New York Business Lawyer » Business Tax

What are my Employer Obligations for Employees in New York?

Craig Delsack — Thu, 22 Apr 2010 20:31:56 +0000

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 is a New York Limited Liability Company (LLC) Taxed?

Craig Delsack — Thu, 01 Apr 2010 16:55:06 +0000

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).

Forming or Buying a Small Business in New York? Links To Start and Grow Your Small Business.

Craig Delsack — Sun, 07 Mar 2010 23:02:32 +0000

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.

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.

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.

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.
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.

Why Choose a Limited Liability Company (LLC) over a Corporation For Your Small Business?

Craig Delsack — Fri, 05 Mar 2010 20:38:54 +0000

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.

What are the benefits of having an LLC?

Craig Delsack — Tue, 02 Feb 2010 18:28:07 +0000

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.

Starting an LLC or a Business in New York? Here is my Business Startup Checklist

Craig Delsack — Fri, 08 Jan 2010 17:52:40 +0000

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.