How to Register a Business: The Order That Actually Matters

The right order for how to register a business is entity first, EIN second, money and tax accounts third, licenses fourth, and the two things with countdown clocks, newspaper publication and the S election, tracked from day one. The reason how to register a business is a sequencing problem rather than a paperwork problem is that three of these steps depend on the output of an earlier one, and two of them expire.

Step one is the entity decision, made with real projected numbers rather than a blog post. Revenue, owner compensation, whether there are partners, whether you will take outside investment, which states you will operate in, and what you expect to do with the business in five years all change the answer. This is the only step where a mistake is expensive to unwind.

Step two is the name. Search the state’s entity database before you commit. New York requires the name to be distinguishable from every other entity on file and restricts certain words outright under section 204 of the Limited Liability Company Law. A name reservation is available if you need a few weeks.

Step three is the formation filing. For a New York LLC that is the Articles of Organization with a $200 fee, filed with the Department of State; for a corporation it is a Certificate of Incorporation. Two clocks start the moment it is filed: 90 days to adopt an operating agreement under section 417, and 120 days to complete the publication requirement under section 206 and file the Certificate of Publication.

Step four is the EIN, and doing it after formation rather than before is deliberate. The name and entity type on Form SS-4 should match the state filing exactly. Apply first and you may end up with an EIN attached to the wrong entity type, which the IRS will not simply edit.

Step five is the bank account and the accounting file, opened before the first dollar moves. Commingling personal and business money from week one is the most common reason a limited liability shield gets challenged, and it is also what turns a two-hour bookkeeping cleanup into a twenty-hour one.

Step six is tax registration. If you will make taxable sales in New York, apply for the sales tax Certificate of Authority at least 20 days before you begin business. If you will pay wages, register for withholding and unemployment insurance and put workers’ compensation, disability, and paid family leave coverage in place before the first payroll runs. New hires get reported to the state within 20 calendar days.

Step seven is licensing, which is industry-specific and mostly local: food service, alcohol, home improvement, childcare, and dozens of trades each have their own permit, and several of them require an inspection that takes weeks.

Step eight is the elections. Form 2553 for an S corporation election is generally due no more than two months and fifteen days after the start of the tax year it should apply to. Form 8832 changes entity classification and has its own effective-date rules. Both allow late relief through a revenue procedure, but relief is requested, not owed.

Put dates on it. A founder opening a Manhattan bakery on June 1 files Articles of Organization on April 3 and pays $200. The operating agreement is signed April 12. The EIN comes through online on April 14 at no cost. The bank account opens April 18. The sales tax Certificate of Authority application goes in May 1, comfortably ahead of the 20-day cutoff. Employer registration, a workers’ compensation policy, and disability and paid family leave coverage are in place by May 15, three weeks before the first employee’s first shift. The health department permit is applied for in April because the inspection queue is long. Publication runs across May and June, and the Certificate of Publication with its $50 fee is filed July 20, inside the 120-day window that started April 3. Total government cost so far: $250, plus whatever the two county-designated newspapers charged.

The common mistake: forming the entity months before there is any activity, “to get started.” That produces a short first tax year with a return obligation, starts the publication clock while nobody is watching, and adds a biennial statement to the calendar for a business that does not exist yet. The mirror-image mistake is worse, operating for eight months as a sole proprietorship, then forming an LLC in September and assuming the LLC’s protection reaches backward. It does not. A close second is applying for an EIN as a sole proprietor, later forming an LLC or corporation, and continuing to use the old number on invoices and W-9s. Publication 1635 spells out when a new EIN is required, and mismatched taxpayer identification numbers on inbound 1099s lead directly to backup withholding at 24%.

Going forward, build the calendar the same week you file. Put the 90-day operating agreement date, the 120-day publication deadline, the biennial statement month, the sales tax filing frequency, and the S election cutoff into whatever system you actually check. Our business management team runs that setup for new entities so the dates live somewhere other than a founder’s memory. None of this is advice about which entity you should form. That conversation needs your numbers, not a checklist.

Two decisions belong in this sequence that founders usually postpone. The first is the tax year and accounting method, which get locked in on the first return you file, most small businesses use the cash method and a calendar year, but inventory, revenue size, and industry all bear on the choice, and our cash versus accrual guide lays out the tradeoff. The second is where else you will need to register. Every state has its own definition of doing business, and hiring one remote employee in another state usually creates payroll registration, income tax withholding, and sometimes a foreign qualification filing there. Nobody wants to discover that in year three with three years of unfiled state returns behind them.

One last ordering point about the address on the formation document. The county you name determines the newspapers your publication notice runs in and therefore the price, and the address you give becomes the one the Secretary of State forwards legal process to. Using a home address makes it public; using a mail drop can create service problems. Decide both before filing, because changing either one afterward means an amendment and, for the county, publishing all over again.

The state fees are modest and the newspapers are not. That sentence explains most of the surprise on the first invoice.

Start with the filings. A New York LLC pays $200 for Articles of Organization. A corporation pays $125 for a Certificate of Incorporation plus a tax on authorized shares that begins at $10, so the practical floor is $135. A name reservation, if you need one, is a small additional fee. Expedited handling is available at the Department of State for an extra charge on a tiered schedule. Every LLC and corporation files a Biennial Statement every two years for $9. A Certificate of Assumed Name, if you will trade under a name other than the legal one, costs $25 at the state level plus county fees for corporations. The EIN is free from the IRS. The sales tax Certificate of Authority is free from the Tax Department. A registered agent service is optional in New York, the Secretary of State is the statutory agent for service of process, and commercial services run roughly $50 to $300 a year.

