How to Form a Single-Member LLC in New York

by ECL Writer
Single-Member LLC in New York

A single-member limited liability company (SMLLC) is a type of limited liability company (LLC) in which there is only one owner. In New York, a single-member LLC is formed in the same way as a multi-member LLC, by filing articles of organization with the New York Department of State. One of the main benefits of a single-member LLC is that it provides liability protection to the owner, meaning that their personal assets are protected from creditors and lawsuits arising from the business. This is the same protection provided by a multi-member LLC.

Another advantage of a single-member LLC is that it is easy to manage and has fewer formalities and requirements compared to a corporation. For example, there are no formal meetings or minutes required, and the owner has complete control over the business. In terms of taxation, a single-member LLC is treated as a disregarded entity by the Internal Revenue Service (IRS), meaning that the business income and expenses are reported on the owner’s personal tax return. However, the owner can choose to be taxed as a corporation if they prefer.

It’s important to note that while a single-member LLC provides liability protection, it does not provide protection against business debts. The owner is personally responsible for the debts and obligations of the business. If you are considering starting a business in New York, it’s important to consult with a business attorney to determine the best type of business structure for your needs and to understand the benefits and drawbacks of a single-member LLC. But in this post, Eastcoastlaws.com will outline the steps in how to form a single-member LLC in New York.

Forming a Single-Member LLC in New York

Name Your SMLLC

The words “Limited Liability Company” or the abbreviation “L.L.C.” or “LLC” must appear in the name of a New York SMLLC. The name of the SMLLC must be distinct from other company names that have previously been registered with the Division of Corporations (DOC) of the New York Department of State (DOS). Use the Department of Corporations website’s company entity search to make sure the name you desire is available. By submitting an Application for Reservation of Name with the DOC for a price of $20, you can reserve a name for 60 days.

File Articles of Organization

By submitting Articles of Organization to the New York Secretary of State, you establish a New York SMLLC. The formal name of your new SMLLC, the county where its office will be situated, and the address to which the state shall deliver any legal documents relevant to the SMLLC must all be provided in order to finish the articles. You can obtain a blank article of organization form or submit your articles online. The filing fee right now is $200.

Every SMLLC in New York shall appoint the Department of State as its principal registered agent to receive service of process on its behalf. (You may also designate a person residing in New York, a foreign LLC, or a New York-based business as an extra agent.) Any court documents pertaining to litigation filed against your SMLLC will be mailed to the address you specify in your articles of organization by the DOS.

Prepare an Operating Agreement

All SMLLCs must have an operating agreement according to New York law. The SMLLC’s only member and the SMLLC itself typically enter into an operating agreement. You must sign the contract prior to, at the time of, or 90 days after filing your articles of incorporation. Since it is an internal SMLLC document, the operating agreement is not recorded with the Department of State. Regarding the repercussions of failing to establish an operating agreement, New York law is silent.

Most states treat SMLLCs as member-managed by default if you don’t specify when you first register with the state that your SMLLC will be manager-managed. Before choosing the form of management structure you want for your SMLLC, make sure to weigh both the advantages and disadvantages of member- and manager-managed organizations.

Does A Single-Member LLC Need An EIN In NY?

In New York, a single-member limited liability company (SMLLC) may need an Employer Identification Number (EIN) or Tax Identification Number from the Internal Revenue Service (IRS).

An EIN is a unique nine-digit number issued by the IRS for tax purposes. An SMLLC typically needs an EIN if it has employees, is required to file employment tax returns, or is otherwise taxed as a separate entity. If the SMLLC is a disregarded entity for tax purposes, meaning that the business income and expenses are reported on the owner’s personal tax return, then an EIN is not required.

It’s important to note that even if an SMLLC is a disregarded entity for tax purposes, it may still need to obtain an EIN for certain purposes, such as opening a bank account in the business’s name.

If you are unsure whether your SMLLC needs an EIN, it’s a good idea to consult with a tax professional who can help you determine your specific tax obligations and requirements. They can also assist with obtaining an EIN if necessary.

You can get an EIN by completing an online application on the IRS website. There is no filing fee.

Pay Annual State Filing Fee

Standard SMLLCs must pay an annual filing fee to New York (with the default tax status of the disregarded entity). The filing fee’s amount changes according to how much of the SMLLC’s gross income came from New York in the most recent tax year. Some SMLLCs, such as those with no New York-related gains, losses, or deductions, are exempt from paying the charge. The cost might be from $25 and $4,500. Using Form IT-204-LL, the fee is sent to the Department of Taxation and Finance (often referred to as the Tax Department). Within 60 days of the last day of the tax year for your LLC, the form must be submitted.  For more details, check the Tax Department website.

Obtain Business Licenses

Depending on what kind of business you’re running and where it’s located, you may need to obtain local or state business licenses for your SMLLC. Among other possibilities, these might include licenses related to:

  • your profession or occupation
  • specific goods or services you’ll sell or provide
  • an assumed or fictitious name for your business, or
  • health and safety matters.

No Annual Report

New York does not require SMLLCs to file an annual report, in contrast to the majority of other states. Many SMLLCs are nevertheless required to pay an annual fee in New York.

Publication Requirement

The LLC is required to publish a copy of the articles of the organization or a notice regarding the formation of the LLC in two newspapers within 120 days of the articles of the organization being effective. The county clerk of the county where the LLC’s office is situated must designate the newspapers. The New York Department of State, Division of Corporations, must receive a Certificate of Publication and the affidavits of publication from the newspaper or publisher of the newspapers attached. The Certificate of Publication must be filed for a $50 filing fee.

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