Starting a Corporation in New York | What You Need to Know

Start a Corporation in New York

In New York, starting a corporation can benefit entrepreneurs looking to establish a separate legal entity for their business. Incorporating your business provides liability protection for its owners and offers potential tax benefits and a professional image. This comprehensive guide will walk you through Starting a Corporation in New York, from choosing a corporate name to fulfilling ongoing compliance requirements. Some people consider starting a corporation since it has advantages and benefits rather than Starting an LLC in New York.

Webinarcare Editorial Team will help you gain knowledge in starting a corporation with thorough research and market study. It would be best to cross-check all the factors in this article before forming a corporation.

What is a Corporation in New York?

A corporation in New York is a business organization recognized as a separate legal entity from its owners, also known as shareholders. When a corporation is formed, shareholders invest capital by purchasing shares of stock and, in return, become partial company owners. The corporation is managed by a board of directors elected by the shareholders to oversee the company’s operations and make important decisions. Corporations in New York are required to have at least Three directors. One of the main advantages of a corporation in New York is that it provides limited liability protection to its shareholders, meaning their assets are not at risk if the corporation incurs debt or is legally sued.

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Common Types of Corporations

Before you start with a corporation, you should know what type of corporation you will form. There are several different forms of corporations you can take into consideration, depending on your corporation’s objectives and ownership structure.

C-Corporation

C-Corporation is the most known type of incorporation. They have almost all corporate distinguishing characteristics. Profits are distributed to corporate owners who are taxed at an individual level. The corporation is taxed similarly to a business unit.

S-Corporation

S-Corporation in New York is set up similarly to a C-corporation but has different tax implications and owner limits. An S-Corporation has no more than 100 stockholders and is not taxed separately. These business units must also file paperwork with the Internal Revenue Service (IRS) to obtain their status.

Nonprofit Corporation

Religious, educational, and charity institutions frequently use nonprofit businesses to run their operations without making a profit. Thus, a nonprofit corporation is exempt from paying taxes. The nonprofit organization’s gifts, contributions, or cash are reinvested in the company to fund its growth, future endeavors, or operations.

It is recommended to Start a Corporation in New York if you would like to provide limited liability protection to your shareholders rather than New York LLC. However, you may want to consult to LegalZoom’s Business Attorney before starting a business.

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How to Start a Corporation in New York

To start a corporation in New York, you must follow the below steps that, include choosing a corporate name, hiring a Resident Agent, appointing directors, filing for Certificate of Incorporation, creating corporate bylaws, holding the initial board of directors, issuing stock, obtaining required licenses and permits, registering with state tax agencies, and annual reporting and ongoing compliance. All these steps are basic ones. It can be changed depending on the type of corporation you form and the nature of your business.

Step 1: Choosing a Corporate Name

The first step in starting a corporation is choosing an available name that complies with New York naming rules. Most states require that the name of a corporation be distinguishable from other registered business names and include a corporate designator such as “Corporation,” “Incorporated,” “Company,” or an abbreviation thereof.

Here are some guidelines you must follow while naming your corporation in New York-

  • Your business name must contain entity identifiers, such as “Incorporated,” “Limited,” “Corporation,” or “Company,” or an abbreviation, such as “Inc.,” “Co.,” or “Ltd.”
  • Exclude any words in your business name, such as “Trust,” “Bank,” “Credit Union,” or “Trustee,” or words related to a government agency, such as “FBI,” “State Department,” or “Treasury.”

To check the availability of your desired corporate name, you can search the New York Secretary of State‘s business name database and Business Name Search in New York. If the name is available, you may choose to reserve it for a specific period of 60 days by filing a name reservation application and paying the online name reservation fee of Not available and mail name reservation fee of $20. If your corporation plans to operate under a name other than its legal name, you may also need to register a fictitious or “doing business as” (DBA) name.

The DBA filing can be done by two methods, by mail and in person., which costs around $25. In addition, the DBA’s validity in New York is Indefinite, which you can file in New York Secretary of State.

You can check out How to File a DBA in New York for clearer understanding.

