So, you’ve decided to take the leap to build a business, congratulations! This is such an exciting moment for you! And if you’re anything like me, you want to make sure you do it correctly and most importantly—legally. When I first decided to legitimatize my business, I took to google and looked up “How to open a business in New York,” and was greeted with a lot of information—some of it relevant some of it not.
What I did not find was a simple “how to” guide, though. That’s where this comes in. After creating my business, I got a lot of messages from fellow creatives in similar situations looking for guidance. While in no way whatsoever, is any of this legal guidance or advice, below is a step-by-step guide of how I legitimatized my Photography business in Nassau County of New York State. Please keep in mind, this is directed towards creatives (such as photographers) who are based in NYS, more specifically, Nassau and Suffolk counties. NYC and other counties may have different requirements pertaining to the advertisement requirements.
Step 1: Pick a Name!
It’s easier said than done, but picking a name is perhaps one of the most important factors of your business! Try to make it personal while also showcasing what service/product you provide.
Once when you lock in a potential name, you need to check the NYS Business Directory to see if the name is available. If it's available, go ahead and move onto the next step.
Step 2: Figure out your business structure
NYS has put together this helpful little business wizard that provides guidance in developing your business.
Lucky for you, it wasn’t available when I finalized everything so I had to do everything on my own by using this very useless NYS Website.
In the world of photographers you mainly have two structures you can choose from: Sole Proprietor (SP) or Limited Liability Company (LLC).
My basic understanding of the two is this:
Sole Proprietor (SP):
-An SP is essentially an extension of yourself.
-You use your own Social Security Number to file your taxes and the business is just an extension of you as a person. So things can be simpler.
-Any claims taken out go against you and your assets, not your business, since your business and you are essentially the same.
Limited Liability Company (LLC):
-An LLC is a completely separate entity from you.
-You get an EIN that you files taxes against, separate from your personal taxes.
-In the world of insurance, if a client opens a claim against you, and you are an LLC, they cannot go after your personal assets since it is a separate entity. Again, I am not a lawyer, and am not providing any legal advice. If you would like to seek legal guidance on this issue, please reach out to a small business lawyer.
For purposes of the rest of this guide, I am going to assume you are forming an LLC (that’s what I did). That way your business is completely separate from your personal life in regards to income, taxes, claims, insurance, etc.
When you file your LLC on the NYS Website online filing site you will then get an Articles of Organization. Essentially, this is like your business’ Birth Certificate. It has the date it was created and the county in which the LLC was formed. Altogether, this costs $240 at the time of publishing this post. Your Articles of Organization will also come with a filing receipt and a certificate of status. All of these items will be emailed to you shortly after making payment creating your LLC. You should keep all of these documents filed for future reference when it comes to filing taxes, issuing advertisements and creating and EIN in the next step.
Step 3: Create an EIN
Since you’ve created an LLC, when it comes to taxes you will need an Employer Identification Number (EIN). This is like a Social Security Number for your business. This number you’ll be able to use to open up a business banking account, open a business credit card, take out insurance, pay taxes, make donations and everything in between.
It’s very simple to do, and you merely need to follow the online step-by-step instructions on the IRS website on how to do it.
It only look a few minutes to do, and after you’re able to use this EIN for all money concerns. After completing the setup, your EIN confirmation will be emailed to you. Again, you should keep this information for future reference.
Step 4: Advertisement Requirement:
This is the most pro-active step you are going to need to take in creating your LLC.
Yes, it is 2022 and yes, pursuant to Section 206 of the NYS LLC Law, you are required to publish the Articles of Organization or a notice related to the formation of the LLC in two newspapers within 120 days of forming the LLC. Here’s the link to the actual requirement.
LLC's that fail to comply with the publication requirements within 120 days after their formation will have their authority to carry on, conduct or transact any business suspended.
If you don’t do this requirement yourself, you’re going to get a bunch of spam mail in the mail advertising that various companies will do it for you—of course if you want to pay, then do it! However, you are more than capable of doing this on your own.
Here's the breakdown of what's required:
-This must be done within 120 days of forming your LLC
-You must choose two printed publications to advertise with. One must be a daily paper and the other must be a weekly paper.
-The Advertisement must be published for six consecutive weeks.
-The Advertisement must be published in the county in which the LLC is formed. So for me I did Nassau County.
For my Advertisement, I did Long Island Business News and Newsday.
Again, this is the most pro-active you're going to need to be. You need to call or email the publication companies found on your County’s approved papers list and reach out the advertisement department. Mention Article 206's advertisement requirements for a newly formed LLC and they will know what to send you.
They will send you a proof of the publication and then once when you approve it and submit payment it should run in the next newspaper for six consecutive weeks.
After the advertisements are published for the six weeks, the newspaper companies will send you affidavits of publication. You need to make photocopies of them and snail mail the copies with a filled out Certificate of Publication along with the $50 filing fee via check to the mailing address found at the top of the certificate of publication.
I did not received any kind of confirmation that the certificate was received, but I did request a return signature via certified USPS mail, and my $50 check was cashed, so I saved both of those items as "receipts" for my own purposes.
After doing all of those steps you’re a formed LLC in NYS! Congratulations!
Things to keep in mind:
Biennial Filing: A Biennial Statement two years after the filing of the Articles of Organization with the NYS Department of State, and every two years thereafter is required. The filing period is the calendar month in which the original Articles of Organization were filed by the Department of State. Online filing is available on the Department of State’s website. The filling fee is $9. Entities who wish to receive a notice when the Biennial Statement is due for filing must provide an email address at the Department of State’s Email Address Submission/Update Service.
Operating Agreement: If you have any employees working for you this is something for you: Section 417 of the LLC law are required to adopt a written Operating Agreement. The Operating Agreement may be entered into before, at the time of, or within 90 days after the filing of the Articles of Organization. The Operating Agreement is the primary document that establishes the rights, powers, duties, liabilities and obligations of the members between themselves and with respect to the LLC. The Operating Agreement is an internal document of the LLC and is not filed with the Department of State. The law is silent on the consequences of not adopting an Operating Agreement. The Department of State cannot provide legal advice regarding the preparation of the Operating Agreement.
Insurance: You are an LLC, in it and of itself. You need to be insured to protect yourself and your assets. There are plenty of reasonably priced companies and carries for all company sizes. Do not wait on this.
All together, opening an LLC in NYS is not the most cost-efficient business-venture, however it will get you in the right direction of legitimatizing your business!
Here was my total costs to open my LLC:
- Articles of Organization: $240
-Advertisement with LIBN: $50
-Advertisement with Newsday: $330
-Certificate of Publication Filing Fee: $50
Total cost: $670.00