TRUE Cost to Start a New York LLC (Don’t Overspend!)

Overall New York LLC Formation Costs

LLC Name Reservation Fee

Have a great name in mind? Is it so great that you think someone else might take it? A name reservation might be just what you need. Reserving a business name isn’t required to start your LLC, but if you’re not quite ready to file your Articles of Organization, it’s a nice option.

Filing an Application for Reservation of Name and paying the $20 fee will place a 60-day hold on your name, which you can renew twice by paying additional $20 fees. The Articles of Organization, however, automatically register your name, so if you’re ready, it’s better to skip the reservation and start there.

To clarify, most states don’t require name reservations, and they’re rarely necessary. If you’re concerned about someone else registering the name you want, you could opt to simply form your LLC instead of reserving the name.

Whether you reserve your business name or not, you should always perform a New York business name search to make sure the name you want is available.

Articles of Organization Fee

This is the big one, the most important (and most expensive) form that you’ll file to start your New York LLC. By filing the Articles of Organization, you are formally putting your business on record with the Department of State. At $200, it isn’t cheap, but considering the filing’s importance, it’s $200 well spent. If you’re in a hurry, the state also offers three expedited processing options: 24-hour for $25, same-day for $75, and two-hour for $150. The Articles of Organization are available online and in hard copies. It’s a one-time filing, so this fee won’t come up again.

The information you’ll need to file your Articles of Organization includes your LLC’s official business name, the county where your LLC is located, the name and address of your registered agent, and your name, mailing address, and signature.

Before we move on, we’ll briefly note that if you’re forming a professional LLC in New York, you’ll need to use a specialized version of the Articles of Organization. For further information, consult our full guide to forming a New York professional LLC.

Business and Professional Licenses

Not all LLCs need additional licensure, but some do. It all depends on the type and location of the business. For example, real estate brokers must apply for licensure through the state’s Real Estate Board. Visit the Division of Licensing Services website to see all professional licenses. On top of that, cities and/or counties often have their own specific licensure requirements, so be sure to check with your local government as well.

What are some of the most commonly required business licenses for New York LLCs? If your business operates in a regulated industry, you will probably need some sort of professional license to operate in compliance with state law. On the municipal level, things like alarm permits, building permits, and zoning permits are all very common.

Publication Fees

New York has a unique requirement for its LLCs: every new LLC must publish its Articles of Organization or a notice of its formation in two newspapers from its home county. Then, it must send an affidavit of publication with a completed Certificate of Publication to the Department of State. Publication costs vary, depending on the county, and LLCs with registered offices in New York City will pay significantly more than those in smaller cities. The Certificate of Publication itself costs $50 to file.

Would you like some more information about this process? Consult our full guide to New York LLC publication requirements, or take a look at our guide to the best New York LLC publication services if you’d rather hire a reputable company to take care of this step on your behalf.

LLC Formation Company

Starting an LLC in New York can be a complicated and time-consuming process. If you want to spend less time on paperwork and more time planning your business, you might opt for an LLC formation company. These services take care of the registration process for you, so you don’t have to spend time on research, paperwork, and filings.

Most of these services (like ZenBusiness and Northwest) offer basic LLC formation services like Articles of Organization filing, tax consultations, and phone/email support for a flat rate, with options to pay more for premium packages with premium services like Employer Identification Numbers, operating agreements, and expedited filing.

Registered Agent Service

Appointing a New York registered agent is an important part of your LLC formation process. Your registered agent is responsible for handling sensitive legal and tax documents and keeping your business compliant with New York business law. In short, you need an agent you can trust.

While you can be the registered agent for your own LLC, this puts pressure on you to keep up with business filings and potential legal disputes. Sometimes it’s better to hand off that responsibility to a professional. A registered agent service ensures that your annual reports and other forms are filed efficiently, saving you from the penalties of delinquent filings and the stress of having to do it yourself.

Plus, if you’re a New York City company, using a registered agent service based in another city will save you money by allowing you to publish your formation notices in less expensive newspapers.

If you need to change your New York registered agent or resign as a New York registered agent, check out our full guides on each of these topics.

Attorney Fees

If you have questions or concerns about the LLC formation process or if it’s the best business structure for you, sometimes it’s best not to take chances and consult an attorney. They’re not cheap, but they can provide essential business advice, professional filing assistance, and peace of mind.

Some attorneys offer free consultations (usually 30-60 minutes) but will charge by the hour after that. On average, business attorneys charge between $150-350 per hour. Some will offer a flat rate for setting up an LLC, which can range from $500-2,000.

Cost variations depend on the experience and location of the lawyer. Research them using a site like Avvo and you’ll have all the information you need in one place. You can search, compare, and contact thousands of New York business attorneys through Avvo’s database, ensuring that you’ll find a good fit for your LLC.

If you don’t want to go digging for your own attorney, we compiled the following list of highly rated business lawyers in New York. All of these attorneys are primarily focused on the business world, they all receive five-star ratings from clients, and they all have excellent Avvo ratings.

• John Kiritsis
• Frank Natoli
• Brian Tracz
• Anthony Ballato
• Melody Westfall

Foreign Qualification Fee

This only applies if your LLC was formed in another state and is now expanding into New York. For foreign LLCs, the “Application for Authority,” takes the place of the Articles of Organization.

