New York is one of the most vibrant cities of the United States of America. Foreign investors may set up a corporation to start their new business in New York.
A corporation is a type of business structure that protects your personal assets from liability for your business’s debts and obligations. It also helps protect you personally if someone sues one of your business partners or employees. To fully realize the benefits of incorporating, you will want to consider your company’s capital, needs, profits, management, and ownership structure to make sure forming a corporation is the best business structure for you.
Type of New York Corporations
The best type of corporation for your business relies on many factors. Here are some different types of corporations you can choose from when forming your company in New York :
- C corporations- C corps are owned by stockholders, they have a directorate, and hold annual meetings.
- S corporation- Contrary to a C corp, an S corp can pass-through income to its shareholders for tax purposes. S corps are limited to 100 shareholders.
- Professional corporations- These are generally for corporations that require specific licensed individuals.
- Nonprofit corporations- These use profits to improve the company’s mission instead of distributing them to shareholders.
You should consider your business’s structure, objectives, and financial situation before selecting the appropriate corporation structure for you.
Steps To forming A corporation in New York
Choose a name for your business
The first step to forming your corporation is determining a name for your business. Choose a name that is notable, unique, and accurately represents your business. When picking out a name, remember to conduct a name search on the New York Department of State business entity database to find out whether the name you choose is available.
There are a few rules that New York Corporations must follow in order to register a name.
- First of all, the name you choose must be different and not similar to the name of any other New York business. This is to prevent fraud or misrepresentation.
- New York corporations are not required to include a corporate indicator along with the name of their business.
- Your name can also not contain restricted words such as Bank, University, or Union, unless you obtain permission to do so from the state of New York.
Designate a Registered Agent in New York
Most states impose that you designate a registered agent for your business, and New York is no exception. A registered agent acts as the state’s means to communicate with a business. A registered agent is responsible for obtaining legal and official documents related to the business. A registered agent may be an individual or third-party service that agrees to accept legal papers on the corporation’s behalf. The agent must have a physical street address in New York.
File Your Certificate of Incorporation in New York
The state of New York needs you to file the Certificate of Incorporation to order to form a corporation. The Certificate of Incorporation is a simple one-page form that contains all of the essential information required to register your business. Once your Certificate of Incorporation has been accepted by the New York Department of State’s office, your business will be officially formed.
Create your Corporate Bylaws
Corporate bylaws are a thorough set of rules agreed upon and adopted by the board of directors after a corporation is established, these corporate bylaws define the internal management structure of the corporation. They are generally drafted by the corporation’s founder or directors.
The state of New York does not require a corporation to create bylaws upon approval of the Certificate of incorporation, but it is highly recommended. Bylaws allow a business to retain consistency in the way it operates, and communicate organizational rules to help avoid conflicts and disputes.
Appoint your Corporate Directors
The board of directors of a corporation are generally elected by the shareholders. However, for a new business, the individual who signed the Certificate of incorporation will often appoint the initial directors if there are no initial directors named in the certificate of incorporation. This is done by creating the Statement of Incorporator which will list the names and addresses of the initial directors of the business. The statement of incorporator is then signed by all of the incorporators, which passes all elements of management over to the initial directors.
Hold the First Meeting of the Board of Directors
The first meeting of the board of directors is a significant time in the life cycle of a corporation. During this meeting, the initial directors of the business will adopt the corporate bylaws, establish the fiscal year, and appoint corporate officers.
The first meeting, and all future meetings of the board of directors, must be recorded in corporate minutes. Minutes are documents that list what was discussed and any decisions the business makes during meetings. They are reserved with the corporate records. Corporate minutes are required for all New York corporations by law.
Authorize the issuance of shares of stock
Stock is a representation of ownership in a corporation. When your shareholders purchase stock, they are buying a small piece of your business. Although it’s not legally imposed, it is common that most corporations will issue paper stock certificates to their shareholders.
Obtain your New York business licenses and permits
In New York, all businesses are mandated to file for a general business license. If you plan on managing your business in multiple cities, you will need to apply for a business license in each location. Some additional permits may be required in addition to a general business license, which may need to be filed with the state.
You can find out about the particular licenses relevant to your business by checking with the New York city offices where you will conduct business.
Get an EIN number for your business
An EIN, also referred to as a Federal Tax ID, is a nine-digit number that is granted by the IRS and used to uniquely identify your business for tax purposes. It is essential to wait until the Corporation has been approved by the state before applying for an EIN. For that reason, filing for an EIN is one of the last things to do when you are setting up a business.
Open a Corporate Bank Account
An important step in forming a corporation is opening a corporate bank account. This account will be separate from the bank accounts of its owners, which helps protect your personal funds from any business liabilities. Damalion helps to set up business bank account for your New York corporation.
At Damalion, our experts can and will help you in opening your corporation in New York City, contact us now to get started.