Step 2: Hire a Resident Agent

Hiring a Resident Agent is essential in starting a corporation. Resident Agent is a person or company responsible for receiving important legal documents, tax notices, and other correspondence on behalf of your corporation. They ensure that your corporation remains compliant with state regulations and requirements. There are New York Resident Agent Services to check in forming New York Corporation. We reviewed some of the best-registered agent services and provided features as an add-on with their packages.

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Step 3: Appointing Directors

Corporations in New York are required to have at least Three directors, though some states may require more. Directors are responsible for overseeing the corporation’s management and making major decisions on behalf of the company. In New York, directors must be at least 18 years old and do not need to be state residents.

When appointing directors, it is essential to consider individuals who are knowledgeable, trustworthy, and capable of making sound business decisions. Maintaining a record of appointed directors, including their names, addresses, and terms of service, is also a good idea.

Step 4: Preparing and Filing Certificate of Incorporation

After you appoint the initial board of directors in your New York corporation, the next step is to write and file a Certificate of Incorporation. In writing, the New York Certificate of Incorporation, the corporation name, principal place of business, the purpose of business, Resident Agent contact information, and the names and addresses of incorporators and initial board members, should be written.

To officially form your New York corporation, you must prepare and file Certificate of Incorporation with the New York Secretary of State. The Certificate of Incorporation is a legal document that outlines essential information about your corporation, such as its name, address, purpose, and details about its stock.

The specific requirements for Certificate of Incorporation vary by state, but generally, the document must include the following:

  • The corporate name
  • The purpose of the corporation
  • The name and address of the registered agent
  • The names and addresses of the initial directors
  • The number of authorized shares and their par value
  • The name and address of the incorporator(s)

Once the Certificate of Incorporation are complete, please submit them to the New York Secretary of State’s office, along with the required filing fee. Fees vary by state, but in New York, the Certificate of Incorporation filing fee costs around $125 for filing online, or by mail.. It is crucial to provide accurate and complete information on this document, as errors or omissions may result in delays or rejection of your filing.

  • Online Filing: Create an account/Log in to the SOS site, get the online form, fill it, and submit online
  • Offline filing: Send the form by mail to Department of State Division of Corporations, State Records and Uniform Commercial Code, One Commerce Plaza, 99 Washington Ave., Albany, NY 12231.

Step 5: Creating Corporate Bylaws

Now you are done filing Certificate of Incorporation in New York, the next step is to draft corporate bylaws. While not always required by law, creating corporate bylaws is essential in establishing New York corporation. Bylaws are the internal rules and regulations that govern the corporation’s operations and management. They outline the rights and responsibilities of directors, officers, and shareholders and provide guidelines for holding meetings and making decisions.

Key provisions to include in your corporate bylaws may include:

  • The corporation’s purpose and principal place of business
  • The roles and responsibilities of directors, officers, and shareholders
  • The process for appointing and removing directors and officers
  • The procedures for holding annual and special meetings
  • The methods for amending the bylaws and Articles of Incorporation
  • The procedures for issuing stock and maintaining shareholder records

Once the bylaws are drafted, they must be adopted by the corporation’s board of directors. Keeping a copy of the bylaws with your corporate records and updating them to reflect changes in the corporation or applicable laws is essential.

Step 6: Holding the Initial Board of Directors Meeting

The initial board of directors meeting is a crucial milestone for your New York corporation. During this meeting, the directors will adopt the corporate bylaws, elect officers, and make other key decisions to set the foundation for the corporation’s operations.

The agenda for the initial board meeting may include the following:

  • Adopting the corporate bylaws
  • Ratifying any pre-incorporation actions taken by the incorporator(s)
  • Electing corporate officers (e.g., president, vice president, secretary, treasurer)
  • Designating a corporate bank account
  • Authorizing the issuance of stock
  • Approving necessary licenses, permits, and tax registrations

It is essential to keep detailed minutes of the initial board meeting, documenting the decisions made and actions taken. These minutes should be stored with your corporate records.

Step 7: Issuing Stock

Corporations in New York are required to issue stock to their owners, also known as shareholders. When preparing to issue stock, you must determine the number of authorized shares and their par value, as outlined in your Certificate of Incorporation. You may choose to issue different classes of stock, each with its rights and privileges, such as voting rights and dividend preferences.

