What is a NY single-member LLC?

A New York single-member LLC is a limited liability company (LLC) with just one member; “member” is another term for owner. It’s a popular entity choice because an SMLLC gives you personal asset protection, unlike a sole proprietorship.

New York SMLLCs vs. Sole Proprietorships

SMLLCs and sole proprietorships look similar at first glance because they’re both types of businesses with a single owner. Arguably, a sole proprietorship is easier to start because you can just begin business without filing paperwork with the state. But its biggest drawback is that it lacks personal asset protection. If the business defaults on a debt or gets sued, the owner is liable. New York creditors can claim their car, home, and personal savings to pay the debt.

In contrast, a single-member LLC is a separate legal entity that is liable for its own debts and lawsuits. Usually, in a legal battle, the business owner can’t lose their personal assets. This liability protection is one of the main reasons New York entrepreneurs decide it’s time to start an LLC.

Start a New York SMLLC in six steps

The New York single-member LLC filing process is an important, extensive process. But with these six steps, you’ll be up and running with minimal hassle.

Before we dive in, if you’re licensed for a professional service (for example, medicine, accountancy, etc.), you may need to form a professional limited liability company (PLLC) or a professional corporation (PC) instead. We don’t offer formation services for PLLCs or PCs, but we do have a New York PLLC guide to help you get started.

Step 1: Pick a name for your New York single-member LLC

Your very first step is to decide what you’ll call your LLC. You’ll want to create a descriptive, memorable name that stands out to New Yorkers. But you also need to comply with state naming rules. New York requires your name to:

  • Contain a designator that identifies the type of business you’re forming. For LLCs, New York allows you to use “Limited Liability Company” or “LLC” or “L.L.C.”
  • Avoid restricted words. New York has a long list of words and phrases that you cannot use for an LLC’s name. We won’t include the full list, but many terms relating to education, banking, government agencies, and insurance are restricted.

Ideally, your name should also match an available domain name so you can establish an online presence.

Step 2: Get a registered agent for your New York SMLLC

Every New York LLC is required to designate a registered agent. A registered agent is an individual or business entity that accepts service of process and some other official notices on your behalf. They forward these notices to you as soon as possible.

New York gives you two primary options for a registered agent. If you wish, you can designate the Department of State as your agent. Alternatively, you can appoint an individual or business entity; if you go this route, your appointed agent must have a physical address in New York. They also must be present at that address during all standard business hours.

Don’t want to appoint the DOS? Our registered agent service has you covered.

Step 3: File your New York Articles of Organization

Once you’ve picked a name and appointed an agent, it’s time to file your formation documents: the Articles of Organization. This form is pretty simple to complete, with a few bits of basic information to include:

  • The LLC’s name
  • County where the LLC is located
  • Name and address of the registered agent
  • Signature of the organizer (the person or persons forming the LLC)
  • Name and address of the person filing the form

New York’s current filing fee for the Articles of Organization is $200. If you request additional certified copies or expedited processing, the fee will be higher.

Step 4: Create a NY single-member LLC operating agreement

New York state law requires every LLC to draft an operating agreement. This internal document acts like a constitution or charter for your business, detailing specifics of how the LLC works. Typically, this agreement describes the responsibilities of each member, how profits are distributed, and how membership rights can change later on. Multi-member LLCs can’t function efficiently without one.

Even though you’re an SMLLC, this document will provide for future growth. It also helps maintain your personal liability protection by further delineating the distinction between your personal assets and your business.

Step 5: Get a single-member LLC EIN

An EIN, or Employer Identification number, acts like a Social Security number for a business. It’s a nine-digit code code that the IRS uses to identify a business for federal tax purposes. You must obtain one if you’ll owe employment taxes or excise taxes and if you have multiple members.

As a result, some single-member LLCs don’t have to obtain an EIN (though many do). You can apply for one for free with the IRS. If you’d rather not mess with extra paperwork, our EIN service can help.

