First you should “Determine Whether Your New York Business has Employees or Independent Contractors” by reading that post or consulting with a corporate attorney. If your New York business hires employees, then the following would apply.

Workers’ Compensation.  The New York State Workers’ Compensation Law (“NYWCL”) requires qualifying businesses must obtain workers’ compensation insurance before putting employees to work.   This insurance covers your company for employees’ personal injuries incurred in the course of employment and deaths resulting from such injuries.

Disability Benefits.  The New York Disability Benefits Law (NY DBL) is a special section of the NYWCL that protects workers from non-occupational injury or sickness. If your company employs one or more employees (in covered employment) for 30 days in any calendar year, then you are subject to this law and must get protection, generally in the form of insurance, from a company authorized to write accident and health insurance in New York State, or from the New York State Insurance Fund.

Unemployment Insurance.   When you start your business in New York and hire employees, you must register the New York State Department of Labor Unemployment Insurance Division to determine whether or not you are liable for unemployment insurance in New York State, and if so you can register as an employer online.

Posting Notices.   Your New York business must post and maintain, in a conspicuous place, a printed notices stating that the company has: (i) complied with all the rules and regulations governing workers’ compensation, and (ii) secured the payment of compensation to your employees and their dependents as provided under the NYWCL. You can get these printed notices from your insurance carrier.  Alternatively, New York State and Federal posting requirements can be found at the New York State Department of Labor and the U.S. Department of Labor.  In addition, there may be special permits and/or licenses that need to be posted depending on the nature of your company’s business.

Federal Unemployment Tax.  Your company is subject to federal unemployment tax if, during the current or prior year, you paid wages of $1,500 or more during any calendar quarter in the current calendar year or any calendar quarter in the preceding calendar year; or employed at least one person for some part of one day for any 20 weeks during the current or preceding calendar year.  Your company will have to file with the Internal Revenue Service Form 940 and should read the instructions for “Form 940 Employer’s Annual Federal Unemployment (FUTA) Tax Return.”

Social Security.  As an employer, your New York business must file an application for an employer’s identification number on IRS Form SS-4. Your New York business can apply and obtain an Employer Identification Number (EIN) online (sometimes it is easier to use the toll-free number).

Immigration.  The Immigration Reform and Control Act of 1986 states that all employers are required to verify employment eligibility of new employees. The law obligates all employers, including New York businesses, to process Employment Eligibility Verification Form I-9.

Internal Revenue Service’s “Small Business and Self-Employed Tax Center” is an excellent site that provides links to information on employment taxes, wage reporting requirements, employer identification number (EIN) and other items of interest to New York businesses with employees.

Of course, it is best to discuss the above Employer Obligations for Employees in New York with a New York Business Attorney (or corporate attorney).

Some business activities require licenses or permits from New York state and/or local governments.  To find out what licenses and permits may be required in New York, you can visit the New York State’s Online Permit Assistance and Licensing website and you should call a New York Small Business Attorney (or corporate attorney).

Organizers form an LLC in New York by filing the Articles of Organization, pursuant to Section 203 of the New York Limited Liability Company Law, with the Department of State. Organizers prepare, sign and file the Articles of Organization that creates the LLC. Any person or business entity may be an organizer (it does not have to be a business lawyer or corporate attorney). Organizers may be, but need not be, a member of the LLC formed. You can obtain a basic Articles of Organization from the New York Department of State here (note, this  form reflects only the basic requirements — Articles of Organization may include other provisions consistent with law).

Of course, if you have any questions on How to Form a Limited Liability Company in New York, it is best to discuss them with a New York Small Business Lawyer.

According to Section 417 of the New York Limited Liability Company Law, the members of a New York LLC are required to adopt a written operating agreement.  The operating agreement may be entered into before, at the time of, or within 90 days after the filing of the Articles of Organization.   The operating agreement is the primary document that establishes the rights, powers, duties, liabilities and obligations of the members between themselves and with respect to the limited liability company. It is an internal document of the LLC and is not filed with the Department of State. Note, New York law is is silent on the consequences of not adopting an operating agreement, but as a general rule, it is best to have an operating agreement when the LLC has more than 1 member.

