Do you need a New York Corporation?
There are very real and valid reasons why an individual would need to form a New York Corporation. Many individuals will find that as their business grows they may be more exposed to liability risk. This is where forming a corporation will be a smart decision. A New York Corporation formation would shelter the individual's personal assets in the event of a lawsuit. This formation causes a separation of the business assets from that of your personal assets. It is often the case that the shareholders are not liable for debts and obligations incurred by the corporation. This liability protection is not afforded to your under a partnership or in a sole proprietorship.
How to form a corporation in NY
Any individual can form a New York Corporation. Typically the individual would generate an Article of Incorporation pursuant to Section 402 of the Business Corporations Law.
Section 301 of the Business Corporations Law also provides instructions on relevant matters of what legal descriptors are allowed in the state of New York. Such as "Incorporated", vs. "Inc" vs. "Corp" etc. In addition, Section 301 does give information on what uses of words or phrases are allowed. Some words and phrases do require approval from the governing agency prior to approval.
The completed Articles of Incorporation are then submitted to the Secretary of state together with the statutory fee pursuant to Section 180 of Tax Law. These documents are then forwarded to the Secretary of State either by the expedited or standard submission
Department of the State
Division of Corporations
41 State Street
Albany, NY 12231.
The Secretary of State has adopted new regulations in the submission of documents. The following are guidelines in submitting correct documents.
- The Division of Corporations will only accept cover pages and articles on white paper. Colored paper will be rejected.
- All documents submitted must be on 8.5 x 11 paper.
- The Division of Corporations will only accept single sided documents. Double sided documents will be rejected.
- All documents, this includes signatures, should be in black ink.
- Avoid using light type, thin fonts, or outlined fonts.
- Recommended font is Times New Roman.
Once the Department of State receives the documents, they will process and approve those documents in the time frame chosen. They will send you certified documents and a filing receipt to you. Once your filing has been approved there are certain publication requirements that must be completed in order to validate your company.
Benefits of a corporation are:
- The life of the corporation is not determined by the owner. This corporation is a self contained entity and has unlimited life until its dissolution. The Corporation will continue to exist long after the owner dies or sells ownership.
- Like a corporation, a LLC will provide limited liability for its owners.
- The owner of the Corporations can transfer ownership of the corporation as long as it meets SEC guidelines.
- Finally the corporation can benefit your company with certain tax savings.
- Can change from a C corporation to an S corporation.
Naming your New York Corporation
Corporations formed in the state of New York may use as its legal descriptor Corporation, Incorporated, Limited, Corp., Inc., Ltd., Corp, Inc, and Ltd. These legal descriptors are for use with Corporations, LLCs can’t use these descriptions and vice versa. The company name that you wish to use must be distinguishable from all other companies already on file with the Secretary of States office. The Secretary of State will ignore words such as “the”, “and”, “a” “an” etc. These words do not provide any distinction. Only the root words of the company will be used for the distinction of a company. Corporations are not allowed to use the name of an active LLC. Lastly, there are some words such as “bank”, “school” and other words that may require prior approval before it is used.
Responsibilities of an active corporation
The owner of a corporation must maintain good bylaws and minutes for the company. They must keep good records of all accounting. They must hold annual share holder meetings. To keep your business in good standing with the NY Division of Corporations, you will need to make sure that you comply with all state, local, and federal requirements. You may order a Certificate under Seal directly from the NY Corporations division for $25 dollars.
How to dissolve a New York Corporation?
A New York corporation can be voluntarily dissolved authorized by the shareholders. Once approval has been reached. Prior to dissolving, the corporation must obtain the consent of the State Tax Commission from the New York State Department of Taxation and Finance. Once consent has been obtained, you may submit your document to voluntarily dissolve your company. Certain fees and paperwork may be involved in this dissolution process.