Legal Information for Large and Small Business Owners
Posts tagged Business Links
What are my Employer Obligations for Employees in New York?
Apr 22nd
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).
How Do I Form a Limited Liability Company in New York?
Apr 14th
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.
What is a New York Professional Service Limited Liability Company (PLLC)?
Apr 11th
What is the difference between a NY PLLC vs. an LLC?
One or more professionals may form, or cause to be formed, a professional service limited liability company (PLLC) in New York for profit for the purpose of rendering the professional service or services that the professionals are authorized to practice. A PLLC is formed by filing Articles of Organization pursuant to Section 1203 of the NY Limited Liability Company Law.
“Profession,” as defined in Section 1201(b) of the New York Limited Liability Company Law, includes any practice as an attorney and counselor-at-law, or as a licensed physician, and those occupations designated in Title Eight of the Education Law. Title Eight of the New York Education Law includes the following professions: acupuncture, architecture, athletic training, audiology, certified shorthand reporting, chiropractic, dentistry, dietetics and nutrition, engineering, interior design, land surveying, landscape architecture, massage therapy, medical physics, medicine, midwifery, nursing, occupational therapy, ophthalmic dispensing, optometry, pharmacy, physical therapy, podiatry, psychology, public accountancy, respiratory therapy, social work, speech-language pathology and veterinary medicine.
Of course, if you have any questions about a Professional Service Limited Liability Company in New York, it is best to discuss them with a New York Small Business Lawyer (or company lawyer).
Are There Any Special Responsibilities or Formalities Associated With Forming a New York Limited Liability Company?
Apr 9th
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).
How is a New York Limited Liability Company (LLC) Taxed?
Apr 1st
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).
How Do I Convert a Partnership, LLC or Other Business Entity into a Corporation?
Mar 19th
(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.
How Do I Convert a Partnership, Corporation or Other Entity into an LLC?
Mar 16th
(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.
Forming or Buying a Small Business in New York? Links To Start and Grow Your Small Business.
Mar 7th
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Is the name that you have in mind for your startup company available to use? Is the New York company with which you are doing business in good standing? 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.
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Need to find out whether shares of stock or personal assets of a person or company have liens filed against it? Search the New York Department of State UCC Lien Search Database for Financing Statements and Financing Statement Amendments filed under Article 9 and Revised Article 9 of the Uniform Commercial Code (UCC) and Notices of Federal Tax Liens and notices and certificates affecting such liens filed under Article 10-A of the Lien Law.
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Need to find out if tax warrants have been filed in New York? The New York State Department of Taxation and Finance files tax warrants in county clerks’ offices throughout the state. Search the New York State Department of Taxation and Finance Database for tax warrant-related notices.
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Need to know about the various taxes applicable to New York large and small businesses and individuals? The New York State Department of Taxation and Finance site includes information on sales and use taxes, withholding taxes, corporation taxes, and other taxes.
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Did you know the State of New York LOVES small businesses? Here is the New York State NY♥Small Business site with information on starting or growing your small business in New York. It has links to local county resources, information on industry specific tax and financial incentives, and ways in which small businesses can apply for grants, loans, tax incentives, rebates on energy bills and other financing options.
Of course, you should contact a licensed New York Small Business Lawyer if you have any questions about anything on the websites mentioned in this article or about forming, buying or selling a large or small business in New York.
Links to New York State and the City of New York Laws
Jan 26th
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).
Starting an LLC or a Business in New York? Here is my Business Startup Checklist
Jan 8th
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:
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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).
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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.
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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.
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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).
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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.
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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.
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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.