New York limited liability companies are required to publish a notice of formation.  Section 206 of the New York Limited Liability Company Law requires a notice related to the formation of a limited liability company (LLC) to be published in two newspapers. The newspapers must be designated by the county clerk of the county in which the office of the LLC is located. An affidavit of publication from each newspaper must be filed with the Department of State. A Certificate of Publication, with the affidavits of publication of the newspapers annexed thereto, must be submitted to the Department of State, with the appropriate filing fee.

Of course, it is best to discuss the Special Responsibilities and Formalities Associated With Forming a New York Limited Liability Company with a New York Small Business Lawyer (or company lawyer).

The Internal Revenue Code (IRC) allows an LLC to elect its tax status for income tax purposes. You should consult your financial or tax adviser about these “check-the-box” regulations and any changes. For income tax purposes, New York State law follows federal law.  Additionally, New York state law (and certain other states’ laws) imposes a tax based on the number of members of the LLC.  Also, depending on the nature of the business the limited liability company undertakes, the LLC may have to pay or collect sales taxes, employee withholding taxes and other taxes.

The LLC will need a taxpayer identification number (or an EIN).  Here is the link to the IRS’ How to Apply for an EIN (with separate instructions for Corporations, International Businesses, Partnerships, and Small Business/Self-Employed).  Your applying by telephone is sometimes easier than via the online method.

As a New York small business owner, you need to understand your New York State tax responsibilities (Recordkeeping, Hiring employees, Selling products or services, and other New York State taxes).  The New York State Department of Taxation and Finance site has a lot of information for those starting or buying a business.  Also, you should read the IRS’ “Publication 583 Starting a Business and Keeping Records” is available as a pdf download or viewable on the IRS web site.

Of course, it is best to discuss the above with your financial adviser or accountant along with a New York Small Business Lawyer (or corporate attorney).

After you have found your target New York business to acquire, you (and/or your corporate attorney) have to negotiate the terms of the business purchase transaction.  In this article I will outline some of the typical terms of a term sheet for the purchase of a small business and some of the things you need to consider.

As I mentioned in “Buying a Small Business in New York”, you need to put together a  “term sheet” (also known as a “LOI,” “letter of intent,” “MOU,” or a “memorandum of understanding”).  This can be done as you and your corporate attorney are conducting your due diligence on the target business.

The term sheet should consist of the broad basic terms of the deal.  As that the stock purchase agreement or asset purchase agreement will be drafted from the term sheet, you need to be as specific as possible with respect to contingencies to closing, offsets to the purchase price and other obligations (it will be hard to convince the seller to agree to terms in the resulting agreement differing from the deal points already agreed upon in a term sheet).   The term sheet, will set forth the parties’ mutual understanding of the terms of the small business purchase.

Having a term sheet serves purposes in addition to acting as the blue print of the business deal from which to draft the stock purchase agreement or asset purchase agreement.

The business purchase term sheet communicates to the seller that you are serious about purchasing the small business.  Depending on how the term sheet is drafted, while you may have an “out” to walk away from the business acquisition, it shows that you are committed to culminate the purchase;

It can lock the seller into looking for other purchasers of the small business; and

The term sheet helps flesh out the major issues that often arise in a business purchase and sale, so to avoid surprise roadblocks that may pop up along the way to closing;

Here is a list of typical terms and other issues to be addressed in a term sheet to buy a business:

1.    The Names and Contact Information for all parties that are involved in the purchase transaction — buyer, seller, buyer’s corporate attorney, seller’s company attorney, names of any business brokers involved in the deal, and the names of the financial advisors and/or accountants.  If any of the parties are not individuals, you should have the full entity’s legal information (including state of incorporation, officer’s names and contact information, etc.)

2.    Purchase Price and Other Consideration – Will this be a cash deal, or a combination of cash and other real or personal property, stock, or intellectual property?

