Forming a Corporation in New York
If you’re thinking about starting a business in New York, you may be wondering about the steps involved to form a corporation.
A corporation is a specific type of entity that is legally separate and distinct from its owners. Corporations possess many of the same legal rights and responsibilities as individuals; they can lend and borrow money, enter into contracts and other legal agreements, hire and fire employees, sue and be sued, and own assets. And just like individual US citizens, corporations owe taxes to the federal government.
There are several types of legal entities you can use for your New York business, including sole proprietorship, partnership, LLC, and corporation. The business formation experts at Prime can help you understand the differences between each type of business structure if you have questions about what’s best for your business. If you’ve decided that incorporation is the right route for you, read on for all the steps to forming a corporation in the state of New York, or reach out for a free consultation on setting up your entity.
8 Steps to Forming a Corporation in New York
Step 1: Choose a Name for Your New York Corporation
The state of New York has several rules regarding your corporate name. First, the legal name must include “Incorporation,” “Incorporated,” “Limited,” or an abbreviation of one of those terms..
It’s also important that your corporation’s name be clearly different from the names of other business entities in New York. Once a name has been filed on record with the New York Secretary of State, that name is no longer available. You can check the name you’re thinking of for availability by using the New York Department of State Division of Corporations business name database. You may also want to consider checking to make sure you can secure the URL or website address of the name you are considering at a service like Go Daddy.
Filing an Application for Reservation of Name (must be done by mail) with the New York Department of State Division of Corporations will reserve that name for 60 days. To avoid having that name protection expire, you must complete your incorporation paperwork within that 60 days.
Step 2: File the New York Certificate of Incorporation
Once you have chosen a name, the next step is to file a Certificate of Incorporation with the New York Secretary of State (SOS). Once this is filed, your corporation has been legally created. To fill out that certificate properly, you will need the following information:
- The corporation name
- The corporation purpose
- The county in New York in which the corporation’s main office is located
- The stock structure
- A designation of the Secretary of State as the corporation’s agent
- The name and address of the person who should receive any legal correspondence mail
The New York Secretary of State offers an optional form you can file as part of the incorporation process that includes a general purpose clause and authorizes the corporation to issue 200 shares of common stock with no par value. If you would like to change any details, including adding more shares and/or setting a par value, you can rewrite portions of the form.
The New York Certificate of Incorporation may be filed online or by mail. The fee for filing the Certificate of Incorporation is $125. If you are filing by mail, send the completed form, along with the fee, to: New York Department of State, Division of Corporations, One Commerce Plaza, 99 Washington Avenue, Albany, NY 12231.
Step 3: Designate a Registered Agent
While some states allow you to choose an individual or a private service as your registered agent, the state of New York requires that every corporation appoint the New York Department of State as its registered agent for service of process in the state. This simply means that the state agency will accept and forward legal papers on the corporation’s behalf in the case of legal action.
Step 4: Write Corporate Bylaws
Every corporation should have a governing document that delineates the basic operational rules guiding the company. These rules are called bylaws. Although bylaws are internal documents that are not filed with the state and are not legally required, they are important to establish good business practices and to show legitimacy to partners, creditors, and the IRS.
Step 5: Appoint Directors and Conduct First Board Meeting
The person who signs the articles of incorporation is called “the Incorporator,” and it is their talk to fill in the “Incorporator’s Statement” to appoint the initial corporate directors for the company. These directors will sit on the board until the first annual meeting of shareholders. Once the shareholders meet, they will elect board members.
The Incorporator’s Statement should be kept with the other corporate records such as the bylaws, but does not have to be filed with the state.
At your first board meeting, the directors should perform the following tasks:
- Formally adopt the bylaws
- Appoint corporate officers
- Authorize the issuance of shares of stock
- Select a corporate bank
- Set the corporation’s fiscal year
- Adopt an official stock certificate form and corporate seal.
All actions the directors take at the board meeting should be recorded in corporate minutes that will be approved and filed with the other corporate records.
Step 6: Issue Stock
Issuing stock is a way of giving an ownership share in the corporation. If you are a small business, you can use paper stock certificates and keep a paper record of stock transactions.
In the state of New York, corporations can choose whether the stock they issue will have a par value. Par value is a set amount that fixes the base price for the stock—the stock cannot be sold below that price. If you do not set a par value, your shares can be issued or sold at any price. Most small New York corporations do not set a par value.
The state of New York requires anyone selling securities to the public to register as a broker-dealer with the Investor Protection Bureau of the New York Attorney General. This requirement, however, does not generally apply to a small corporation that is privately offering and selling initial shares. If you are unsure whether your corporation needs to follow the public registration requirement, you should consult a qualified securities law attorney. For more information about New York registration requirements, see the Investor Protection Bureau Broker-Dealer and Securities Registration and Information Sheet.
Step 7: File New York Biennial Statement
Every other year—during the calendar month in which the corporation was originally incorporated—New York corporations must file a Biennial Statement with the Department of State every other year. The Biennial Statement is filed online.
Step 8: Comply With Other Tax and Regulatory Requirements
In the state of New York, additional tax and regulatory requirements apply to your corporation. These include a requirement to obtain a federal employer identification number (EIN) and a requirement to pay New York State taxes.
Forming a Corporation in New York: FAQs
How much does it cost to form a corporation in New York?
To register your business name it will cost $20, and to file your Certificate of Incorporation it will cost $125.
Am I required to create corporate bylaws in New York?
Although corporate bylaws are not legally required in the state of New York, it is always a good idea to create them so that your corporation is well governed.
How do I find out if my New York business name is available?
The best thing to do is to check the New York Department of State Division of Corporations business name database.