great idea for a new business, but now what? If you’re serious about making your business idea a reality in New York, there’s some formal steps you need to take.
What you’ll learn
What you’ll learn
Key takeaways
- Decide between an LLC, corporation, sole proprietorship, or partnership structure based on your liability protection goals and tax preferences.
- File with your local county clerk (for sole proprietorships/partnerships) or the New York Department of State (for LLCs, corporations, and limited partnerships).
- Apply for a federal Employer Identification Number (EIN) and secure a NYS Certificate of Authority if you plan to sell taxable goods or services.
- If you form an LLC, fulfill the state’s mandatory six-week local newspaper publication requirement within 120 days.
This guide walks you through the milestones to get your business up and running and fully compliant.
Select a business structure for your goals
Before you jump ahead to marketing, branding, or hiring, you need to establish your business’s legal foundation. Your choice of business structure is a major decision that directly affects your personal liability, administrative requirements, tax responsibilities, and start-up costs.
Take some time to consider these four common options:
Limited Liability Corporations
Limited Liability Companies (LLCs) are popular among small business owners and teams. Unlike sole proprietorships or general partnerships, an LLC serves as a legal shield, protecting your personal assets (such as your home, savings, and personal vehicles) from business debts, liabilities, and legal claims.
- Filing fees and process: To officially form a domestic LLC in New York, you must file Articles of Organization with the New York Department of State (DOS) and pay a $200 filing fee. If you are registering an out-of-state LLC to do business in NY, you’ll file an Application for Authority and pay a $250 filing fee. While you don’t legally need a lawyer to complete this filing, consulting a professional can ensure your operating structures are clean.
- Taxes and management: By default, LLCs benefit from “pass-through taxation.” This means the business’s profits or losses pass directly to the owners’ personal tax returns, avoiding double corporate taxation. However, if it makes financial sense, the IRS allows LLCs to choose to be taxed as corporations instead. LLCs are slightly more expensive to start than sole proprietorships, but they are highly favored because they offer robust liability protection without heavy corporate administrative burdens.
Corporations
Like LLCs, corporations protect your personal assets from business liabilities. However, a corporation is treated as a separate legal and tax entity from its owners.
- Tax structure: The corporation pays taxes on its income. Its shareholders must then pay additional personal income taxes on any dividends they receive from the business (often referred to as double taxation).
- Filing and complexity: To form a corporation in New York, you must file a Certificate of Incorporation with the Department of State and pay a $125 filing fee. Generally, a corporation structure is best for larger, more complex businesses. The record-keeping, board meeting, and annual reporting requirements are much more intense for corporations than LLCs, which can be a heavy burden for smaller teams. If, however, your goals include raising institutional capital, issuing shares, or preparing for an eventual public offering, a corporation is likely your best structure.
Sole proprietorships and partnerships
Sole proprietorships (for single owners) and general partnerships (for multiple owners) are the simplest ways to start a business.
- Trade-off: These structures are generally less expensive — and complicated — to create and maintain than LLCs or corporations. However, they do not provide separate liability protection. As the owner, you take full personal responsibility for all the business’s legal liabilities, debts, and potential lawsuits. If the business is sued or goes into debt, your personal assets (such as your savings or home) are at risk.
Doing business as
- While doing business as (DBA) isn’t a business structure in itself, it’s worth considering when formalizing your business. You use a DBA when you’re operating your business under a different name than its official, legal name. For example, the official name of your LLC could be “Smith Holdings LLC,” but your DBA for your candy shop could be “Christy’s Candies.” The DBA is more marketable, while the legal name is more official.
Registering a DBA does not create a new legal entity for your business or provide any separate liability protection. To register a DBA in NY, you have to complete the Certificate of Assumed Name and pay the $25 filing fee. There is also an additional county filing fee.
Understanding DBAs (“Doing business as” or assumed names)
While doing Business as (DBA) isn’t a business structure itself, you’ll want to be familiar when formalizing your business. You use a DBA when you operate your business under a name different from its official, legal name.
- For LLCs and Corporations: If your legal registered LLC name is “Smith Holdings LLC” but you operate a retail shop called “Christy’s Candies”, you must file a Certificate of Assumed Name with the Department of State, paying a $25 filing fee plus an additional county-specific fee.
- For sole proprietors and general partnerships: If you are operating as a sole proprietor or partnership, you do not file with the state. Instead, you file your Business Certificate (DBA) directly with your local County Clerk. To register a DBA in NY, you have to complete the Certificate of Assumed Name and pay the $25 filing fee, plus any county fees.
Example cost
In St. Lawrence County, NY, registering a DBA directly with the County Clerk costs a flat $25 fee and legally reserves your business name locally. Note that registering a sole proprietor DBA does not create a new legal entity or provide separate liability protection.