3.    Payment Terms. If a cash deal, will it be paid in a lump sum, or paid in installments?  If in installments, will it be tied to profitability, or other contingencies?  If seller financed, at what interest rate and term?  If financed by a third party, is the deal contingent on obtaining that financing?  Will there be a downpayment?

4.    Collateral (or security) for the Purchase Price. If the business is being sold with seller financing, the seller may want collateral for your promise to pay back the loan.  Perhaps the security interest pledged will be the stock of the company, some or all of the business property or business assets, or some other real or personal property that you own.  Of course, if you fail to make the financing payments, the seller will want to then be able to foreclose or repossess the collateral that is being pledged against the seller financing.

5.    Structure of the Deal. Will it be an Asset Purchase or Stock Purchase?

Assuming that the business target is a corporation or limited liability company (LLC), you can structure the purchase in one of two ways — either it will be a stock purchase or an asset purchase.   There are advantages to both, and both may have significant tax implications.  You should structure the transaction after obtaining advise from your financial advisor or accountant.

From a legal perspective a stock sale is quite different from an asset sale.  In a stock sale transaction, you are buying all of the stock of the company — so the company’s assets, liabilities, goodwill, contracts, intellectual property, real property stays with the company (assuming that there are no prohibitions of or conditions to transfer contained in any of of the documents relating to same). In a stock purchase, you are buying the company entity “lock, stock and barrel.”  That also means you may be buying the company’s headaches as well (like lawsuits, and other contractual obligations).  So when you buy the stock of the company, you and your corporate attorney should conduct intensive due diligence into the business’ history, contracts, minute books, financial reports and records.

In an asset purchase, you are cherry-picking and buying the plum assets that you need for your own business (or even a division of the seller’s business).  In an asset sale (or asset purchase)  the company’s liabilities and other headaches stay with the seller.  You can buy all or substantially all of the assets of a business in New York, with little risk that you will be held responsible for the debts and obligations of the business incurred prior to the purchase of the business by you.

6.  Transfer Issues.  Whether the business is being sold as a stock sale or as an asset sale, you have to be concerned about whether there are restrictions to transferring the assets of the business.  When conducting due diligence, you (with the help of your corporate attorney) should determine which assets may need prior consent for the transfer (like business space leases, major contracts with customers or vendors, or bank loans or credit agreements).  Depending on how the restriction is worded in the respective contract, a mere transfer of any stock or a controlling interest of the ownership of the business stock, may trigger the obligation to obtain consent.

7.    Covenant not to Compete.  Generally, how successful the the business you are buying was in the past was a result of the management and ownership of the business.  So you might want to consider keeping those employees on after you buy the business for continuity purposes and have them enter into employment agreements or consulting agreements with you.  Of course, if you have the expertise to run the business from day 1, then you may want to “buy” the benefit of having the prior management and prior business owners from competing with your newly purchased business.  You would want to enter into an agreement with covenants not to compete (sometimes referred to as a “non-compete agreement” or “forfeiture for competition agreement”), to prevent the sellers from immediately soliciting their old customers or competing with you.   Under New York law, covenants not to compete (or “non-compete agreement” or “forfeiture for competition agreement”) are valid as long as they are reasonable in duration and scope.

8.    Non-binding Nature of the Term Sheet.  As I discussed in “Buying a Small Business in New York”, you should consider having a “non-binding” term sheet (e.g., there should be contingencies when you can walk away from the deal without liability).  But note, the term sheet should be drafted properly so that certain provisions of the term sheet should be binding, like the provisions regarding limitation of liability and confidentiality, among others (you don’t want the seller to sue you nor disclose your confidential information like financial information).

9.    Post-Closing Seller Obligations or Buyer Obligations that Continue after the Sale of the Business. As discussed above, there might be times that you want the seller to continue to provide consulting services to the business after the sale of the business.  Maybe you decided to close the deal before all of the non-material consents were obtained or prior to when the applicable taxed needed to be prepared and filed.  Any post-closing obligation that need to be written in the stock purchase agreement or asset purchase agreement should be included in the term sheet.

