Step by Step

No matter what business you are in, you will need some form of legal business organization. There are four basic forms - the sole proprietorship, the partnership, the limited liability company and the corporation.

Each has advantages and disadvantages, including tax consequences. We recommend you seek the advice of an attorney and tax consultant to select the best form for your circumstances.

Sole Proprietorship

You must file an Assumed Name Certificate (also known as a "dba" or "doing business as") with the clerk of the county in which the business is conducted ONLY IF you are operating under a name other than the proprietor's (no formation document is required).

Personal liability is full, meaning a sole proprietor is personally responsible for all debts of his or her business.

The life span of the business is determined by the individual (proprietorships automatically cease on the retirement or death of the sole proprietor). For purposes of taxation, business income is reported and taxed through the sole proprietor's personal tax return.

General Partnership

You must reach agreement with the partners to file an Assumed Name Certificate (also known as a "dba" or "doing business as") with the clerk of the county in which the business is conducted. Personal liability is joint and individual for the general partners who are responsible for the obligations of the partnership. The life-span of the business is for a designated period stipulated in the partnership agreement; or until dissolution event occurs.

For purposes of taxation - a general partnership is not treated as a separate taxable entity; business income is taxed through each general partner's personal tax return.

Limited Partnership

You must file a Certificate of Limited Partnership (following an agreement of the partners) and Affidavits of Publication with the New York State Department of State and publish a Notice of Formation in newspapers.

Personal liability is joint and individual for the general partners who are responsible for the obligations of the partnership; limited partners are liable to the extent of their capital contribution to the partnership.

The life-span of the business is for a designed period stipulated in the partnership agreement; or until a dissolution event occurs, subject to any right to continue that may be stated in the partnership agreement.

For purposes of taxation a limited partnership is not treated as a separate taxable entity; business income is taxed through each partner's personal tax return.

Limited Liability Company

You must file Articles of Organization (signed by one or more organizers) with the New York Department of State.

Personal liability is generally limited, although the Articles of Organization can specify that member (s) will be liable for company debts, etc.

The life-span of the business may be for a designated period stipulated in the Articles of Organization; or until a dissolution event occurs and the company takes no action to continue.

For purposes of taxation an LLC can elect its classification for federal tax purposes. An LLC with two or more members can elect to be an association (corporation) or a partnership; an LLC with only one member can elect to be an association (corporation) or elect to be disregarded as an entity separate from its owner (in effect, to be treated as a sole proprietorship for federal tax purposes).

Business Corporation

Then you must file a Certificate of Incorporation (signed by at least one incorporator) with the New York State Department of State.

Personal liability is limited, for shareholders.

The life-span of the business is perpetual; or for a designated period stipulated in the Certificate of Incorporation.

For purposes of taxation a corporation pays state franchise taxes and taxes on income; shareholders pay taxes on income distributed as dividends (a limited exception exists for "Subchapter S" corporations).

Licenses and Registration Authorities

Since so many businesses are required to be licensed, it is best to contact some licensing agencies directly to find out if your company needs a license:

For New York State, contact:

New York State Department of State, Division of Licensing Services
270 Broadway
New York, NY 10007
Tel: +1 212 417 5747

 

For New York City, contact:
New York City Department of Consumer Affairs, Division of Licenses
42 Broadway
New York, NY 10004
Tel: +1 212 487 4051

Best Business Banks

All the major international and national banks are represented in New York, as well as many “business friendly” local banks. Business banking hours are generally Monday to Friday from 9:00am to 4:00pm, but this can vary from branch to branch. For exact opening hours of your local branch, it’s best to either contact them directly or consult their website for more information.