Here is an outline of the steps you need to follow in order to form a corporation (specifically, a "C corporation") in New York. You should also read the general section on forming a corporation for information applicable in any state. Additionally, you should familiarize yourself with the New York Department of State's website, which has useful information and resources.
1. Choose a business name for the corporation and check for availability.
- Please see our section on choosing and checking the availability of a name for your small business, as well as our section on the trademark law aspects of choosing a name.
- New York law requires that a corporation name contain the word "Incorporated," "Corporation," or "Limited," or one of the following abbreviations: "Inc.," "Corp." or "Ltd." Additionally, your corporation name must be distinguishable from the names of other corporations, limited liability companies, and limited partnerships already on file with the Department of State. There are a large number of words that cannot be included in the name without prior approval. For a full list, see N.Y. Bus. Corp. Laws § 301.
- You can search for the availability of your proposed name by writing to the Department of State, Division of Corporations, 41 State Street, Albany, NY 12231. The written inquiry should state that you wish to determine the availability of a corporate name (or names) and list the name (or names) to be searched. There is a $5 fee for each name, which must accompany the request. Searching the availability of a corporate name does not reserve the name. You may also search the New York Corporation and Business Entity Database to help you identify names that have already been taken, but this database might not be complete.
- Although you are not required to do so, consider registering your business name as a federal and/or state trademark.
2. Recruit and/or appoint a director or directors for the corporation.
- Under New York law, a corporation must have at least one director.
- Directors must be at least eighteen years old.
- Directors need not be residents of New York or shareholders of the corporation, unless the certificate of incorporation or bylaws so require.
- It is a good idea to set forth the number of directors who will constitute the board of directors in the bylaws. If you do not do so, the number will be one.
3. Prepare and file a certificate of incorporation with the Department of State.
- The filing fee is $125, plus a minimum tax of $10 based on the number of shares authorized in the certificate. The Department of State's website has a fill-in-the-blank form for the certificate of incorporation. It also offers some basic information on filing a certificate of incorporation, as well as a more detailed guide on Forming a Business Corporation in New York, which is a must see.
- Every business corporation must designate in its certificate the number of shares that the corporation has authority to issue and must state the "par value" of the shares or whether they are without "par value." Shares without par value may be issued or sold at any price. Shares with a stated par value cannot be issued or sold at a price less than the stated par value. By default, the form developed by the Department of State contains an authorized stock structure of 200 shares with no par value. Most corporations are formed with 200 shares no par value. Nothing more needs to be added unless you wish to have a different stock structure. If this is the case, delete the present statement and insert the desired number of shares and a statement of their par value or a statement that they are without par value. The $10 minimum tax (see above) authorizes the corporation to issue 200 shares no par value. Corporations wishing to authorize more than 200 shares no par value or par value shares totaling more than $20,000 must pay more tax -- the rate is 5 cents per share of no par value stock and 1/20 of one percent (.05%) of the par value of the shares that have a stated par value.
4. Create the corporation's bylaws.
- There is no set criteria for the content of bylaws, but they typically set forth internal rules and procedures for the corporation, touching on issues like the existence and responsibilities of corporate offices, the size of the board of directors and the manner and term of their election, how and when board and shareholder meetings will be held, who may call meetings, and how the board of directors will function. You are not required to file bylaws with the Secretary of State, but the corporation must keep a copy at its principal place a business. For general information on corporate bylaws, please see the Corporate Bylaws page.
5. Hold an organizational meeting.
- See the general section on forming a corporation for details. You can find the New York statute relating to the organizational meeting at N.Y. Bus. Corp. Law § 404.
6. Issue stock certificates to the initial owners of the corporation.
- See the general section on forming a corporation for details. The New York statute relating to issuance of stock certificates is located at N.Y. Bus. Corp. Laws § 508. Unless the certificate of incorporation states otherwise, the board of directors has the authority to set the "consideration" (i.e., the amount to be received) for each share of stock.
7. Obtain any required local licenses.
- See the general section on forming a corporation for details.
8. Determine what tax and other regulatory obligations the corporation has, and take care of any necessary registrations.
- Request an Employer Identification Number (EIN) from the IRS. This can be done via its online application. There is no filing fee.
- Register for New York employment taxes. You can learn more about and register for employment taxes at the New York State Department of Taxation and Finance's Business Taxpayer Home Page.
- Whenever you hire an employee in New York (including corporate officers), you must inform both the IRS and the State of New York. You can find details of all the necessary steps, including verifying work eligibility and withholding allowances, on the Hiring Employees section of the IRS website. You can find state-level information at the New York New Hire Home Page.
- If you have employees in New York, you must carry workers' compensation insurance.
- As a small business owner or employer, there may be other informational returns that you have to file annually or semi-annually with the IRS. For more information, take a look at the IRS Guide To Information Returns.
- New York's corporate income tax has a complex structure. You are encouraged to discuss your New York state tax obligations with a tax accountant.
- If your business is located or does any business in New York City, you may be subject to the NYC General Corporation Tax. For more information, see New York City Taxes.
9. Open a bank account for your business.
- It is a good idea to keep your business's finances separate from your personal accounts. A good way to do this early on is by opening a bank account for your corporation. You will probably need a Tax ID number (EIN), a copy of the articles of incorporation, and a resolution identifying authorized signers if those names are not listed in the articles. Here is one example of the documentation that banks ask for.
Note: New York law requires that incorporators (i.e., the people filing the paperwork) be at least eighteen years old.
Other Notable Requirements for Maintaining a Corporation in New York- New York corporations must file a Biennial Statement with the Department of Revenue every two years after the date of formation. The Biennial Statement is made on a form provided by the Department of State. For corporations, the Biennial Statement is automatically mailed to the address of the principal executive office or, if none is listed in the certificate, the form is mailed to the address for service of process. The Biennial Statement is mailed one month prior to its due date. The filing fee is $9.
- New York requires certain documents to be kept at a corporation's principal place of business. The required documents are described in N.Y. Bus. Corp. Laws § 624 (link is to entire code, you need to click on the Business Corporation section, then choose Article 6 and locate the specific provision).
- An S corporation has the same basic organizational structure as a regular corporation, but some of the tax advantages of a partnership or LLC. An S corporation pays no federal income tax, except for tax on certain capital gains and passive income. Instead, the corporation's profits and losses "pass through" to shareholders, and profits are taxed at individual rates on each shareholder's Form 1040. Certain requirements and additional obligations apply -- please see the S Corporation page for details.
- To form an S corporation, designate "S" status with IRS via Form 2553 within 2 months and 15 days of filing your articles of incorporation with New York. There is no additional paperwork that must be filed with New York to obtain "S" status.
- New York subjects S corporations to a fixed-dollar minimum corporate tax. You are encouraged to discuss your New York tax obligations with a tax accountant.