FOUR STEPS TO STARTING A BUSINESS IN NEW YORK CITY

You’ve been thinking about starting a business and now you’re ready to make it official. You’ve identified the goods or services that you’re bringing to the market; you’ve identified your potential client base. You’ve got a great idea, a business and marketing plan, you might even have funding. Now it’s time to roll up your sleeves and get your business running. Establishing a business in New York is relatively straightforward once you make a few important decisions.

1. CHOOSE YOUR BUSINESS STRUCTURE

There are three basic structures that most small startups/entrepreneurs should consider:

Sole Proprietor
Limited Liability Company (LLC)
Limited Liability Partnership (LLP)

Your choice of business structure is one of the most important decisions that you’ll make. Your structure will determine your tax reporting, registration and filing obligations, and whether your personal assets are protected. Let’s go through them:

Your business structure options might be dictated by the numbers of individuals establishing the business. With a Sole Proprietorship (also referred to as a single-member LLC), all of the assets of the business are owned by one person. This is the simplest structure to establish. However, since one individual owns all of the assets of the business, the business owner is personally responsible for all debts incurred by the business.

If you’re starting the business with other people, you might consider a Limited Liability Company (LLC) or Limited Liability Partnership (LLP). The LLC is a legal entity distinct from its owners (called members) and therefore protects owners from liability (similar to a corporation). However, the LLC is easier to form than a corporation and is free of many of the legal requirements that govern corporations, such as director meetings, shareholder requirements, by-laws, etc. The LLP, on the other hand, is a partnership and is not a distinct entity for income tax purposes therefore profits and losses are passed through to the partners.

Both the LLC and LLP provide personal asset protection, but there are important differences. For example, members of an LLC are protected from debts and liabilities relating to the operation of the business, but they are not protected from the negligence or bad acts of another member. By contrast, a partner in an LLP is personally liable only for his or her own negligence (or of someone working under their direct supervision).

2. CHOOSE YOUR BUSINESS NAME

New York State has laws that regulate how your business can be named. If you’re a sole proprietor and choose to use your legal name as your business name, you won’t need to register the name of your business. If you want to use another name, then you are required to register that name with the County Clerk in the county where your business is located. Also keep in mind that your business cannot have the same name as another existing business entity in New York. 

3. REGISTER WITH NEW YORK STATE DIVISION OF CORPORATIONS

Your new business (unless its a sole proprietorship doing business under your name) must be registered with the state. If you’re forming an LLC you must file Articles of Organization and a Certificate of Publication with the state. If you’re forming an LLP, you must file a Certificate of Registration and a Certificate of Publication with the state.  

The members of an LLC are required to adopt a written Operating Agreement before, at the time of, or within 90 days after the filing of the Articles of Organization. The Operating Agreement establishes the rights, powers, duties, liabilities and obligations of the members between themselves and to the LLC. 

4. GET YOUR TAX/EMPLOYER IDENTIFICATION NUMBER (EIN)

Generally, all businesses need an EIN. An EIN is a nine-digit number that the Internal Revenue Service assigns to a business. EINs are free and relatively easy to obtain online at the IRS website. If you’re planning to hire employees you must register your EIN and get the necessary insurance such as workers’ compensation, unemployment and disability insurance. 

These are the basic steps to establish your business in New York. Although you might be tempted to use boilerplate documents in forming your business, you should keep in mind that your business is distinctive and should reflect and protect your particular interests and objectives. Consider consulting with a business attorney to discuss these structures in more detail and to draft the operating/partnership agreements that document the duties, liabilities and obligations of the business owners. You should also consider consulting an accountant or financial advisor to discuss the tax implications of your business structure.

Please contact me if you're thinking about starting a business.  The Law Office of Joycelyn McGeachy-Kuls offers flat-fee packages for startups and entrepreneurs.  Visit our website for more information.   

This article was originally published at nyintl.net.

Hiring Temporary or Seasonal Workers?? A Few Considerations

The holidays are approaching and you might be looking for extra staff for your business or workplace.  Even when it’s not holiday season, your business might be cyclical, so you’ll need extra help for a period of time or maybe part-time help. The key is to remember that seasonal, temporary or part-time workers are employees not independent contractors.  Many of the laws and regulations that apply to full-time employees also apply to seasonal or part-time employees.

