New York is undoubtedly one of the highly ranked places in the world for setting up a business. It shouldn’t come as a surprise that thousands of businesses are established every year in the state.
Read on to learn the steps for how to form a corporation in New York, plus some key considerations to be aware of if you are a global company looking to expand into this jurisdiction.
Steps to Form a Corporation in New York
The first important step is to confirm with your legal advisor that forming an entity in New York makes the most sense in terms of the tax and legal implications for your international business. Your U.S. advisors will then provide guidance on several important matters, including what type of entity to form in New York, for example a corporation or limited liability company (“LLC”).
If, after consulting with your U.S. legal and/or tax advisor, your business plan is to set up a corporation in the State of New York, you will need to complete and file a Certificate of Incorporation containing:
Name of the Corporation
The first step would be choosing the name of the corporation. The New York Business Corporation Law (NYBCL) requires entities to have one of the following corporate endings to their name: Incorporated (Inc.), Corporation (Corp.) or Limited (Ltd.). Choosing a name in New York can become a challenging task, as the NYBCL has numerous words that will require consent from NYS government agencies before they can be used in the name of the corporation (e.g., insurance, finance, investment and several others). Your legal advisor can provide specific guidance on those requirements and government approvals, if applicable.
Purpose of the Corporation
You may use a general purpose clause in the Certificate of Incorporation for your corporation (i.e., the purpose of the corporation is to engage in any lawful act or activity for which a corporation may be organized under the NYBCL). However, certain business activities may require prior consent by the State of New York. Once again, your legal advisor can provide guidance on this. Note that in addition to a general purpose or statement of a specific purpose clause, the NYBCL also requires that the following statement is the purpose clause of the Certificate of Incorporation (otherwise, it will be rejected when you submit it for filing): “The corporation is not formed to engage in any act or activity requiring the consent or approval of any state official, department, board, agency or other body without such consent or approval first being obtained.”
You will need to provide the county in the State of New York where your business will be located. New York is a very large state with several boroughs and many counties.
Corporations can raise money through issuance of stock. In the Certificate of Incorporation, you will need to state the number of shares that the corporation has the authority to issue and must state whether the shares are with par value or without par value.
Service of Process
The NYBCL requires that the Secretary of State be designated as the agent of the corporation to receive service of process in the State of New York on behalf of the corporation. You will also need to provide an address where the Secretary of State can mail a copy of any legal process served on the corporation. The address must be located within the United States. Typically, international clients will engage and name a professional registered agent company to provide the mailing address for this purpose.
Finally, the Certificate of Incorporation needs to be signed by one or more incorporators. This can be submitted in-person, by mail or fax or through the online filing system. Note that a professional service company can assist you with this filing.
Licenses and Permits
Be aware that certain business activities in New York may require special permits and licenses from local governments. It is highly recommended that you consult with an advisor on the licensing requirements to ensure you are fully compliant with these requirements when you commence doing business in New York.
Incorporation or Qualification
As a company considering conducting business in the U.S., you have the option of setting up a new corporation in the state of New York (known as ‘incorporation’), independent of your non-U.S. company. Alternatively, you may decide to register or qualify your ‘non-U.S.’ business entity in New York (known as ‘qualification’). You can choose either route depending on your business goals in the U.S. and based on the advice of your legal and/or tax advisors.
If you are qualifying a non-U.S. entity to do business in New York, you will need to provide details about the company to show it is in good standing. For example, if a U.K. company wants to register to do business in New York State, they will have to show their business is in good standing in the U.K., in addition to filing the “Application for Authority”.
You will need to appoint the New York Secretary of State registered agent on behalf of the company and provide a mailing address where legal process and official correspondence can be sent.
New York State requires all corporations to file a Biennial Statement every two years to update or confirm the principal office of the company, setting out certain current details of the entity such as principal business address, mailing address for legal process, and its Chief Executive Officer’s name and address. The due date for filing the Biennial Statement is biennially in the calendar month in which the original Certificate of Incorporation was filed with the New York Department of State.
Once the company is incorporated or qualified, the NY Department of Taxation and Finance will mail a registration package to the address for service of process with general information about tax registration requirements. It’s important to ensure all income tax matters required for the corporation are attended to so that the corporation maintains compliance and its existence and good standing for the duration of its conducting business in New York.
This content is provided for informational purposes only and should not be considered, or relied upon, as legal advice.