The process for issuing stock typically involves the board of directors approving a stock issuance resolution, determining the price per share, and recording the issuance in the corporation’s stock ledger. Maintaining accurate and up-to-date records of all stock transactions, including transfers and cancellations, is crucial to ensure proper ownership tracking and compliance with securities laws.

Step 8: Obtaining Required Licenses and Permits

Depending on the nature of your corporation’s activities and location, you may need to obtain various licenses and permits to operate legally. These may include federal, state, and local requirements, such as:

  • A Federal Employer Identification Number (EIN) for tax reporting and employee withholding purposes.
  • State sales and use tax registration, if your corporation sells taxable goods or services
  • Professional or occupational licenses for specific industries (e.g., healthcare, construction, food service)
  • New York Business Licenses, zoning permits, and health department approvals

Researching and obtaining all required New York licenses and permits before commencing operations and maintaining compliance with any ongoing renewal or reporting requirements is essential.

Step 10: Registering with State Tax Agencies

In addition to obtaining licenses and permits, your New York corporation may also need to register with various tax agencies. This may include registering for sales and use tax, obtaining an Employer Identification Number (EIN) in New York for payroll tax purposes, and filing state income tax and franchise tax returns.

An EIN will serve as the tax ID for your New York corporation. EIN can be obtained from the Internal Revenue Service (IRS). It is a 9-digit number similar to Social Security Number. EIN, however, is distinct from SSN. It is only used for business-related activities, particularly for submitting general taxes. The form must be completed and uploaded to the IRS website.

The application of an EIN in New York can be through the following:

  • Apply Online- The online EIN application is the preferred method for customers to apply for and obtain an EIN.
  • Apply by Fax- Taxpayers can fax the completed Form SS-4 application to the appropriate fax number), after ensuring that Form SS-4 contains all of the required information.
  • Apply by Mail- The EIN application Form SS-4 can be filed via mail. The processing time frame to receive the mail is four weeks.
  • Apply by Telephone-International Applicants – International applicants may call 267-941-1099 (not a toll-free number) from 6 a.m. to 11 p.m. (Eastern Time) Monday through Friday to obtain their EIN.

Each state has tax requirements, so consult a tax professional or New York State Department of Taxation and Finance for guidance on your specific obligations.

Step 11: Biennial Reporting and Ongoing Compliance

Once your New York corporation is up and running, you must fulfill ongoing reporting and compliance requirements to maintain good standing. This may include filing Biennial Report with the New York Secretary of State, updating your corporate records to reflect changes in directors or officers, and staying current on any required licenses or permits.

In addition, it is essential to stay informed about changes in corporate laws and regulations that may impact your business and to seek professional advice when needed.

Paying Your Taxes in New York

Even if you have established your corporation in New York, pay your taxes and keep everything up to date so you won’t pay any penalty. Unlike an LLC, there is a corporate tax that every corporation in New York has to pay. On the other hand, they must pay income taxes based on their business income. Some other types of taxes in New York are sales tax, franchise tax (not applicable to all the states), and other state taxes.

Cost of Forming a Corporation in New York

In forming a corporation in New York, a filing and Biennial fee must be paid. Without it, your corporation won’t operate. A corporation’s initial filing fee may vary from state to state. However, in New York, it costs $125 for filing online, or by mail.. The corporation in New York also has to file an Biennial Report (though it might not be mandatory, it is recommended to file one). Ensure you comply with all the necessary fees and costs so your corporation will run successfully and smoothly.

