Choosing the Business Entity That’s Right for YOUR Small Business

If your business is located in Nassau or Suffolk County, Long Island, New York, there are four (4) main types of business structures to choose from:

  • Sole proprietorship: In both Nassau and Suffolk Counties, a business that is operating as a sole proprietorship must register with the County Clerk in the county in which it is conducting business. You can find the Certificate of Business online at the respective County Clerk websites. The cost to file the Certificate of Business is $35.
  • Corporation: A certificate of incorporation needs to be prepared. A sample form can be downloaded from New York’s Department of State, Division of Corporation website. The form then needs to be filled out as required by the New York Business Corporation Law and returned to the Division of Corporation along with a check for $125. However, I recommend you pay for expedited service and additional certified copies so that you don’t have to wait weeks to start running your business. Most banks will not open a business account without a filing receipt and a certified copy of your certificate of incorporation, so expect your total cost to be $170 for a timely filing.
  • Partnership: General or Limited. General partnerships are formed when two or more people start doing business together without choosing a business entity. You must file a Certificate of Business with either Nassau or Suffolk County. I suggest you see a qualified business lawyer before choosing this form of doing business. By not choosing a different business form, you are opening yourself up to unlimited liability for not only your acts, but also any acts of your partners. Your partner could incur debts and enter into agreements in the name of the partnership. Limited liability partnerships and limited partnerships in New York are acceptable partnership forms. New York charges $200 to file the paperwork, and I recommend paying for expedited service and two copies of the certified filing, bringing the total cost to $245.
  • Limited Liability Company (LLC): Many new small businesses and real estate ventures are choosing LLCs these days for the flexibility they offer. LLCs are often known as hybrids between partnerships and corporations. They offer the flexibility of a partnership, and the protection from business liabilities of a corporation. However, New York makes this process a bit more difficult and expensive than other forms of business entities. Filing the Articles of Organization costs $200, and after expediting the filing and requesting certified copies, the total cost to you is $245. However, within 120 days after the Articles of Organization have been filed with the state, you must publish the facts of the LLC’s formation in two newspapers, one daily and one weekly for six successive weeks. This can cost between $300 and $500. Afterwards, you will receive an affidavit of publication from each of the two newspapers, and these must be filed with NYS along with a completed Certificate of Publication and $50.

Additionally, many small businesses require special licenses and permits to operate their business in New York State. Professionals, as defined in the New York statutes, have special rules regarding naming and forming their business entities.

Choice of entity is a highly complicated issue involving liability and tax issues. A qualified small business lawyer will help you understand the consequences of this choice for your small business.