Starting an S-Corp in New York can be great for your small business. New York state has a strong economy, large cities, and a large workforce, deciding to start an S-Corp is easy.
Even though starting an S-Corp in New York may be the right decision for you, there are things you should keep in mind. There are several rules and steps to know first, and there are a few fees as well. Here are the ten steps to start an S-Corp in New York.
What are the benefits of an S Corporation in New York?
There are several benefits to start an S-Corp in New York. Some of the most critical include:
- S-Corp avoids double taxation because it’s a pass-through entity.
- S-Corp owners can write off start-up losses.
- S-Corp profits and losses can pass onto shareholders.
- S-Corp provides liability protection, like LLCs.
How to Start an S-Corp in New York
There are ten steps you’ll complete to start an S-Corp in New York.
Step 1: Choose a Business Name
The first step to start an S-Corp in New York is to choose a business name. In New York, your S-Corp business name must be distinguishable from other names.
There are other requirements for business names in the state. First, businesses that are corporations must have the word Corporation in their name. There are several phrases and words which are prohibited.
You have the option of sending a written inquiry to the Division of Corporations for your name availability. If you send a written inquiry, it will need to state that you wish to determine the availability of a name. You’ll also list the name or the names you want to be searched.
There’s a fee of $5 per name submitted to search for the records for the availability of names.
Finding a unique brand name and (normal-looking) domain to go with it can be a bit of a time-sink for new business owners. This free tool from Business Name Zone generates name and domain combos for you based on your input – and it only takes a few minutes.
Step 2: Obtain EIN
Next, you should obtain an EIN. There are three ways to apply for an EIN: by fax, by mail, or online. It is free to apply and receive an EIN no matter which option you choose, but there are differences in how long it will take to receive your EIN:
- Applying by fax may take up to four business days to receive your EIN if you provide a fax number.
- Applying by mail may take up to four weeks to receive your EIN.
- Applying online is the fastest option, with your EIN being issued immediately. However, you’ll need to complete the EIN application in one sitting.
Step 3: Certificate of Incorporation
Third, you’ll complete and file a Certificate of Incorporation to send to the Department of State. You’ll provide your:
- Corporation Name
- County location
- Stock structure
- Designation for Service of Process
You have the option to file a Certificate of Incorporation by mail or online. Whether you file by mail or online, there’s a fee of $125 to file the Certificate of Incorporation.
Step 4: Registered Agent
Fourth, you’ll complete the registered agent requirement. Registered agents will act as a contact for your S-Corporation, and it will accept documents on your S-Corp’s behalf.
In New York, the state will operate as your registered agent. However, you can choose to work with a registered agent service.
Step 5: Corporate Bylaws
The fifth step to start an S-Corp in New York is to create your corporate bylaws. These are rules your S-Corp owners will develop, outlining the rules which your S-Corp will follow.
It may be helpful to include the following in your S-Corp’s corporate bylaws:
- Board of directors (duties, number of members, and terms of service)
- S-Corp information (address, corporation fiscal year, name, principal place of business)
- Shareholder meeting information (annual meeting procedures, meeting notifications, and voting procedures)
- Stock information (number and type of shares and stock classes)
Step 6: Directors and Meeting Requirements
The sixth step to start an S-Corp in New York is to meet the director and meeting requirements.
S-Corp shareholders will elect a board of directors to represent their interests as the S-Corp develops. Directors can also elect officers who’ll manage the S-Corp’s operations.
Shareholders must have meetings, and the S-Corp will track their minutes. There’s also a requirement for S-Corps to have annual meetings in New York State.
Step 7: Stock Requirements
Next, you’ll have to choose a single class of stock. S-Corps can only have one class of stock, and it can only issue one class of stock to shareholders.
Step 8: Biennial Statement
Eighth, you’ll file a Biennial Statement with the Department of State. The Biennial Statement will provide:
- The name and business address of its chief executive officer.
- The street address of its principal executive office.
- The address where the New York Secretary of State will send copies of process accepted on behalf of the corporation.
- The number of directors which constitute the board and how many directors of the board are women.
You have the option to file Biennial Statements online. If you file online, you’ll need your entity name and your S-Corp’s DOS ID number. There’s a filing fee of $9 for the Biennial Statement.
Step 9: Form 2553
- Election Information
- Fiscal Tax Year
- Qualified Subchapter S Trust (QSST) Election
- Late Corporate Classification Election Representations
The QSST section of Form 2553 applies if you’re making a QSST election, and you’ll only complete the late corporate classification if you’re filing the form late.
There’s no option to submit Form 2553 online, but you have the option to fax or mail Form 2553.
Step 10: Form CT-6
The last step to start an S-Corp in New York is to complete Form CT-6. This form will allow your federal S-Corporation to be treated as a New York S Corporation. To complete Form CT-6, you’ll need:
- Corporation name
- Date business began in New York State
- Date of incorporation
- DBA or trade name (if any)
- Election year to be treated as S-Corporation
- The legal name of a corporation
- Mailing address information (including city, state, and ZIP code)
- S-Corp EIN
- State of incorporation
- Telephone number
You’ll also provide:
- Number of shareholders who are nonresidents of New York State
- The month and date the tax year ends
- The tax year when the corporation will be treated as an S-Corp
- Total number of shareholders
Second, you’ll provide shareholder information.
- In section A, you’ll provide each shareholder’s address, name, and zip code.
- In section B, you’ll provide each shareholder’s Social Security Number
- In section C, you’ll provide stock owned or percentage of ownership information. You’ll include the number of shares or percentage of ownership and the date acquired within this part.
- In section D, you’ll provide each shareholder’s signature.
Third, an authorized person will print their name and provide a signature. They’ll also provide their e-mail address, telephone number, and date. Finally, you’ll fax the form to the Department of Taxation and Finance.
Work With Professionals To Start Your S-Corp In New York
Starting an S-Corp in New York is a great way to operate your business. You’ll have an opportunity to grow your business quickly, with few fees and liability protection.
When it’s time to start an S-Corp in New York, you’ll want to work with the pros. Work with 1-800Accountant to form your S-Corp in New York.
This post is to be used for informational purposes only and does not constitute legal, business, or tax advice. Each person should consult his or her own attorney, business advisor, or tax advisor with respect to matters referenced in this post. 1-800Accountant assumes no liability for actions taken in reliance upon the information contained herein.