How to Start a Business in New York
Table of Contents
Starting a business in New York will require you to file relevant documents with the Department of State and your local county depending on your business entity. There are other state-specific steps as well, including applying to the NYS Department of Taxation and signing up for unemployment insurance for employees.
Here are the steps you will need to complete to start doing business in the state:
- Create a business plan.
- Select a business entity.
- Choose a business name.
- Register your business entity.
- Apply for an employer identification number (EIN).
- Apply for required licenses and permits in New York.
- Open a business bank and other financial accounts.
7 steps to register your business in New York
1. Create a business plan
A business plan is a series of documents that outline what your business is about, how you plan on running it, how you will fund its operations and how you expect to remain profitable. Some business plans include details like business earnings and losses and methods to encourage future growth. You can refine this document over time as your business grows.
Different aspects of a business plan you can create include:
- The business’s name and location.
- The business’s goals and approximate timeline to reach them.
- A market analysis.
- A description of the products or services your business plans on selling.
- How you plan on organizing your business. How you plan on financing the business and any project income growth.
An important part of any business plan is doing thorough market research. When looking at the industry your business falls under, look for trends or any indications of how your business can remain competitive, such as offering a unique service or a product that can stand the test of time.
Doing thorough market research also means understanding the customers you are serving. Factors to consider include:
- Who your customers are.
- Why your customers should buy from your business.
- How you will continue to serve your customers’ needs.
It also includes the tools and software you need to run your business smoothly, such as credit card readers, POS systems and payroll software.
A business plan can be an important tool to receiving funding for your business unless you are choosing to self-fund it. Depending on the financial institution, most lenders will require you to submit a business plan, including projected financial statements. This is to help lenders during the underwriting process when determining the likelihood your business will turn a profit and in turn, pay back loans on time.
2. Select a business entity
New York has several types of business entities your business can fall under depending on your business needs. These include:
- Sole proprietorships.
- General partnerships.
- Corporations.
- Limited liability companies (LLCs).
- Limited partnerships.
Each type has its own advantages and disadvantages, as well as the type of business for which it is best suited.
The New York Department of State’s business wizard is a useful tool to help you determine which business entity is best and the documents you will need to file for each type.
3. Choose a business name
New York requires that you choose a business name that’s distinguishable from other names registered in the state. Sole proprietorships may not have to adhere to this regulation as they don’t necessarily have to register with the state nor their county unless operating under a different name. New York regulations also prohibit certain words and phrases in business names. These naming guidelines are offered by entity type. It’s good to check these guidelines against any business name you want to use first.
For more guidance, read our guide on how to choose a business name.
4. Register your business entity
Depending on the type of business entity you want to register, you will need to fill out the correct form:
There are also additional requirements for LLCs and corporations:
- LLCs: Members are required to adopt and provide an operating agreement, submitted to the New York Department of State when filing the articles of organization or within 90 days afterward. LLCs also need to publish a notice related to the business’ formation in two approved newspapers for six consecutive weeks and file a certificate of publication with the Department of State within 120 days.
- Corporations: Certain businesses, such as hospitals, need the approval of another agency before filing the certificate of incorporation. The New York Department of State offers guidance on the agencies requiring approvals.
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5. Apply for an EIN
An employer identification number (EIN) is mainly used for tax purposes. Issued by the IRS, businesses typically need to use it for other tasks such as applying for business licenses and permits and opening a business bank account.
For more information, read our guide on EINs.
6. Apply for required licenses and permits in New York
Depending on the nature of your business, you may need to apply for certain licenses and permits to operate in New York. For instance, if you plan on selling physical goods or providing certain taxable services in the state, you will need to apply for a sales Tax certificate of authority in order to legally collect sales and use tax.
In addition, the New York Department of State also offers guidance on licenses and permits required for specific types of businesses. Examples of businesses that require additional licenses or permits include:
- Appearance enhancement: Examples of these businesses include spas and salons. These entities need to provide evidence of purchasing a bond that’s in favor of the people of the State of New York and obtaining an appearance enhancement business/area renter license.
- Real estate: These companies need to provide proof that the business or relevant professionals running the business have completed the appropriate education and certification requirements.
- Barbers: Businesses need to get a barber shop’s license if they own and operate one or an area renter license if they’re an independent contractor.
- Security services: Licenses your business may need to obtain include an armored car carrier license; a watch, guard or patrol agency license and a private Investigator license.
7. Open a business bank and other financial accounts
Opening a business bank account helps to separate your business finances from your personal ones. It also makes it easier when it comes to certain tasks, such as bookkeeping and gathering documentation to file taxes.
Consider shopping around for a business checking account that suits your needs before opening one. Don’t forget to look at business credit cards to help keep track of expenses, earn rewards and make it easier for your employees to pay for business expenses.
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Frequently asked questions (FAQs)
You will need to pay filing fees to submit a certificate of incorporation ($125) or an article of organization form ($200) to the New York Department of State to form your business. There may be other fees, such as:
- A business name reservation fee.
- Registered agent fees.
- Business formation public notice publication fees.
- Upfront inventory fees.
- Marketing fees.
- POS system fees.
- Initial deposit fees for a business checking account.
- Rent.
The exact timeline as to when your business can be up and fully functioning will depend on the type of business entity you form. The New York Department of State has different requirements for different business entities, including forms you will need to submit and business licenses to obtain. There is an option to pay for expedited processing, which can help speed up the process to as little as two hours.
No, you don’t need a physical location in New York to open certain types of businesses, such as a sole proprietorship. If your business intends to operate within the state but has no physical presence — such as an online store selling products to New York consumers — you will need to register with the NYS Department of Taxation and Finance.
However, if you form other types of business entities within New York, such as a corporation, you must include a county where your business office will be located within the state.