Register your New York business name and entity
Once you have chosen your structure, you need to select and register a unique name for your business.
- Check availability: Your name must be unique and differ from all existing business entities registered in the state. Use the official NYS Division of Corporations database to search for names you are considering. If an active business is already using your name, you must cross it off your list.
- Follow naming rules: If you are forming an LLC, state law requires that your name end with “Limited Liability Company” or an abbreviation such as “LLC” or “L.L.C.” Avoid words that imply your business is a different type of entity (like “Corp” or “Nonprofit”) or a government agency, and avoid words prohibited by state law without special approval (like “School”, “Library”, or “College”).
- Submit your filings: The paperwork you submit and where you send it depends on your chosen structure:
- Sole Proprietor / General Partnership: File a Business Certificate (DBA) with your local County Clerk where the business is located (Filing fee: typically $25, such as in St. Lawrence County).
- Limited Liability Company (LLC): File Articles of Organization with the Department of State (DOS) online or by mail (Filing fee: $200).
- Business Corporation: File a Certificate of Incorporation with the DOS (Filing fee: $125).
- Limited Partnership (LP): File a Certificate of Limited Partnership with the DOS (Filing fee: $200).
Pro tip
Filing online via the New York state portal is highly recommended, as it often results in immediate approval, whereas mailing paper documents can take several weeks unless you pay additional fees for expedited processing.
To quickly compare your options, use this side-by-side breakdown of state filing requirements, fees, and liability protections:
| Business structure | Filing document | Filing agency | Fee | Liability shield |
| Sole Proprietorship | Business Certificate (DBA) | Local County Clerk | ~$25 (varies) | No |
| General Partnership | Business Certificate (DBA) | Local County Clerk | ~$25 (varies) | No |
| Limited Liability Company (LLC) | Articles of Organization | Department of State | $200 | Yes |
| Business Corporation | Certificate of Incorporation | Department of State | $125 | Yes |
| Limited Partnership (LP) | Certificate of Limited Partnership | Department of State | $200 | Partial |
Comply with New York’s LLC publication requirement
One of New York’s most unique—and frequently misunderstood—regulatory rules is the LLC publication requirement.
All newly formed domestic LLCs (not just professional service LLCs) are legally required to notify the public of their formation. If you do not fulfill this requirement, the state of New York has the authority to suspend your legal right to carry out business.
How to fulfill the requirement:
- Publish notices: Within 120 days of your LLC’s Articles of Organization becoming effective, you must publish a notice of formation (or a copy of the Articles themselves) in two local newspapers designated by your county clerk.
- Run for six weeks: These advertisements must run once a week for six consecutive weeks.
- Submit certificate of publication: After the six-week run, both newspapers will mail you an Affidavit of Publication alongside clippings of your notice. You must put these affidavits together with Form DOS-178 (Certificate of Publication) and submit them to the Department of State with a $50 state filing fee.
Because publication rates are set locally by county clerks, newspaper advertising fees will vary. If your principal business office is located in New York City (such as Manhattan or Brooklyn), local newspaper publication fees can easily cost $1,500 or more.
To save start-up capital, many experienced New York CPAs and business consultants recommend this legal workaround:
- When filing your initial Articles of Organization, list a registered agent service with a physical address in a lower-cost county, such as Albany.
- Because your official county of record is listed as Albany County, your publication notices will run in designated Albany newspapers, which cost a fraction of NYC rates (often saving you over $1,000).
- Once the Department of State approves your publication period ends and your Certificate of Publication, simply file a Certificate of Change (Form DOS-1359) with a $30 state fee to officially update your business’s physical and mailing address back to your actual NYC location.
Apply for federal and state tax IDs
With your business registered, you must set up your tax accounts.
Get an Employer Identification Number (EIN)
An EIN is like a Social Security Number for your business. It is a unique federal ID that the IRS uses to track your business’s tax status. Even if you don’t have employees, you will need an EIN to open a business bank account, establish credit, or apply for business licenses.
- Cost: Registering for an EIN is free.
- How to Apply: Apply directly on the official IRS website. If you apply online, your EIN is generated instantly upon completing the application.
Keep an eye out
Be mindful of look-alike scam sites that attempt to charge you a fee to file this free form.
Register as a NYS sales tax vendor
If your business plans to sell tangible personal property, digital goods, or taxable services, you must register to collect sales tax.
- You have to apply for a Certificate of Authority from the New York State Department of Taxation and Finance.
- You’ll need to obtain this certificate before you begin making sales. Operating without a Certificate of Authority can result in significant state penalties. You can easily apply for this certificate online through the New York Business Express portal.
Prep for New York State taxes
Depending on your business structure, you may be subject to various state taxes:
- Corporation tax: New York corporations must pay a franchise tax, typically at a 6.5% rate on business income; general business taxpayers (those earning more than $5,000,000 annually) are subject to a 7.25% rate.