FAQs

What is a corporation?
A corporation is a legal entity that is separate from its owners (shareholders) and responsible for its own debts and liabilities.
How do I name my corporation in New York?
Your corporation name must be unique in the state of New York, and include a word or abbreviation indicating that it is a corporation, such as Corp., Inc., or Ltd.
Do I need to reserve my corporation name in New York before filing paperwork?
No, you do not need to reserve your corporation name before filing paperwork in New York.
Where do I file paperwork to form a corporation in New York?
You must file articles of incorporation with the New York Department of State.
How much does it cost to file articles of incorporation in New York?
It costs $125 to file articles of incorporation in New York.
Do I need a registered agent for my corporation in New York?
Yes, you must appoint a registered agent in New York who will accept legal notices and other correspondence on behalf of your corporation.
Must my registered agent be located in the state of New York?
Yes, your registered agent must have a physical address in New York.
Can I act as my corporation’s registered agent in New York?
Yes, you can act as your corporation’s registered agent in New York if you have a physical address in the state.
Do I need to publish my corporation’s formation in New York?
No, you do not need to publish your corporation’s formation in New York.
Are there any special tax requirements for corporations in New York?
Yes, New York corporations must pay both state and federal taxes.
Must my corporation obtain any licenses or permits in New York?
It depends on the type of business your corporation will conduct. You may need to obtain licenses or permits from the state of New York or the city where your business will operate.
How long does it take to form a corporation in New York?
It typically takes about 7-10 business days to form a corporation in New York.
Can I expedite the formation of my corporation in New York?
Yes, you can expedite the formation of your corporation in New York for an additional fee of $25.
Does New York require corporations to have bylaws?
No, but having bylaws is a good practice to ensure your corporation is run properly.
Can I elect to have my corporation taxed as an S corporation in New York?
Yes, New York recognizes the S corporation election for federal tax purposes.
How often must I hold meetings for my New York corporation?
Your corporation must hold an annual meeting of the shareholders and directors, and may hold additional meetings as needed.
Do I need to have a physical office address in New York for my corporation?
No, but you must designate a New York address for your corporation’s principal office and official mailing address.
Can I form a foreign (out-of-state) corporation in New York?
Yes, foreign corporations can register to do business in New York and enjoy the same rights and privileges as domestic corporations.
How do I register my foreign corporation in New York?
You must file an application for authority to do business with the New York Department of State.
How much does it cost to register a foreign corporation in New York?
It costs $225 to register a foreign corporation in New York.
Can I convert my existing business into a corporation in New York?
Yes, existing businesses can be incorporated in New York.
What is the difference between a C corporation and an S corporation in New York?
C corporations pay taxes on their profits, while S corporations pass their income and losses through to their shareholders for tax purposes.
How does forming a corporation protect my personal assets in New York?
By forming a corporation, you are creating a separate legal entity from yourself as an individual, which can shield your personal assets from corporate liabilities.
Do large corporations benefit from forming in New York?
New York is home to many large corporations due to its favorable business climate, skilled workforce, and excellent access to transportation, infrastructure, and other resources.
Can a single individual form a corporation in New York?
Yes, a single individual can form and own a corporate entity in New York.
Can I get assistance from the New York government when I am starting a corporation?
Yes, several organizations, such as the New York Small Business Development Center and the Empire State Development Corporation, offer assistance to entrepreneurs and small business owners in forming and operating their businesses.
Can nonprofits be formed as corporations in New York?
Yes, nonprofit organizations can incorporate in New York to take advantage of certain tax and liability benefits.
Do corporations need to provide financial reports to state or federal government in New York?
Corporations are required to file annual tax returns with the state and federal government. The contents of such returns may vary greatly depending on the details of your particular corporation.
Must New York corporations contribute to the state employee pension system?
New York corporations with more than five employees must contribute to the state employee pension system, which guarantees access to a financially secure retirement for those involved in public service.
What are the filing fees to start a corporation in New York?
The filing fee to start a corporation in New York is $125.
How long does it take to incorporate in New York?
Incorporating in New York usually takes around two weeks.
What types of corporations can be formed in New York?
New York allows the incorporation of both S and C corporations.
Is it required to hire a lawyer to form a corporation in New York?
No, it is not required to hire a lawyer to form a corporation in New York, but it is recommended.
What is the minimum number of shareholders required to form a corporation in New York?
There is no minimum number of shareholders required to form a corporation in New York.
Are there any residency requirements for forming a corporation in New York?
No, there are no residency requirements for forming a corporation in New York.
Is the name availability check required before incorporating in New York?
Yes, a name availability check is required before incorporating in New York.
How do I check name availability in New York?
You can check name availability in New York through the Department of State’s website.
Can I reserve a name for my corporation in New York?
Yes, you can reserve a name for your corporation in New York for up to 60 days.
Do I need to obtain a business license in New York in addition to incorporating?
It depends on the nature of your business; some businesses require additional licensing.
How much does it cost to reserve a name for a corporation in New York?
To reserve a name for a corporation in New York, the fee is $20.
Can I form a nonprofit corporation in New York?
Yes, you can form a nonprofit corporation in New York.
What is the tax rate for a corporation in New York?
The tax rate for corporations in New York is 6.5%.
what is a New York S corporation?
A New York S corporation is a corporation that elects to pass corporate income, losses, deductions, and credits through to their shareholders.
Can a corporation act as its own registered agent in New York?
Yes, a corporation can act as its own registered agent in New York, but it is not recommended.
What is the physical address requirement for a registered agent in New York?
The registered agent must have a physical address in New York.
What is a foreign corporation in New York?
A foreign corporation in New York is a corporation that is organized in another state or country.
Is a certificate of authority required to do business as a foreign corporation in New York?
Yes, a certificate of authority is required to do business as a foreign corporation in New York.
How much does it cost to obtain a certificate of authority as a foreign corporation in New York?
To obtain a certificate of authority as a foreign corporation in New York, the fee is $225.
What is the form for filing articles of incorporation in New York?
The form for filing articles of incorporation in New York is known as the NYS DOS 1336 form.
What is the registered agent’s role in a New York corporation?
The registered agent is responsible for receiving legal documents and fulfilling other obligations.
Can I change the registered agent for my corporation in New York?
Yes, you can change the registered agent for your corporation in New York by filing a form with the Department of State.
Can I file the articles of incorporation online in New York?
Yes, you can file the articles of incorporation online in New York.
Is publishing of incorporation headlines mandatory in New York?
Yes, publication of incorporation headlines is mandatory in New York.
How long should the company have to complete compliance after incorporating in New York?
The company has 120 days from the date of incorporation to complete compliance in New York.
How often is the Statement of Information report due for corporations in New York?
The Statement of Information report is due every two years for corporations in New York.
Can a corporation be held more than once a year in New York?
Yes, a corporation can hold more than one annual meeting per year in New York.
Are there any bylaws requirements for corporations in New York?
Yes, all corporations in New York are required to have bylaws.

