Business formation and ownership agreements in New York

Choosing and forming the right entity

The right structure depends on who owns the business, how profits will be paid out, whether outside investors are likely, and—for licensed professionals—what the licensing rules allow. Auxo Law walks through those questions, coordinates with your accountant on tax elections, and handles the filings.

Formation is also the cheapest time to agree on the hard questions between co-owners: who decides what, how much each person contributes, what happens if someone wants out, dies, or stops working in the business. An operating or shareholder agreement answers those before they become disputes.

Typical scope

• Entity selection: LLC, PLLC, or corporation
• Articles of organization or certificate of incorporation
• Managing the LLC publication process
• Operating agreements and shareholder agreements
• Buy-sell provisions for co-owners
• Coordination with the client's accountant on tax elections

New York formation requirements

New York has a few formation requirements that most states do not:

• LLC publication. Within 120 days after the articles of organization take effect, a New York LLC must publish a notice once a week for six weeks in two newspapers designated by the county clerk, then file a certificate of publication. An LLC that misses the deadline loses its authority to carry on business until it complies. Publication costs vary widely by county. Source: N.Y. LLC Law § 206.
• Written operating agreement. Members of a New York LLC must adopt a written operating agreement, before, at, or within 90 days after filing the articles of organization. Source: N.Y. LLC Law § 417.
• Professional entities. Licensed professionals—such as accountants, architects, engineers, and health care providers—generally must use a PLLC or professional corporation, and every owner must be licensed in the profession. Some professions also need a certificate from the licensing authority before filing. Source: N.Y. LLC Law Article XII (§ 1201 et seq.).
• Biennial statements. New York LLCs and corporations file a biennial statement with the Department of State every two years to keep their address information current. Source: N.Y. Department of State — Division of Corporations.

New York corporations can also use a shareholders' agreement to restrict the board or change default governance rules, which is useful for closely held companies with a few owners.

This summary is general information, not legal advice for your situation, and the law changes. Ask about how these rules apply to your business.

How formation works remotely

Formation is almost entirely paperwork, so it works well remotely. After an initial call, Chris prepares the filings and agreement drafts, reviews them with you by video, and collects signatures electronically. New York filings are made online with the Department of State.

You leave with filed formation documents, a signed ownership agreement, and a short list of next steps such as the EIN, bank account, and publication.

See the New York business attorney overview or read how virtual counsel works step by step.