Here are some things to consider:

Laws that cover harassment, discrimination, and workplace health and safety will apply to your temporary and part-time workers just as they do to the other employees in your business.  These employees are entitled to minimum wage and overtime pay.  As an employer, you are also responsible for appropriate documentation and record keeping.  These employees are not entitled to any special protection and are subject to the same employment considerations as other employees, e.g., at-will status, performance management, etc. 

Here’s a brief list of your obligations and benefits that you must provide to your temporary, seasonal or part-time workers.

• Unemployment Benefits – click here to determine your obligations as a New York employer.
• Taxes/Social Security/Medicare – IRS Publication 15 provides that regarding “federal income tax withholding and social security, Medicare, and FUTA tax purposes, there are no differences among full-time employees, part-time employees, and employees hired for short periods. It does not matter whether the worker has another job or has the maximum amount of social security tax withheld by another employer.” See full text here.  See IRS Guidelines here.
• Workers’ Compensation – Businesses with employees are required to carry Workers’ Compensation insurance coverage through a commercial carrier, on a self-insured basis, or through a state Workers' Compensation insurance program.  Click here for information New York Workers' Comp information.

Misclassification of employees or failure to provide benefits listed above can result in an audit or investigation by the IRS or Department of Labor.  Contact me if you're considering hiring part-time, seasonal or temporary workers or visit my website for additional information. 

Fewer Work Hours - Happy Employees??

In the wake of mounting wage and hour lawsuits and a recent fatality in the industry, Goldman Sachs recently announced the formation of a junior banker task force.  One of the first orders of business was requiring these interns to work saner and "more humane" hours.  These junior bankers are not allowed to enter Goldman Sachs buildings for 36 hours on the weekends (from 9pm on Friday through 9am on Sunday).  The task force, reportedly is also monitoring remote logins to determine wither these junior bankers are working through their weekends or enjoying them (or trying to figure out how to get a competitive edge over their fellow junior bankers).  Goldman Sachs is reducing the hours to make the organization more attractive top college graduates.   

This was considered a revolutionary step for Wall Street and the finance industry.  Even if you’re not a Wall Street firm, there are some real upsides to monitoring the hours worked by interns and junior professionals, trainees in your business as well.  

Let’s Review:

• Work-Life Balance – the overall thinking is that a well-rounded employee is a happier employee.  Happier employees are more productive and more likely to stay with their employers.
• Expand the Talent Pool - Attract Top (perhaps nontraditional) Talent – Many talented prospective employees might not want to work for a business where long work hours are regularly expected or required.  By establishing a culture that values leisure time, you might attract candidates with different backgrounds, experience and training to your organization.  That could lead to its own efficiency and innovation. 
• Control Overtime  costs – assuming that your interns are paid and nonexempt, you will pay overtime for those extensive hours in the office.  Limiting the hours, will limit your costs.
• Minimize Exposure to Wage/Hour Violations – Most interns, junior professional or training positions are non-exempt, i.e., entitled to overtime for weekly hours worked in excess of 40.  Monitoring these hours gives you the opportunity to review the classifications of these individuals and compensate appropriately.

Downsides (few but real)

The decision to control work hours speaks to the culture of the workplace.  The message has to be clear and consistently applied to the identified class of employees.  If managers haven’t bought in, aren’t good communicators or effective implementers, this well-intentioned position might have negative impact on the work environment.  

As you change expectations regarding hours, you should consider changing expectations of results and outputs.  Employees working fewer hours might be less productive.  If you expect employees to work fewer hours but still deliver the same results, you might be dealing with productivity issues not work-life balance and the other concerns mentioned above.  If that’s the case, a different conversation around these adjustments may be necessary.    

What to do

If you’re considering a similar change in work culture, communicate with your managers about your expectations and rationale for this change.  Your managers must communicate clearly with employees and apply these changes consistently.   

Need more information or guidance? Contact me or visit my website.