Also Read

How to Save Money While Forming Your New York Corporation

First and foremost, it is essential to research and educate yourself on the process of forming a corporation in New York. Understanding the legal requirements and steps involved can help you avoid potential mistakes that could lead to costly delays or fines. Many resources are available online, including guides and tutorials provided by the New York Department of State, which can help you navigate the process effectively.

When it comes time to choose a business structure, consider the different options available and weigh the pros and cons of each in terms of cost and benefits. While a corporation may offer certain advantages in terms of liability protection and tax benefits, other business structures such as an LLC or a partnership may be more cost-effective for smaller businesses. Consulting with a legal or financial advisor can help you make an informed decision that aligns with your long-term goals and budget.

Legal fees can be one of the most significant expenses when forming a corporation, but there are ways to save money in this area. Many law firms offer flat fee packages for corporate formation services, which can help you budget more effectively and avoid unexpected costs. Additionally, some online legal services and document filing companies offer affordable solutions for entrepreneurs on a budget. While DIY options are not suitable for every situation, they can be an excellent cost-saving option for simpler and more straightforward businesses.

Another way to save money while forming your New York corporation is to consider the timing of your filing. New York charges a filing fee to register a new corporation, but this fee can vary based on factors such as the type of business and the number of shares issued. By carefully planning the details of your corporate structure and filing at the right time, you can minimize unnecessary fees and expenses.

Finally, don’t overlook the importance of maintaining good financial records and staying compliant with state and federal regulations. Failing to do so can result in expensive penalties and legal issues down the line. Consider investing in accounting software or outsourcing your bookkeeping to a professional to ensure that your finances are in order and that you’re not overpaying on taxes or other expenses.

By taking a proactive and strategic approach to forming your New York corporation, you can save money and set your business up for success. With careful planning, diligent research, and smart decision-making, you can navigate the process effectively while staying within your budget. Whether you’re a first-time entrepreneur or an experienced business owner, these cost-saving tips can help you make the most of your corporate formation process.

Conclusion

Starting a corporation in New York involves several critical steps, from choosing a corporate name to fulfilling ongoing compliance requirements. Following the steps outlined in this guide and seeking professional advice when needed, you can successfully establish your New York corporation and enjoy the benefits of limited liability, potential tax savings, and a professional business image.

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