Which is Better – An Asset Purchase or a Stock Purchase of a Company? From first impressions, you might think an asset purchase is more advantageous. Generally, buyers prefer an asset purchase for reasons of tax deductibility and cherry-picking the favorite assets (without being saddled with the liabilities). However, in a stock purchase you can buy the business as a going concern with minimal interference of the business (and sellers prefer to sell the entire business with all its blemishes and liabilities). Of course, the bottom line will be price (an asset purchase will probably be more expensive than buying the stock of a company).

If you are considering a buying a small business in New York, make sure to check with your accountant and/or tax adviser and a New York Business Lawyer.  There may be important tax and other legal consequences to consider before making the decision.

It is critical that you, the business owner, perhaps with the help of your corporate attorney, correctly determine whether the individuals providing services are employees or independent contractors.  For the most part, the employer must withhold income taxes, withhold and pay Social Security and Medicare taxes, and pay unemployment tax on wages paid to an employee.  A company does not have to withhold or pay any taxes on payments to independent contractors.

The person performing the services may be an independent contractor, an employee (common-law employee), a statutory employee, or a statutory non-employee.  This all depends on the facts and circumstances at hand.   Facts that provide evidence of the degree of control and independence fall into three categories:  Behavioral Control, Financial Control, and Type of Relationship, which can be determined by answering:

1.  Does the company control or have the right to control what the worker does and how the worker does his or her job?

2.  Are the business aspects of the worker’s job controlled by the employer/contractor (including, among other things, how worker is paid, whether expenses are reimbursed, who provides tools/supplies, etc.)?

3.  Are there written contracts or employee type benefits (i.e. pension plan, insurance, vacation pay, etc.)? Will the relationship continue and is the work performed a key aspect of the business?

A New York company needs to evaluate all of these factors in order to determine whether a worker is an employee or independent contractor. Some factors may indicate that the worker is an employee, while other factors indicate that the worker is an independent contractor. Unfortunately, there is clear line that “makes” the worker an employee or an independent contractor, and no one factor stands alone in making this determination.

If you have questions or need help in Determining Whether Your New York Business has Employees or Independent Contractors, it is best to discuss your concerns with a New York Business Attorney.

(You may also want to read our related post, “How Do I Convert a Partnership, Corporation or Other Entity into an LLC?“)

The New York Limited Liability Company Laws and the Delaware General Corporation Laws have provisions to easily convert an existing limited liability company, and with respect to Delaware, general partnership, limited partnership, other unincorporated business entities, into a corporation.  Perhaps the owners want to convert the original entity into a corporation for tax reasons or perhaps the startup company/partnership is seeking venture capital financing and the venture capital investors don’t want to invest in a partnership.  Consequently, the business needs to convert to a corporation.  How is a conversion of a partnership, LLC or other business entity to a corporation accomplished?

Under Delaware General Corporation Law Section 265 et seq., “Any other entity may convert to a corporation of this State” by complying with certain procedures.  Under this Delaware General Corporation Law, the term “other entity” means “a limited liability company, statutory trust, business trust or association, real estate investment trust, common-law trust or any other unincorporated business including a partnership (whether general (including a limited liability partnership) or limited (including a limited liability limited partnership)), or a foreign corporation.”  This provision allows for a conversion of an LLC, partnership, trust or foreign corporation (a corporation formed under any other States’ laws) into a Delaware corporation.  If all of the procedures are followed, you will end up with a Delaware corporation where you used to have an “other entity” and the conversion will not “affect any obligations or liabilities of the other entity incurred prior to its conversion to a corporation of this State or the personal liability of any person incurred prior to such conversion.”

If you have a limited liability company formed under the laws of New York, look in Section 1001 et seq. of the New York Limited Liability Company Law.  Under these provisions, a “a domestic limited liability company may merge or consolidate with or into one or more domestic limited liability companies or other business entities formed or organized under the laws of this state or any other state or the United States or any foreign country or other foreign jurisdiction”.  Again, if all of the procedures are followed, your LLC can merge (or consolidate) with or into any other business entity.