New York Single-Member LLC Taxes

The default tax status of an LLC is to be a “disregarded entity” for federal tax purposes. Basically, the LLC itself doesn’t pay taxes; the LLC’s owner does by reporting the business income on their personal returns. This is known as pass-through taxation. This status only changes if the SMLLC elects to be taxed as a C corporation or S corporation (usually for a self-employment tax break).

In a lot of states, this process repeats on the state level. And you will report your share of business profits on your New York annual return. However, if you choose to have your LLC taxed as a corporation at the federal level, you’ll also be taxed as a corporation for New York state tax purposes.

If your LLC is located in New York City, it will also be subject to New York’s Unincorporated Business Tax each year. But this tax is limited to New York City and doesn’t apply to other parts of the state.

Step 6: Satisfy New York’s publication requirement

Within 120 days of forming your LLC, you must file and submit New York’s Certificate of Publication form. But before you can do that, you’ll need to publish a notice explaining your SMLLC’s formation. Another option is to simply publish copies of your Articles of Organization. Either way, you’ll need to submit this notice to two separate newspapers for six consecutive weeks.

Every newspaper has its own fee for these publications, so it’s a good idea to plan ahead for this process. According to state law, your local county clerk chooses which publications you have to use. Once you’ve completed these steps, you can file your affidavits of publication.

We can guide you through this process with our New York publication service.

Benefits of a SMLLC in New York

Still wondering why you should form a single-member LLC? Forming one is a detailed process, but here are some of the benefits SMLLCs enjoy.

Flexibility and Easy Maintenance

A New York LLC is relatively easy to maintain. Generally, you’ll have to pay taxes, file your biennial report, and maintain any business licenses required by your industry and location. Compared to other entity types (especially corporations), these requirements are very simple.

Personal Liability Protection

Since an LLC is a distinct legal entity from its owner, the business will be held liable for its own debts. In most cases, a creditor can’t come after the personal assets of the owner to settle the business’s debts.

Taxation Options

As an SMLLC, you have the luxury of choosing how you want to be taxed for federal tax purposes: as a pass-through entity, a C corporation, or an S corporation. There are advantages and disadvantages to each option. But the luxury is that you can choose.

Extra Brand Legitimacy

It’s perfectly legal to be a sole proprietor in New York, but some customers feel more comfortable working with a business that’s registered with the state. An SMLLC gives you that. The designator “LLC” adds some legitimacy to your brand by telling people you’re an established company.

Business Autonomy

As the sole owner of your LLC, you get to call all the shots. You won’t have to answer to a board of directors, to shareholders, or even other members. If you have an idea for improving your business, you get to make it happen.

We can help!

You might be running your SMLLC by yourself, but that doesn’t mean you have to start it all by yourself. Our LLC formation service can save you from tedious paperwork for $0. We’ll also help you get an EIN, register a domain name, and stay compliant with zero worries.

Single-Member LLC New York FAQs

  • New York’s statutes state that every LLC must have at least one member. There isn’t a requirement for multiple members. So SMLLCs are permitted in New York.

  • There isn’t a specific state that wins a “best in the nation” award for forming a single-member LLC. There are pros and cons to each state. Some states don’t have personal income taxes. Others have low filing fees (and some have hefty ones). Courts in other states don’t rule favorably for single-member LLCs. If you’re not sure which state you want to form your LLC in, we recommend chatting with a business attorney to discuss pros and cons to each.

  • Yes. As with most states, a single-member defaults to pass-through taxation (when the member pays taxes through their personal tax returns). However, if your LLC is within New York City, it will have to pay the city’s Unincorporated Business Tax.  If you choose to have your LLC taxed as a corporation at the federal level, you’ll also be taxed as a corporation for New York state tax purposes.

Disclaimer: The content on this page is for information purposes only and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional.

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Written by Team ZenBusiness

Start Your Single-Member LLC in New York