All foreign business entities are required to foreign qualify in New York, or they could incur some pretty severe penalties. Filing the Application for Authority costs $250, and you can do so by downloading and mailing a paper form. While it’s somewhat pricey, you only need to file the Application for Authority once, so that $250 fee is only required upon startup.

LLC Biennial Fees

After all the startup fees, there are maintenance fees to consider. Fortunately, they won’t break the bank. After starting your LLC, the state mandates that you file a Biennial Statement every two years on the LLC’s anniversary month. The fee for each Biennial Statement is only $9, and you can file them online using the e-Statement Filing System. Read more about Biennial Statements on the Division of Corporations, State Records & UCC website.

The information required to file your Biennial Statement includes your LLC’s Department of State ID number, the name and address of your registered agent, the names and addresses of your LLC’s managers and/or members, and your name, title, and email address.

For more info on Biennial Statements for New York LLCs, check out our full article on this topic!

Taxes

Because LLCs are classified as “pass-through” entities by the federal government and New York doesn’t require them to pay franchise taxes, your company will only need to pay state business taxes under certain circumstances:

• If your LLC hires employees, it will be subject to withholding and unemployment insurance taxes, and you’ll need to file a Quarterly Combined Withholding, Wage Reporting, and Unemployment Insurance Return online each quarter.
• If your LLC sells merchandise, it will owe a sales and use tax, for which you’ll need to register using the New York Business Express System. You’ll also be required to file Sales and Use Tax Returns.
• If you’ve elected to have your LLC taxed as a corporation, it will need to pay a state franchise tax. This means it will owe the highest out of either the business income tax, business capital tax, or fixed dollar minimum tax. See how to calculate it here.

What if I Don’t Pay?

Looking at all these fees, you might be thinking: how can I pay less? While you might be tempted to look for loopholes or find a way around them, this could cause you bigger problems in the future.

Right off the bat, if you fail to submit an Articles of Organization or Application for Authority along with the appropriate fee, you will not be authorized to transact business in the state and can be fined for doing so. Regarding LLC maintenance, if you miss a Biennial Statement, your LLC will be labeled “delinquent,” out of good standing with the state. Businesses without good standing cannot foreign qualify in most other states, apply for many business loans, renew professional licenses, and more.

Paying your taxes late or not at all will result in monetary fines depending on the type of tax, the amount due, and how overdue it is. The Department of Taxation and Finance website has a “Penalty and Interest Calculator” that allows you to determine how much you’ll owe.

Planning Your Expenses

By now, your budget spreadsheet might be looking a little crowded, but have no fear! Most of these are one-time fees that you won’t have to worry about again. Plus, with all these on the books, there won’t be any surprise costs when you register an LLC in New York.

Soon, you’ll have these fees behind you and you’ll be forging ahead, growing your business and earning profits. As you do, make sure to keep up with the few recurring fees — like Biennial Statements — so your business doesn’t fall out of good standing.

Key Steps for Starting a New York LLC

• The first step to forming a New York LLC is to come up with a good name for your business. You’ll want to make sure the name you want is still available and hasn’t already been claimed by another business, so you’ll need to search the state’s business database to verify its availability.
• Next, you’ll need to choose your registered agent. While you can legally serve as your own registered agent in New York, this role can actually be more of a hassle than you might expect. That’s why we always recommend hiring a reputable registered agent service that can handle the responsibility of this position on your behalf.
• The third step involves the preparation and filing of your Articles of Organization. You’ll need to fill out the paperwork and pay a $200 fee. Once the state processes this document, your LLC will be officially open for business!
• That’s not the end of the road for the startup process though, as you’ll also need to create an operating agreement for your LLC. New York is one of a small handful of states that legally requires LLCs to draft a written operating agreement, but this is an extremely important element of any LLC even in states that don’t require it. The operating agreement is an internal document that outlines how your LLC will operate, and there are several aspects of this document that can prevent messy ownership disputes down the line.
• You will also need to acquire a federal tax ID number (also known as an EIN, or employer identification number). This is essentially a Social Security number for your business, as it is a nine-digit code used to file taxes, hire employees, open business banking accounts, and more.
• Next, you’ll need to register for any relevant taxes with the New York Department of Taxation and Finance, and also obtain all licenses and permits that apply to your business type. Keep in mind that, depending on the nature of your business, you might require licenses from the federal, state, county, and municipal governments.

Once you’ve finished all of these steps, you’re ready to operate a compliant business entity with the state of New York!

Key Steps for Maintaining a New York LLC

After you’ve completed all of the items in the previous section, you’ll need to focus on maintaining your LLC. The first step in this process is to open a business bank account. This will help you keep your business and personal expenses entirely separate, and it will also help immensely with your accounting and taxation responsibilities.

You should also keep detailed records of every financial transaction that takes place with your LLC. This means maintaining a file of invoices for every purchase and sale you make, along with information regarding your employees or contractors and the work they perform for your business.

As we already mentioned, Biennial Statements are a key component of LLC maintenance in this state, and there are harsh financial penalties for delinquent reports. Additionally, you might want to hold an annual meeting to discuss goals and priorities for your LLC, although this is an optional step.