New York S Corporation Formation

>Any business corporation in New York, including an S corporation, will be formed under Section 402 of the Business Corporation Law. An S Corporation differs from a C Corporation or LLC in several ways, as shown on this chart and described below.

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Steps to Forming a New York S Corporation

To form a New York S Corp, you must submit Articles of Incorporation to the Division of Corporations of the Secretary of State. Your Articles of Incorporation must contain the following information:

  • Name: The name of your S Corporation must end in one of the following: "Incorporated," "Corporation," "Limited," "Inc.," "Corp.," or "Ltd." You will not be allowed to use a name that is already in use, regardless of the corporate ending or type of entity. For example, if there is already a New York Construction, LLC on file, you would not be allowed to file for an S Corporation by the name of New York Construction, Inc. If you'd like, ClickAndInc can perform a corporate name search for availability for you.
  • Purpose: The Articles of Incorporation template that the state provides has this default general purpose statement: "This corporation is formed to engage in any lawful act or activity for which a corporation may be organized under the Business Corporation Law, provided that it is not formed to engage in any act or activity requiring the consent or approval of any state official, department, board, agency or other body without such consent or approval first being obtained." Most businesses leave that purpose statement intact without clarifying further. Depending on your type of business, you may be required to obtain a letter of consent from the Office of Children and Family Services, the Department of Education Office, the Public Health Council, or the Office of Alcohol and Substance Abuse Services. If you're not sure if you'll need consent from any of these agencies, you should contact them prior to submitting your Articles for filing to avoid a rejection.
  • County: This should be the county in the state of New York where your S Corp's office is located.
  • Shares: You may either leave this section as-is, which by default states that you have 200 shares with no par value, or you may delete this and put in a new amount of shares or par value. Your shares and par value will affect the amount of taxes you will need to pay.
  • Service of Process: The Secretary of State itself is designated as your S Corp's registered agent, but you must provide a physical address for the state to forward any service of process they receive on your corporation's behalf.
  • Organizer: The person may be an officer of the corporation, but is not required to be—whoever drafted the Articles if Incorporation should sign as the Organizer.
  • Filer: The state will mail the filing receipt for the filing to the name and address provided here.

If any of the above information about your business changes, you will need to file a Certificate of Amendment to reflect those changes (or include those changes in your Biennial Statement). It is very important that your registration remains current.

ClickAndInc has provided Sample Articles of Incorporation for your review in hopes that they will help you draft your own.

Further Responsibilities of a New York S Corporation

After your Articles of Incorporation have been filed, you have 75 days to file an S Corp Election Form (form 2553) with the IRS. This form will give you S Corporation status and allow you to be taxed accordingly.

New York State requires that a Biennial Statement is filed every two years. The Biennial Statement costs $9 to file, and it must be submitted during the anniversary month of your S Corp's filing date. Failure to file this Statement may result in fees or penalties.

More Information about a New York S Corporation

  • Can have up to 100 owners/shareholders, but no more
  • May deduct the cost of benefits provided to employers (such as parking permits, health insurance, and so on)
  • Has a board of directors, which oversees the policies of the corporation
  • Cannot have more than one class of shares
  • Issues limited liability for owners
  • Must be owned by US citizens or resident aliens
  • Is taxed as owners' income, not as a separate entity
  • Allows business losses to be deducted on the owners' individual tax returns
  • Must pay payroll tax

For S corporations, only the salary paid to the owner-employee is subject to employment tax. The remaining income that is paid as a distribution is not subject to employment tax under IRS rules. Therefore, an owner of an S corporation stands to realize substantial employment tax savings. However, the salary you give yourself must not be artificially low; if the IRS finds your salary unreasonable, they may reclassify some of the distribution funds as salary and require you to pay taxes on it.

Other Types of Businesses in New York

For information on other types of businesses in New York, please explore the links below.

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