Form An S Corp In Ny In 7 Easy Steps

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Forming an S corporation in New York can be a strategic move for businesses looking to minimize taxes and establish a formal structure. As the state with the highest number of Fortune 500 companies, New York provides a competitive environment for entrepreneurs to thrive. However, navigating the process of forming an S corp can be daunting, especially for first-time business owners. In this article, we will guide you through the 7 easy steps to form an S corp in NY.

Step 1: Choose a Business Name

The first step in forming an S corp in NY is to choose a unique business name that complies with state regulations. Your business name must include the phrase "Corporation," "Inc.," "Limited," or an abbreviation thereof. It's essential to ensure that your chosen name is not already in use by searching the New York State Department of State's database.

You can reserve your business name for 60 days by filing a Name Reservation form with the Department of State. This will give you time to complete the incorporation process without risking someone else taking your desired name.

Tips for Choosing a Business Name:

• Make sure your name is memorable and easy to spell.
• Avoid names that are too similar to existing businesses.
• Consider using a name that reflects your brand identity.

Step 2: File Articles of Incorporation

To form an S corp in NY, you must file Articles of Incorporation with the Department of State. This document will outline the basic structure of your corporation, including its name, purpose, and address. You can file online or by mail, and the filing fee is currently $125.

Your Articles of Incorporation should include the following information:

• Corporation name and address
• Purpose of the corporation
• Number of authorized shares
• Name and address of the incorporator

What to Expect After Filing:

• You will receive a certificate of incorporation from the Department of State.
• Your corporation will be officially registered with the state.
• You can begin conducting business and obtaining necessary licenses and permits.

Step 3: Obtain an EIN

An Employer Identification Number (EIN) is a unique identifier assigned to your corporation by the IRS. You will need an EIN to open a business bank account, file taxes, and hire employees. You can apply for an EIN online through the IRS website, and it's usually issued immediately.

Why Do I Need an EIN?

• To open a business bank account
• To file taxes and obtain tax credits
• To hire employees and report payroll taxes
• To comply with state and federal regulations

Step 4: Create a Corporate Charter

A corporate charter, also known as a certificate of incorporation, is a document that outlines the basic structure and purpose of your corporation. This document should include the following information:

• Corporation name and address
• Purpose of the corporation
• Number of authorized shares
• Name and address of the incorporator

Your corporate charter should be kept with your business records and may be requested by banks, investors, or government agencies.

What's the Difference Between a Corporate Charter and Articles of Incorporation?

• A corporate charter is a document that outlines the basic structure and purpose of your corporation.
• Articles of incorporation are a document that is filed with the state to officially register your corporation.

Step 5: Hold an Organizational Meeting

An organizational meeting is a meeting of the incorporators and initial board of directors to establish the corporation's bylaws, elect officers, and authorize the issuance of stock. This meeting is usually held shortly after filing the Articles of Incorporation.

What Happens at an Organizational Meeting?

• The incorporators and initial board of directors are introduced.
• The corporation's bylaws are adopted.
• Officers are elected, such as the CEO and CFO.
• Stock is authorized and issued to shareholders.

Step 6: Obtain Business Licenses and Permits

To operate a business in New York, you will need to obtain necessary licenses and permits. These may include:

• Sales tax permit
• Employer identification number (EIN)
• Business license from the city or county
• Health department permit (if applicable)

Why Do I Need Business Licenses and Permits?

• To comply with state and local regulations
• To operate a legitimate business
• To protect public health and safety

Step 7: File for S Corp Status

To elect S corp status, you will need to file Form 2553 with the IRS. This form must be filed within 2 months and 15 days of the beginning of the tax year in which you want to be treated as an S corp.

What Are the Benefits of S Corp Status?

• Pass-through taxation, which avoids double taxation
• Limited liability protection for shareholders
• Ability to issue stock and attract investors

By following these 7 easy steps, you can form an S corp in NY and establish a solid foundation for your business. Remember to consult with an attorney or accountant to ensure compliance with all state and federal regulations.