If you are considering a conversion of a general partnership or limited partnership (or “other entity” in Delaware) into a limited liability company, make sure to check with your accountant and/or tax adviser and a New York Business Lawyer (or corporate attorney).  There may be important tax and other legal consequences to consider before making the conversion of a partnership, LLC or other business entity to a corporation.

The New York Limited Liability Company Law can be found here.

The New York Business Corporation Law can be found here.

The New York Partnership Act can be found here.

The New York General Obligations Law can be found here.

(You may also want to read our related post, “How Do I Convert a Partnership, LLC or Other Business Entity into a Corporation?“)

The New York Limited Liability Company Laws and the Delaware Limited Liability Act have provisions to easily convert an existing general partnership or limited partnership (and with respect to Delaware, “other entities” as well, like trusts or other unincorporated business entities) into a Limited Liability Company.  Perhaps the owners want to convert the original entity into an LLC for tax reasons (like passing through the LLC’s losses to the owners’ tax returns) or perhaps the startup company/partnership is seeking venture capital financing and the venture capital investors don’t want to invest in a partnership.  Consequently, the business needs to convert to a limited liability company.  How is a conversion of a partnership,  corporation or other entity into an LLC accomplished?

Under Delaware Limited Liability Act Section 18-214 et seq., “Any other entity may convert to a domestic limited liability company” by complying with certain procedures.  Under the Delaware Limited Liability Act, the term “other entity” means “a corporation, a statutory trust, a business trust, an association, a real estate investment trust, a common-law trust or any other unincorporated business or entity, including a partnership (whether general (including a limited liability partnership) or limited (including a limited liability limited partnership)) or a foreign limited liability company.”  This provision allows for a conversion of a Delaware partnership, trust or foreign limited liability company (an LLC formed under any other States’ laws) into a Delaware limited liability company.  If all of the procedures are followed, you will end up with an LLC where you used to have an “other entity” and the conversion will not “affect any obligations or liabilities of the other entity incurred prior to its conversion to a domestic limited liability company or the personal liability of any person incurred prior to such conversion.”

If you have a general partnership or limited partnership formed under the laws of New York, look in Section 1006 et seq. of the New York Limited Liability Company Law.  Under these provisions, a New York general partnership or limited partnership can be converted to an LLC.  Again, if all of the procedures are followed, you will end up with a LLC where you used to have a general partnership or limited partnership, and under Section 1007 et seq. of the New York Limited Liability Company Law, “a partnership or limited partnership that has been converted pursuant to this chapter is for all purposes the same entity that existed before the conversion” (e.g., all property, debts, and actions or proceedings of the partnership will be same of the resulting LLC).

If you are considering a conversion of a general partnership or limited partnership (or “other entity” in Delaware) into a limited liability company, make sure to check with your accountant and/or tax adviser and a New York Business Lawyer (or corporate attorney).  There may be important tax and other legal consequences to consider before the conversion of a corporation, partnership or other entity to an LLC.

An LLC  combines the limited liability advantages of a corporation with the control and tax advantages of a partnership.  You can elect to have your LLC taxed as a corporation, or you can elect to have it be a “pass through” entity (taxed like a partnership – the LLC’s income and losses are reported on each member’s individual tax returns).  Unlike S-Corps, a New York limited liability company can be owned by non U.S. citizens/resident aliens (and other business entities).  A NY LLC can have unlimited number of members.

Note, however, under New York law, LLCs are required to publish the fact of the LLC’s formation in two newspapers of the county in which the office of the limited liability company is located.  This advertisement could cost as little as a few hundred dollars for an LLC formed in a less populated county to around $1,300 or so for an LLC formed in one of the five New York City counties (Bronx, Kings, Queens, New York, and Richmond (less populated counties may be a little less costly)).

Of course, if you have any questions, it is best to discuss them with a New York Small Business Lawyer.

