Registering Your Business Name
It is recommended, but not required, that you protect your business name by registering it with your county clerk. This typically involves a fee of $25-$50 and helps prove the existence of your business in addition to preventing other business in the county from using your business name. This may also be required to open a business checking account.
Business Structures – Legal Organization
While most businesses start out as sole proprietorships or general partnerships, they may eventually find that the legal liability and tax consequences are more beneficial if operating under a different structure.
New York State recognizes seven different business structures (excluding organizations such as churches and non-profits):
- Sole Proprietorship – The simplest form of organization wherein an individual simply declares himself or herself a business operator. No paperwork is needed to file with government agencies to establish the existence of the business. The proprietor has unlimited liability for the actions and debts of the business.
- General Partnership – A partnership agreement between sole proprietors. No paperwork is need to form this business and partners have unlimited liability.
- Limited Partnership – Also known as a silent partnership wherein an individual joins a partnership but stays out of the management aspects of the business. For remaining silent in the operation, that partner generally obtains the profits of an owner and does not have the legal liability of a full partner.
- Limited Liability Company (LLC) – A partnership offering the limited liability of a corporation. Paperwork must be filed with the state to establish this form of ownership and management meetings must be held.
- Business C Corporation – Structure used by most companies. The business is operated by a management team that reports to a board of directors. Ownership of the business is in the form of stock and shareholders of that stock have different levels of control over management and the board of directors by the quantity held and class of their stock (ex. Class A, B, C, preferred, etc.). Shareholders have limited liability in the company.
- Business S Corporation – A corporation that is operated like a partnership and offers limited liability to shareholders. Paperwork must be filed with the state to establish this form of ownership and management meetings must be held.
- Cooperative – An organization owned by members who contribute equity toward the business and share in profits generated, formed by filing with the state and has similar governance as a C corporation. Voting is either one vote per member or in proportion to patronage of the cooperative. Members have limited liability.
For More Information:
This brochure by the NY Dept. of State has information on six types of business structures including what forms need to be filed, the business’s lifespan under that structure, personal liability and tax information.
Forming a Business in NY: An Overview
Access the following publication from the Dept. of Applied Economics and Management at Cornell for help on navigating the legal maze of business structures.
Doing Business in New York State: Structures and Strategies