I am often asked for a checklist of items to consider before starting a business as a Business Lawyer in New York representing both startups and established companies. Here’s a high-level overview of what you’ll need to do to start or buy a large or small business in New York.
Step 1: Decide on a Business Structure
Which structure is best for your small/startup business? In New York, you have the choice of operating as a sole proprietor, a partnership, a corporation, or a limited liability company. You can consult with your accountant/financial advisor to determine the correct structure for your tax situation, as well as an attorney to explore the different structure options.
You should formalize the structure by having the business principals sign a written agreement and filing the necessary documents with the New York Secretary of State. Please note that if you do business with someone without a formal agreement in place, you may be in a de-facto relationship without realizing it (e.g., your partner could entering agreements and monetary obligations on behalf of the relationship, and both partners would be liable).
Step 2: Pick a Business Name
Finding a business name is easier said than done; the wrong name can lead to plenty of legal and business problems (you can always change it later, but the fewer times you change it, the better).
The terms “corporation,” “incorporated,” or “limited,” or an abbreviation of one of these words must appear in the name of the corporation. In addition, the corporation’s name cannot be similar to that of any other New York corporation, limited liability company, or limited partnership. Search existing businesses, limited partnerships, limited liability companies, limited liability partnerships, and other companies in the New York Corporation and Business Entity Database.
It’s important to avoid naming your small business or tech startup anything confusingly similar to an existing trademark. It would be best if you also thought of a company name available as a domain name.
Step 3: Create your large or small business.
After you’ve decided on a name for your company, you’ll need to establish it by filing the correct documentation with the New York Department of State. For further information on the various agency criteria, see the Division of Corporations website engage a New York Business Lawyer as your startup lawyer.
Step 4: Enter Into a Written Agreement with your Fellow Business Owners
If you decide you’re going into business with others, you’ll need to write an agreement with them that spells out the owners’ rights and obligations. This is in the form of an operating agreement (for a limited liability company), a shareholder agreement and corporate bylaws (for a corporation), or a partnership agreement (for a partnership).
Step 5: Learn about your Tax Obligations and obtain a Tax Identification Number.
Consult your financial advisor or accountant, but even if you’re a single-member LLC, it’s a good idea to have a separate federal tax IRS (or EIN).
As a small business owner in New York or a tech startup, you must be aware of your state tax obligations. For those starting or buying a business, the New York State Department of Taxation and Finance site has a lot of information.
Step 6: Open Company Bank and Credit Accounts
You should open bank account(s) in the business name once you have your federal tax ID. It would be best if you looked out for a bank that offers “commercial” services- in my experience, “retail” banks with little experience in sophisticated business needs should be avoided. In most cases, the bank may need copies of the business entity-forming papers.
You can get standardized banking resolutions from the bank, but if you’re incorporated, you should include them in your corporate bylaws. You can contact a New York Small Business Attorney or a startup attorney if you have any questions.
Step 7: Obtain Necessary Licenses and Permits
Once you’ve registered your business name, you’ll need to apply for a business license, which allows you to do business in your city or county. This also includes applying for state taxes and permits.
To find out what permits and licenses are required, visit the New York State Business Express website and contact a New York Small Business Lawyer.
Have a Business Lawyer New York review, draft, and negotiate important business agreements, such as business owners’ agreement, office, and other commercial space leases, arrangements with customers and vendors, any technology/intellectual property licenses, as well as web site development and hosting arrangements.
Of course, it’s best if you discuss with a Business Lawyer New York (or corporate attorney) the above New York Small Business Startup Checklist.