If you’ve decided to form a limited liability company (LLC) in the state of New York, this is an exciting time for your business.
You’re probably ready to build up your LLC and operate the business you’ve always dreamed of!
However, before you get started, it’s important to understand all of the various fees and other expenses that come with forming a New York LLC.
Most entrepreneurs understand that they’ll have to pay the state a fee in order to get their LLCs formed. However, we find that some people are often unaware of all the potential additional expenses, like LLC formation service fees, registered agent service fees, Annual Report fees, taxes, and more. Let’s take an in-depth look at all the possible expenses you’ll encounter when forming a New York LLC.
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The Required Upfront Costs of Forming a New York LLC
Let’s start by discussing the absolute essentials. You cannot form an LLC in New York without first filing the Articles of Organization, or the document that officially registers your business within the state. This filing currently costs $200 to submit.
The Articles of Organization requires some important information about your LLC, including your business’s intended name, the county you’ll operate in, the registered agent who will accept service of process on your behalf, and more.
But what if you’re not forming a brand-new LLC in New York, and instead you’re transferring a pre-existing business into New York from another state? In that case, you would file the Application for Authority instead. This form is pretty similar to the Articles of Organization, but it also requests some information about the jurisdiction where your business was originally formed. This document costs $250 to submit.
But regardless of whether you’re filing a domestic or foreign LLC, New York requires you to publish notice of your business in two local newspapers (to let the public know that you’re starting business). Once you’ve done that, you should file the Certificate of Publication, which costs $50 to file.
For many LLCs, these are the only upfront expenses that are required. That said, your New York LLC will certainly have other costs down the line, and there are some optional expenses as well. Understanding how many of these fees will apply to your business is the key to figuring out exactly how much it will cost to form your New York LLC.
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The Optional Upfront Costs of Forming a New York LLC
The first optional expense for a New York LLC is name reservation. The only time you need to reserve a business name for a New York LLC is if you’re not yet ready to form the business but you want the name to be available when you are ready. It costs $20 to reserve a business name in this state, which gives you exclusive rights to the name for 60 days.
However, considering that you can simply form your business instead, the $20 name reservation fee is usually unnecessary.
Another expense that may or may not apply to your business is an LLC formation service fee. While some entrepreneurs choose to fill out and file their own Articles of Organization, and others opt for the much more expensive route of hiring an attorney to handle it, our preferred option is hiring a business formation service.
These companies can provide the professionalism and peace of mind you receive from having a true expert forming your LLC while charging significantly lower prices than any lawyer you’ll ever find. We’ll discuss LLC formation services again in a bit to help you figure out which of the many companies you should hire.
Many LLCs also hire registered agent services, and these companies also charge their own fees. Every LLC needs a registered agent, as this is the LLC’s point of contact for the state. If the state needs to send you any important documents (like service of process), they will deliver them to your registered agent, who will inform you and forward the documents to you.
We like to bundle registered agent and LLC formation services, as there are some formation services that will throw in a full year of registered agent service at no extra charge. For the most part, these companies charge an average of roughly $150 per year for this service, although rates can vary widely based on which company you choose.
You may also want to secure your business domain name and website, which will add another expense to your list. We always advise our readers to claim their domain names as soon as possible after filing the Articles of Organization because it’s important to get the URL you want for your website. Especially considering how much the business world operates online these days, getting the domain name you want is almost as important as securing your desired LLC name. The cost of a domain name can vary a bit, but for the most part, this should cost you $20 per year or less.
The Required Ongoing Maintenance Costs of a New York LLC
No matter if you’re forming a new domestic LLC or transferring a foreign LLC into New York from another state, your LLC will need to file biennial reports every other year. In other states, this filing is an annual report instead. The report keeps the state up-to-date about certain important information regarding your business. It costs $9 to file.
Depending on your LLC’s business pursuits, you will almost certainly need to pay some form of ongoing business taxes as well. For instance, if your business sells any products or services, you’ll probably need to register for sales and use taxes in order to properly start a business.
If your LLC has employees, it will also need to pay unemployment insurance tax. Based on the nature of your business, there could be additional taxes on top of these, so make sure you check with the New York Department of Taxation to make sure you’re paying all of the taxes you should be.
The Optional Ongoing Maintenance Costs of a New York LLC
Much like you can hire an LLC formation service and a registered agent service, many of these same companies offer annual report services. If you’d like a reputable company to draft and file these reports on your behalf, you’ll need to pay their yearly service fees, on top of New York’s state fees.
Business insurance is another ongoing expense that many, but not all, LLCs will require. It’s very difficult for us to get into much detail on this topic because there’s so much variance from business to business regarding insurance coverage needs.
Still, for example, any business that serves customers from a physical retail location should have business liability insurance to protect against common risks like slip-and-fall accidents. Depending on the nature of your business, this may be just the tip of the iceberg when it comes to your insurance responsibilities.
Next, while there is no general state business license in New York, depending on the nature of your business, you may still need to obtain professional or industry-specific licenses. There are many different licenses and permits that might apply to your New York LLC, and some of them might cost you money when you apply for or renew them, so this is another potential expense you’ll need to keep an eye out for.
