Starting a Business in New York: Procedures, Pros and Cons, and Necessary Items

Choosing the Business Entity

Starting a business in the U.S. begins with determining the business entity. Here are the main options:

Sole Proprietorship:

• Pros: Easy to start, suitable for the early stages of independence.

• Cons: Personal and business assets are integrated, limited legal protection.

Limited Liability Company (LLC):

• Pros: Less formal than a corporation, limited personal liability.

• Cons: May require newspaper advertising post-formation, incurring additional costs.

S-Corporation:

• Pros: Double taxation exemption, but restrictions on foreign shareholders.

• Cons: Constraints require careful consideration.

C-Corporation:

• Pros: Easily attracts investments, enhances credibility as a large corporation.

• Cons: Stringent regulations, taxation on corporate income, and dividends.

Business Registration (Company Formation) Procedure

1. Determining the Company Name:

• Choose a unique name, apply for Doing Business As (DBA) if necessary.

2. Selection of Registered Agent:

• The Registered Agent acts as a liaison between the state government and the company.

3. Company Registration:

• Submit the Certificate of Incorporation for legal registration, with a registration fee of $125.

4. Creating Bylaws and the First Board of Directors Meeting:

• Hold the first board meeting, establish bylaws defining the company's basic policies.

5. Obtaining an Employer Identification Number (EIN):

• Acquire an EIN from the IRS for identification in banking and tax-related activities.

Other Necessary Procedures

6. Opening a Bank Account:

• Requires EIN and Certificate of Incorporation.

7. Employee Registration & Sales Tax Registration:

• Register for Unemployment Insurance, Employee Withholding Tax, and obtain a Sales Tax Certificate of Authority if applicable.

8. Implementation of an Accounting System:

• Introduce an efficient accounting system (e.g., QuickBooks) before commencing operations.

9. Obtaining Business Licenses:

• Confirm and obtain the necessary licenses based on the business type and location.

10. Obtaining Insurance:

• Acquire essential insurance, such as Worker’s Compensation and General Liability.

11. Compliance with Regulations:

• Adhere to U.S. employment and tax laws when hiring employees.

Pros:

1. Legal Protection: C Corporation provides legal independence, limiting personal liability.

2. Shareholder Protection: Shareholders are legally protected, and risks are limited.

3. Capital Access: Issuing stocks makes fundraising easier.

Cons:

1. Complex Procedures: Formation and legal documentation can be intricate.

2. Taxation Constraints: Profits are subject to corporate tax, and dividends are taxed again.

3. Costs: Establishing and maintaining entail certain expenses.

Necessary Items:

1. Formation Costs: Fees for procedures like Certificate of Incorporation application.

2. Corporate Bank Account: Requires EIN and proof of incorporation.

3. Accounting System: For efficient financial management (e.g., QuickBooks).

4. Business Licenses: Depending on industry and location.

5. Insurance: Minimum required coverage.

Conclusion:

Entrepreneurial ventures in New York involve varying procedures and considerations based on business scale and form. The legal procedures and risk levels differ significantly between large corporations and small businesses. Therefore, it's crucial to choose an appropriate entity that aligns with the nature of your business. By following the steps and considering important factors, you can take the first steps towards success.