]]> http://www.nybusinessattorneyblog.com/business-laws/why-choose-a-limited-liability-company-llc-over-a-corporation-foryour-small-business/feed/ 1 http://www.nybusinessattorneyblog.com/business-laws/what-are-the-benefits-of-having-an-llc/ http://www.nybusinessattorneyblog.com/business-laws/what-are-the-benefits-of-having-an-llc/#comments Tue, 02 Feb 2010 18:28:07 +0000 Craig Delsack http://www.nybusinessattorneyblog.com/?p=32

A New York Limited Liability Company  has the following benefits:

• Liability Protection Like a Corporation. New York LLC members are generally protected from personal liability for debts and claims of the business. This means that if the business can’t pay a creditor or gets sued, the creditor cannot legally come after the member’s personal assets such as a house or car (unless the owner is hiding behind the corporate entity for his or her own unlawful or unscrupulous personal dealings, in that case the business owner might not be able to prevent personal liability if a creditor can prove facts and circumstance to “pierce the corporate veil”).

• Maintenance.  LLCs are less formal than corporations and do not have the same corporate formality requirements such as annual meetings, maintaining minute books, and having corporate bylaws (of course, these items can be addressed in the LLC’s Operating Agreement).

• Management.  An LLC provides a lot of flexibility in business organization and management. The owners can be individuals, trusts, partnerships, corporations, LLC and foreign individuals.  There are no requirements to have officers — one or more managers can run the LLC (as set forth in the LLC’s Operating Agreement).

Of course, if you have any questions about the benefits of having a New York LLC, you should speak with a New York Small Business Lawyer.

]]> http://www.nybusinessattorneyblog.com/business-laws/what-are-the-benefits-of-having-an-llc/feed/ 0 http://www.nybusinessattorneyblog.com/business-laws/links-to-new-york-state-and-the-city-of-new-york-laws/ http://www.nybusinessattorneyblog.com/business-laws/links-to-new-york-state-and-the-city-of-new-york-laws/#comments Tue, 26 Jan 2010 21:51:28 +0000 Craig Delsack http://www.nybusinessattorneyblog.com/?p=21

Here are a few links to the websites maintained by the New York State and the City of New York legislatures.

New York State Legislature – Laws of New York, Bills, Resolutions, Bill Text, Status, Summaries, Sponsor Memos, Floor Votes.

NY Department of State-Division of Administrative Rules – New York Codes, Rules and Regulations (NYCRR).

New York City – Charter and Administrative Code and the Rules of the City of New York.

Of course, if you have any questions about New York State or the City of New York Business Laws, you should speak with a New York Small Business Lawyer (or corporate attorney).

As a corporate attorney, I am frequently asked for a checklist of items to consider when starting a business.  Here is a “10,000 foot” overview of what needs to get done in starting or buying a large or small business in New York:

• Choose Your Business Structure

What type of structure is right for your small business?  In New York, your choices are: sole proprietor, partnership, corporation or limited liability company.  You should speak with your accountant/financial advisor to see what structure is the best for your tax situation and speak with an attorney to discuss various structure options.  Also, you will want a structure that is flexible as your business grows. For example, if you hope to attract investors (or even become a publicly traded company in the future) a limited liability company or corporation might be a good structure.  Of course, forming a New York limited liability company has the added expense of publishing the formation of your LLC in two newspapers (see my other post about LLC vs Corporation).  Keep in mind, a sole proprietorship does not offer the limited liability protection of an LLC or corporation.

You should formalize your structure with a written agreement signed by the business principals and by filing the proper documents with the Secretary of State of New York.  Please note, if you are doing business with other people without the proper written agreement in place, you may be in a de-facto partnership without knowing it (e.g., your partner could enter into agreements and monetary obligations in the name of the partnership and all partners would be liable for those obligations).

• Choose a Name for your Business

New York has laws regarding certain naming conventions that must be used.

Corporations must contain the word “corporation”, “incorporated” or “limited”, or an abbreviation of one of such words (click through to Laws of New York (bottom of page) to see Section 301 of New York Business Corporation Law (BCS)).  Also, the name of the corporation cannot be the same as any other New York corporation, limited liability company or limited partnership.  Search the New York Corporation and Business Entity Database for existing business and not for profit corporations, limited partnerships, limited liability companies and limited liability partnerships, as well as other miscellaneous businesses.

