Starting a Business in New York: A Legal Guide

Starting a business in New York involves a series of legal and regulatory steps that vary depending on the type of business, its structure, and where it operates. Getting these steps right from the beginning prevents problems that are more expensive and disruptive to fix later: entity disputes between co-founders, personal liability for business debts, tax penalties for missed filings, and regulatory violations that can shut down operations. This guide covers the key legal steps for starting a business in New York, from entity selection through permits and ongoing compliance.

Choosing Your Business Structure

The first and most important decision is the type of business entity. The structure you choose affects your personal liability, your tax obligations, your ability to raise capital, and how the business is managed. The most common structures in New York are sole proprietorship, limited liability company (LLC), corporation (C-corp or S-corp), and partnership (general, limited, or limited liability). For most small to mid-size businesses, an LLC provides the best combination of liability protection, tax flexibility, and operational simplicity. For businesses seeking venture capital or planning to go public, a C-corporation may be more appropriate. For a detailed comparison, see our LLC vs corporation guide.

Forming an LLC in New York

Forming an LLC in New York requires filing Articles of Organization with the New York Department of State. As of early 2026, the filing fee is $200. The articles must include the LLC's name (which must include "LLC," "L.L.C.," or "Limited Liability Company" and must be distinguishable from other entities on file), the county in which the LLC's office is located, and the name and address of the LLC's registered agent (the person or entity designated to receive legal papers on the LLC's behalf). After filing, the LLC must comply with the publication requirement: publishing notice of formation in two newspapers (one daily and one weekly) in the county where the LLC is located for six consecutive weeks. For a complete walkthrough of this process, see our LLC publication requirement guide.

New York requires every LLC to adopt a written operating agreement, regardless of whether the LLC has one member or multiple members. The operating agreement governs the members' rights and obligations, profit and loss allocation, management structure, and procedures for admitting or removing members. Without one, the default rules of the New York Limited Liability Company Law apply, which may not reflect the members' intentions. For detailed guidance, see our operating agreement guide.

Forming a Corporation in New York

Forming a corporation requires filing a Certificate of Incorporation with the Department of State. As of early 2026, the filing fee is $125. The certificate must include the corporation's name, the number of authorized shares, the rights and preferences of each class of shares (if there are multiple classes), the county of the corporation's office, and the registered agent designation. After incorporation, the corporation must hold an organizational meeting at which the board of directors is elected, bylaws are adopted, officers are appointed, and shares are issued. If the corporation will have multiple shareholders, a shareholders' agreement should be put in place to govern the relationship between owners. See our shareholder agreement guide for details.

Obtaining an EIN and Opening a Business Bank Account

Every business entity needs an Employer Identification Number (EIN) from the IRS. The EIN is used for tax filings, payroll, and opening a business bank account. You can obtain an EIN online through the IRS website at no cost. Once you have the EIN, open a dedicated business bank account. Keeping business finances separate from personal finances is essential for maintaining the liability protection that your LLC or corporation provides. If you commingle personal and business funds, a court may "pierce the corporate veil" and hold you personally liable for the business's debts.

Business Licenses and Permits

New York City and the surrounding municipalities require various licenses and permits depending on the nature of the business. Common requirements include a general business certificate (DBA filing if operating under a name other than the entity's legal name), a sales tax certificate of authority (required if you sell taxable goods or services, obtained from the New York State Department of Taxation and Finance), industry-specific licenses (food service establishments need a Department of Health permit, contractors need a license from the Department of Consumer and Worker Protection, healthcare businesses need state licensure), a commercial use permit (if your business operates from a location that requires zoning approval), and a home occupation permit (if you are operating from a residential address in an area with zoning restrictions). The specific requirements vary by industry, location, and business activity. Your attorney can identify the licenses and permits your business needs based on your specific operations.

Registering for State and City Taxes

Depending on your business activities, you may need to register for several state and city taxes. New York State sales tax registration is required if you sell taxable goods or services. The New York City Unincorporated Business Tax (UBT) applies to sole proprietors, partnerships, and LLCs operating in New York City (the rate is 4% of taxable income, with a deduction available). The New York City Commercial Rent Tax applies to businesses that rent commercial space in Manhattan south of 96th Street and pay annual rent exceeding $250,000. Your accountant and attorney should advise on which taxes apply to your business and ensure you are registered and filing on time from the start.