The Potential Penalties for Avoiding These Costs
At this point, the costs are really adding up for some New York LLCs. You might be wondering what the consequences would be for avoiding some or all of these expenses. In short, it’s certainly not in your LLC’s best interests to skip out on any necessary fees.
If you don’t pay your Articles of Organization filing fee, your LLC will never exist to begin with. If you fail to pay your biennial report, the state can administratively dissolve your business. Meanwhile, failing to pay your taxes in full can lead to some severe penalties for you and your business.
While it might seem that these expenses add up quickly, paying these fees is still a far better option than the alternative. If there is simply no way to cover these LLC formation costs, a secondary option is to operate as a sole proprietor.
The Best New York LLC Formation Services
Does the LLC formation process sound like a hassle? Would you rather pay someone else to form your LLC while you focus on actually growing your business? Fortunately, there are plenty of reputable LLC formation services out there that can provide professional assistance for a mere fraction of a lawyer’s fees.
There are dozens of different companies that offer LLC formation services these days, and it can be difficult to discern which of them is your best option. That’s why we put together our comprehensive guide to the top-rated business formation services available online. We encourage all of our readers to check out that guide and choose the right company for your specific situation. In addition, we’ll briefly run down a couple of our favorite options here.
ZenBusiness
We think ZenBusiness is the most well-rounded business formation service available today. It’s tough to beat the ZenBusiness pricing model, as this company charges just $49 to form your business and provide a full year of annual report service. In addition, ZenBusiness has outstanding customer feedback, with more than 10,000 reviews available online and nearly all of them being positive in nature.
We also appreciate ZenBusiness because this company gives back to the communities it serves. ZenBusiness partners with Kiva.org to provide loans to low-income individuals, and also donates money to help build businesses owned by women and minorities. Doing good while providing helpful business services is the ZenBusiness way!
Northwest Registered Agent
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You don’t need us to tell you that Northwest’s $39 entry-level price point is a good deal. What does Northwest Registered Agent do that makes them stand out? In short, Northwest has the best customer support we’ve ever experienced in this industry.
While most of its competitors have rather mediocre customer service departments, staffed by outsourced call centers, Northwest has highly trained professionals answering its phones at all times. These experts can help answer many tough questions that competing companies’ support teams won’t have a clue how to answer.
In addition, Northwest also offers its customers a year of registered agent service, just like Incfile. However, only Northwest locally scans every document it receives as your agent, while Incfile only scans the government forms they’re legally required to scan.
Incfile
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Incfile is one of a very small handful of companies in this industry that will form an LLC or corporation with no service fees. All you need to do is pay your state’s fee and Incfile will take care of everything else. That’s not the only piece of good news we have regarding Incfile’s business formation services though.
Like ZenBusiness, Incfile also receives excellent feedback from its customers, with around 27,000 positive reviews available online and just a few negative reviews.
The main reason we rank Incfile behind ZenBusiness is that Incfile has more third-party offers and upsell attempts than ZenBusiness does. However, if you don’t mind promotional partnerships and upsells, Incfile could be a great fit for your new LLC or corporation.
Frequently Asked Questions
What is the absolute minimum cost to form a New York LLC?
The cheapest possible price tag for LLC formation in New York is $250, which covers the cost of filing the Articles of Organization for a domestic LLC along with the Certificate of Publication. All other upfront expenses for a New York LLC formation are optional.
How much does it cost to form a corporation in New York?
In many states, it’s more expensive to incorporate a business into a corporation than it is to form an LLC. However, in New York, it’s the opposite: a Certificate of Incorporation (the document that forms a corporation within the state) costs just $125—half of the cost of the Articles of Organization.
How long does it take to form my New York LLC?
The Department of State’s office usually takes close to 14 business days to process formation paperwork. But if that’s not fast enough for you, the state does offer expediting. $25 gets you 24-hour processing, while $75 guarantees that your documents will be processed the same day. $150 gets 2-hour processing for those in a big rush.
How much does ongoing LLC maintenance cost per year in New York?
That will largely depend on what licenses your business needs, as each industry has its own requirements for annual renewals. Some industries require renewals every year, some every other year, and some industries don’t even require licenses. That said, every business will have at least one maintenance cost in common: the $9 biennial report fee. However, since this fee is so small, it’s almost inconsequential.
Where can I find more information about expenses for New York LLCs?
The New York Department of State provides a comprehensive list of every possible business fee on this page.
How many small businesses are there in New York today?
There are over 2.3 million small businesses currently operating in the state of New York, comprising all but 0.2% of businesses in the state. Roughly 49% of New York’s workforce is employed by one of these businesses.
What are the top official state resources for entrepreneurs?
The New York Department of State offers a Small Business Hub, with a wide variety of business resources like grants and more. A lot of states don’t have a state-sponsored resource like this, so we appreciate New York’s efforts in this area.
In Conclusion
We’ve discussed many New York LLC costs in this article, some of which will apply to all LLCs in the state. As you can see, there are also plenty of expenses that will only affect certain LLCs. The most important takeaway is that you shouldn’t try to find loopholes to get out of paying these fees, as the consequences are potentially severe and easily avoidable.
That said, there are still some ways you can make financially smart decisions on your LLC formation and maintenance costs, like choosing an affordable business formation company to oversee your Articles of Organization filing and provide registered agent service.