- Income tax: LLCs and partnerships are pass-through entities. The business itself pays no direct state income tax; instead, the income passes directly to the owners, who pay personal New York State income tax on their share of the profits.
- Sales and use tax: If your business is registered to collect sales tax, you must collect NYS sales tax (the state rate is 4%, plus any additional local county or city sales taxes) and remit these funds to the state on a regular filing schedule.
- Withholding tax: If your business employs workers, New York requires you to withhold personal income taxes from their wages and remit them to the state.
Local taxes to watch
“Depending on your locality, there may be additional taxes. For instance, if you live in NYC or own a business operating in NYC, there are other taxes such as Unincorporated Business Taxes (UBT) for sole prop/SMLLC or partnerships, NYC General Corp taxes for NYC Corps, and individual taxes for living in NYC. There is also another tax called the Metro Commuter Transportation Mobility Tax (MCTMT).”
— Kelly A. Rohrs, CPA, Small Business Advisor
Establish payroll and mandatory state insurance coverage
Hiring your first team member is a milestone to celebrate, just keep in mind that it triggers state-level employment regulations. In New York, the State requires businesses with employees to carry three key types of coverage:
- In New York, you must contribute to the state’s unemployment insurance program if your business pays total employee wages of $300 or more in any calendar quarter. You will register for this tax account directly through the New York State Department of Labor.
Workers’ compensation insurance
Having a policy is mandatory for almost all employers in New York State. This insurance covers medical costs and lost wages for employees who are injured on the job.
If you are running the business without employees, the state provides specific exemptions. Workers’ compensation insurance is generally not mandatory for individuals who have no other employees and work alone as a:
- Sole proprietor
- Single-member LLC
- Partner
- Corporate officer
How to get it: Coverage can be obtained through the New York State Insurance Fund (NYSIF), a private insurance carrier, or through state-approved self-insurance.
Disability and Paid Family Leave (PFL) Benefits
New York requires employers to protect employees from off-the-job injuries and support family needs:
- Disability insurance (30-day rule): Disability benefits insurance is mandatory if you employ workers for more than 30 days in a calendar year in New York. This covers off-the-job injuries or illnesses.
- Paid Family Leave (PFL): If you employ at least one worker, PFL coverage is required. This is typically added directly to your disability insurance policy. PFL provides employees with paid, job-protected time off to bond with a new child, care for a seriously ill family member, or assist when a family member is deployed. It is funded entirely by employees through small payroll deductions, though employers can choose to cover this cost as an additional employee benefit.
- Getting it: Like workers’ comp, disability and PFL coverage can be purchased through NYSIF or a private insurance carrier.
Good to know
“While workers’ compensation, disability benefits law, and paid family leave are not strictly required for officer-only payrolls in New York State, expect to get correspondence from the WC Board no matter what when you first start payroll. Do not ignore these notices. NYS takes this very seriously, and penalties can add up very quickly.”
— Kelly A. Rohrs, CPA, OnPay contributor
What if I have zero employees? (Form CE-200 Exemption)
If you are operating as a sole proprietor or a single-member LLC with no employees, you are generally exempt from having to purchase workers’ compensation and disability benefits.
However, you cannot simply ignore the rule. State and local agencies, as well as building departments issuing permits, will require proof that you are legally exempt. To obtain this proof, you must complete and submit Form CE-200 (Certificate of Attestation of Exemption) online through the New York Workers’ Compensation Board portal. This certificate is free to obtain and serves as your official proof of compliance.
Some businesses choose to use contractors, which comes with different requirements than hiring and paying employees. Learn how to pay a 1099 contractor.
Plan for ongoing compliance and operational costs
Filing your initial registration papers is just the first out-of-pocket piece of starting a business. Successful entrepreneurs plan for ongoing operational and compliance costs to keep their businesses in good standing:
NYS Biennial Statement Filing
To keep your entity active, New York requires all LLCs and corporations to file a Biennial Statement every two years.
- Purpose: This filing confirms or updates your official post office address so the state knows where to forward service of process (legal papers).
- Cost: The state fee is a flat $9.
- Deadline: The statement must be filed online in the same calendar month your business originally became active. Filing early or late can result in compliance flags, so mark your calendar!
Navigating New York’s rules is the first step
As you put your business ideas to the test, and your business takes the next steps, staying on top of payroll, tax withholding, and state insurance requirements is simple. Consider using payroll and HR platforms like OnPay, which streamline payroll taxes, HR tasks, and employee benefits in one place, ensuring you never miss a critical filing deadline.
Take a tour to see how easy payroll can be.
Jon Davis is the Sr. Content Marketing Manager at OnPay. He has over 15 years of experience writing for small and growing businesses. Jon lives and works in Atlanta.