New York regulates or prohibits the use of certain terms in corporate names (or only allows them after approval).  For example, certain phrases must have a legend so not to be confused with a   “governmental agency”.  You cannot use certain terms like “state police”, “urban development”, “chamber of commerce”, “state trooper”, “urban relocation”, “community renewal”, and “tenant relocation”, among other names.  Also, certain names have additional requirements or approvals like “bank”, “guaranty”, “insurance”, “trust”, “doctor”, and “lawyer”.  (click through to Laws of New York (bottom of page) to see Sections 301 and 302 of New York Business Corporation Law (BCS)).

Caution should be used to not name your small business company in a way that might be confusingly similar to an existing trademark.  You should also consider a corporate name that is available as a domain name (however, that may mot be as important if you have a domain that has brand appeal).  If your company will be doing interstate business (across state lines), may want to protect your corporate name with a trademark or trade name under federal trademark laws (check out the U.S. Patent and Trademark Office’s FAQs) or state trademark and trade name laws.

• Form Your Large or Small Business.  Once you have selected the name of the company, you need to form the business by filing the proper documentation with the New York Department of State.  See the Division of Corporations website for FAQs regarding the different entity requirements or engage a New York Business Lawyer as your corporate attorney.

• Enter Into a Written Agreement with your Fellow Business Owners.  If you are going into business with other people, you need to enter into a written agreement with them setting forth the rights and responsibilities of the owners — this generally 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).

• Get a Tax Identification Number and Learn about your Tax Obligations.  Speak to your financial advisor or accountant, but generally it is a good idea to have a separate federal tax IS (or EIN) even if you are a single-member LLC (select a “disregarded entity”).  Here is the link to the IRS’ How to Apply for an EIN (with separate instructions for Corporations, International Businesses, Partnerships, and Small Business/Self-Employed).  Your applying by telephone is sometimes easier than via the online method.

As a New York small business owner, you need to understand your New York State tax responsibilities (Recordkeeping, Hiring employees, Selling products or services, and other New York State taxes).  The New York State Department of Taxation and Finance site has a lot of information for those starting or buying a business.  Also, you should read the IRS’ “Publication 583 Starting a Business and Keeping Records” is available as a pdf download or viewable on the IRS web site.

• Open a Business Bank Account.  Once you have your federal tax ID, you should open bank account(s) in the name of the business.  You should consider a bank with “commercial” services — in my experience its better to avoid “retail” banks that don’t have a lot of experience in sophisticate business needs.  Generally the bank will need to see your business entity formation documents (including banking resolutions).  The bank can provide you with generic banking resolutions, but if you are incorporated, you should include these in your corporate by-laws (with specific banking resolutions and officer powers).  If you have questions, you can call a New York Small Business Attorney.

• Get the Necessary Licenses and Permits Necessary for your Business.  Go to the New York State’s Online Permit Assistance and Licensing website to see what permits and licenses are required and call a New York Small Business Attorney.

Have a New York Small Business Lawyer review and/or draft and negotiate the important business agreements, including, among other things, the business owners’ agreement (operating agreement, shareholder agreement and corporate bylaws, and/or partnership agreement, as the case may be), office and other commercial space leases, contracts with your customers and vendors, web site development and hosting agreements and any technology/intellectual property licenses.

Of course, it is best to discuss the above New York Small Business Startup Checklist with a New York Small Business Attorney (or corporate attorney).

Welcome to our New York business law blog with free legal information for large and small businesses, start-ups and entrepreneurs in New York written by New York City business attorney, Craig Delsack.  I am a New York Business Attorney helping businesses and business owners with buying and selling businesses, limited liability companies, incorporations, mergers, business consolidations, non-disclosure agreements, buy-sell agreements, shareholder agreements, partnership agreements, operating agreements, joint venture agreements, business contracts, and raising capital.  If you can’t find your answer on our business law blog, you can visit our site at www.nyccounsel.com or CALL US at (212) 688-8944 for a free initial telephone consultation.