10 Steps to Start an S-Corp in New York

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10 Steps to Start an S-Corp in New York

Starting an S-Corp in New York can offer a range of benefits for small businesses. With its vibrant economy, thriving metropolitan areas, and vast workforce, New York State provides a conducive environment for businesses to thrive. However, before starting the process, it's essential to be aware of the various rules, steps, and fees involved in forming a such business entity. This article presents 10 steps that will help you establish an S-Corp in New York successfully.

What are the Benefits of an S-Corp in New York?

S-Corps have numerous benefits for small businesses in New York. Firstly, they are easy to set up, making them a preferred option for most entrepreneurs. S-Corps are perpetual entities and avoid double taxation since they are pass-through entities. S-Corp owners can write off start-up losses, while profits and losses can pass onto the shareholders. Additionally, an S-Corp provides liability protection, similar to an LLC.

How to Start an S-Corp in New York?

Step 1: Choose a Business Name

The first step in starting an S-Corp in New York is to choose a unique business name. The name should be distinguishable from other business names in New York, and businesses that are corporations must have the word 'Corporation' in their name. It is also essential to be aware of the various phrases and words that are prohibited. You can send a written inquiry to the Division of Corporations to check name availability for a fee of $5 per name submitted.

Step 2: Obtain EIN

After choosing a business name, the next step is to obtain an Employer Identification Number (EIN). You can apply for an EIN by fax, mail, or online, and it is free. However, the time it takes to receive your EIN varies depending on the method of application. Applying online is the fastest option, with your EIN being issued immediately, while applying by mail may take up to four weeks.

Step 3: Certificate of Incorporation

The third step is to complete and file a Certificate of Incorporation with the New York Department of State. The Certificate of Incorporation should include your Corporation Name, Purposes, County location, Stock structure, and Designation for Service of Process. The Certificate of Incorporation can be filed online or by mail, and there's a fee of $125 for either option.

Step 4: Registered Agent

The fourth step is to appoint a registered agent, who will act as a contact for your S-Corporation and accept documents on its behalf. In New York, the state will serve as your registered agent, but you can also work with a registered agent service.

Step 5: Corporate Bylaws

The fifth step involves creating your corporate bylaws, which outline the rules your S-Corp will follow. Your New York S-Corp's corporate bylaws should include:

• Purpose of the corporation
• Board of Directors' duties
• S-Corp information
• Shareholder meeting information
• Stock information
• Management structure and amendment process.

Step 6: Directors and Meeting Requirements

The sixth step is to meet the director and meeting requirements. S-Corp shareholders will elect a board of directors to represent their interests as the corporation develops. Shareholders must hold meetings, and the S-Corp must track their minutes. Additionally, S-Corps must hold annual meetings in New York State.

Step 7: Stock Requirements

Next, you'll need to choose a single class of stock as S-Corps can only have one class of stock. The stock must be sold to shareholders at fair market value.

Step 8: Biennial Report

On the eighth, you will submit a Biennial Statement to the Department of State.

• The Biennial Statement will include the identity and company location of its chief executive officer.
• The street location of its main executive office; and
• The address to which the New York Secretary of State will deliver copies of the process accepted on its behalf.
• The number of directors on the board and the proportion of female directors on the board.
• Biennial Statements can be filed electronically. Make it a point to submit one every two years. You'll need your corporate name and your S-Corp's DOS ID number if you submit it online. The Biennial Statement has a submission charge of $9.

Step 9: Fill out Form 2553

One of the final stages requires completing Form 2553. This document enables a company to choose to become a New York S-company. Form 2553 is divided into four sections:

• Election Information
• Fiscal Tax Year
• Election of a Qualified Subchapter S Trust (QSST)
• Late Corporate Classification Election Representations

If you make a QSST choice, the QSST portion of Form 2553 applies, and you'll only finish the late corporate classification if you file the form late. While there is no choice but to send Form 2553 online, it is worth noting that you still have the option to fax or send it through postal mail.

Step 10: CT-6 Form

Form CT-6 is the final stage in forming an S-Corp in New York. This document will convert your federal S-Corporation into a New York S Corporation. You will need the following items to finish Form CT-6:

• Corporation name
• Beginning date of business in New York State
• Date of establishment
• DBA or brand name (if any)
• Election year to be regarded as a local S-Corporation
• A corporation's formal name
• Mailing location details (including city, state, and ZIP code)
• S-Corp EIN
• State of incorporation

In addition, when filing, you should include the following information: state the number of shareholders who are not residents of New York State; specify the month and date when the tax year concludes; and indicate the tax year when the New York company will be considered an S-Corp.

• Total shares held by owners

You'll also disclose stockholder details next.

Section A should list the location, name, and postal code of each shareholder, while Section B should list their Social Security number.

• You must include details about the property you own or your ownership stake in part C. In this section, you'll list the number of shares or the proportion of possession as well as the acquisition date.
• You must provide the signature of each shareholder in section D.

Looking to establish an S-Corp in New York? Collaborating with professionals can be immensely helpful. Operating as an S-Corp in New York offers several advantages. Firstly, it allows for rapid business expansion, as S-Corps can easily sell stocks to raise capital.

In addition, S-Corps typically face minimal fees and paperwork compared to other business structures. Furthermore, S-Corps provide liability protection for their shareholders, shielding them from personal financial responsibility for the company's debts or legal issues. Additionally, the tax structure of S-Corps allows for profits and losses to be passed through to shareholders, avoiding double taxation. Trust the expert's Bookkeeping Pro services to guide you through the process of starting your S-Corp in New York.

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