Protecting Your Brand

Before investing in marketing and branding, protect your business name and logo. Search the USPTO database, the New York Department of State entity database, and common law sources (domain names, social media, business directories) to ensure your name does not conflict with an existing business. File a federal trademark application with the USPTO to secure nationwide protection. Register your domain name and secure your social media handles. For a comprehensive trademark guide, see our trademark basics article and our trademark registration practice page.

Employment and Contractor Compliance

If your business will have employees, you must register for New York State unemployment insurance and workers' compensation insurance before the first employee starts. You must withhold federal and state income taxes, Social Security, and Medicare from employee wages and remit them to the appropriate agencies. New York also requires paid family leave contributions and disability insurance coverage. If you engage independent contractors rather than employees, ensure the classification is correct to avoid misclassification penalties. For guidance, see our independent contractor vs employee guide.

Insurance for New Businesses

Appropriate insurance coverage protects your business from risks that entity formation alone cannot address. Common types of business insurance include general liability insurance (covering bodily injury, property damage, and personal injury claims), professional liability insurance (errors and omissions coverage for businesses that provide professional services or advice), commercial property insurance (covering business equipment, inventory, and office contents), workers' compensation insurance (required in New York if you have employees), and commercial auto insurance (if the business owns or leases vehicles). Some industries require specific types of coverage: healthcare businesses need malpractice insurance, contractors need surety bonds, and businesses that host events may need event-specific liability coverage. Your insurance broker and attorney should work together to identify the coverage your business needs based on your specific operations and risk profile.

Contracts Every Business Needs

From day one, your business should have a set of standard contracts tailored to your operations. At minimum, these include a client or customer agreement (defining the scope of your services, payment terms, and liability limitations), a contractor agreement (for anyone who performs work for your business, with clear intellectual property assignment provisions), a non-disclosure agreement (for protecting confidential business information shared with potential partners, investors, or collaborators), terms of service and privacy policy (if you operate a website or collect customer data), and an employment agreement or offer letter template (if you hire employees). Using contracts consistently from the start establishes professional standards and prevents disputes that arise from verbal agreements and unclear expectations. For more on commercial contracts, see our commercial contracts practice page.

Ongoing Compliance

After formation, New York businesses must maintain ongoing compliance with state filing and tax requirements. LLCs must file a Biennial Statement with the Department of State every two years (as of early 2026, the fee is $9). Corporations must pay an annual franchise tax. All businesses must file annual tax returns (federal and state, and NYC if applicable). Failure to comply with these requirements can result in penalties, loss of good standing, and, for corporations, dissolution by proclamation. For more on what happens when compliance lapses, see our business dissolution guide.

Starting a business is exciting, and the legal requirements should not be an obstacle. They are the foundation that allows your business to operate with confidence, protect your personal assets, and grow sustainably. For more guidance, visit our business formations practice page.

Common Mistakes When Starting a Business

The most common legal mistakes new business owners make include choosing the wrong entity structure (operating as a sole proprietor when an LLC would provide liability protection), failing to draft an operating agreement or shareholder agreement (leaving the default rules of state law to govern the owners' relationship), commingling personal and business finances (undermining the liability protection the entity provides), not registering for required taxes (resulting in penalties and back tax obligations), using contracts found online without customization (which may not comply with New York law or adequately protect the business), not protecting intellectual property (failing to register trademarks, not using contracts with IP assignment provisions for contractors), and not carrying adequate insurance (exposing the business and its owners to risks that could have been transferred to an insurer). Each of these mistakes is preventable with proper planning and professional guidance. The cost of setting up a business correctly from the start is a fraction of the cost of fixing problems that result from cutting corners. An experienced business attorney can identify potential issues before they become costly disputes and ensure your business launches on a solid legal foundation.

For entrepreneurs who are also involved in real estate, entertainment, or healthcare, additional industry-specific requirements apply. See our practice area pages for real estate, entertainment law, and healthcare law for industry-specific guidance on starting and operating a business in those fields.

Frequently Asked Questions