Then the publication requirement. Section 206 of the Limited Liability Company Law requires most new LLCs to publish notice in two newspapers, designated by the county clerk where the LLC’s office sits, once a week for six consecutive weeks, followed by a Certificate of Publication with a $50 fee. The newspapers set their own rates. In New York County the two designated papers together commonly run well into four figures. In many other counties the same requirement costs a couple hundred dollars. Same statute, same six weeks, an order of magnitude apart on price, decided entirely by which county you named in the Articles.

Work a full year. Two consultants form a Manhattan LLC and expect $600,000 of New York source gross income. Formation is $200. Publication in the two county-designated papers runs $1,400. The Certificate of Publication is $50. The Biennial Statement is $9 in the second year. That is roughly $1,659 of hard cost in year one, against a founder’s budget that said $200.

Recurring state cost arrives with the returns. An LLC treated as a partnership or a disregarded entity with New York source income files Form IT-204-LL and pays an annual filing fee scaled to New York source gross income, ranging from $25 at the bottom to $4,500 at the top, generally due by the fifteenth day of the third month after the close of the tax year. A corporation pays franchise tax under Article 9-A, computed as the highest of a business income base, a capital base, or a fixed dollar minimum keyed to New York receipts, so even a corporation with no profit owes something. New York City adds its own layer: unincorporated businesses operating in the city face the Unincorporated Business Tax at 4% of city-allocated taxable income, and corporations face the city’s Business Corporation Tax. The city does not follow the federal S election, which catches founders who assumed the pass-through treatment they get federally follows them into the five boroughs.

Now the counterintuitive part. Forming in Delaware to “save money” almost always costs a New York operating business more, not less. A Delaware LLC pays $110 to form and a $300 annual franchise tax whether or not it does anything. If it operates in New York it must also file an Application for Authority with the New York Department of State, and out-of-state LLCs are subject to the same publication requirement. You end up with two states’ fees, two registered agents, and the identical newspaper bill. Delaware is chosen for its courts and its governance law by companies raising institutional capital, not for its price.

The common mistake: budgeting the filing fee and nothing else, then treating the newspaper invoice as optional. Publication is not optional. Missing the 120-day deadline suspends the LLC’s authority to carry on business in New York, and the cure is publishing anyway, later, at the same cost. The second common mistake is naming a county in the Articles based on where the founder lives rather than where the business will actually be, then discovering the publication rate and trying to change it, which means amending the Articles and publishing again.

The forward-looking move is to price the whole first year before you file anything: formation fee, publication estimate from the specific county clerk’s designated papers, Certificate of Publication, any assumed name filing, license fees for your industry, the annual filing fee tier your projected revenue lands in, and professional fees for the first return. Our tax strategy consulting team models the state and city tax side alongside the formation costs, because the recurring number matters far more over five years than the one-time one. This is general information rather than advice for your business; confirm every current fee directly with the agency before you rely on it.

New York City adds costs that never appear on a formation checklist. Roughly fifty-odd trades need a license from the city’s consumer and worker protection agency, each with its own fee and renewal cycle. Businesses that occupy commercial space in Manhattan south of 96th Street may owe the city’s commercial rent tax once annualized base rent reaches the statutory threshold, at an effective rate near 3.9% after credits. A tax that exists nowhere else in the country and that surprises every tenant who signs a Midtown lease. Sidewalk cafe permits, sign permits, fire department permits, and a certificate of occupancy check all carry their own fees and their own waiting periods.

Then there are the professional fees, which usually exceed the government fees. Formation done properly with an attorney, an operating agreement drafted rather than downloaded, a first-year bookkeeping setup, and a first business return will typically cost more than every filing fee combined. That is not an argument against doing it, a two-partner operating agreement that actually addresses deadlock and buyout is worth more than the publication bill, but it belongs in the budget from the start rather than arriving as a surprise in March.

You get it directly from the IRS, for nothing, usually in the same sitting. The employer identification number is a nine-digit federal tax ID, applied for on Form SS-4, and the IRS application page issues it immediately at the end of a completed online session. Fax runs about four business days. Mail runs about four weeks. There is no expedited tier and no fee, which is worth saying plainly because search results for this term are dominated by companies charging one to three hundred dollars for the same eleven minutes of typing.

Three rules trip people up. The responsible party must be a natural person who controls or manages the entity, identified by their own Social Security number or ITIN, not a lawyer, not a registered agent, not a formation service. The IRS limits issuance to one EIN per responsible party per day. And an applicant whose responsible party has no U.S. taxpayer identification number cannot use the online tool and must apply by fax or phone, which is the usual reason a foreign-owned entity waits weeks for a number the domestic version gets in minutes.

Not every business needs one. A sole proprietor with no employees, no excise tax obligations, and no retirement plan can operate on their Social Security number. Most do not, because every W-9 they sign then hands their SSN to a client’s accounts payable department. You must have an EIN if you have employees, file employment or excise tax returns, operate as a partnership or a corporation, withhold tax on income paid to a nonresident, or administer certain retirement plans, trusts, or estates. A single-member LLC treated as disregarded for income tax still needs its own EIN to file employment tax returns and pay excise taxes in the LLC’s name.

The harder question is when an existing business needs a new number. Publication 1635 is the authority. A sole proprietorship that incorporates needs a new EIN. A sole proprietorship that takes on a partner and becomes a partnership needs a new one. A partnership that incorporates needs a new one. A corporation that receives a new charter from the state needs a new one. An LLC that simply elects to be taxed as a corporation generally does not. The entity did not change, only its classification did. Changing your business name or address does not require a new EIN, though it does require notifying the IRS, and a change in the responsible party has to be reported on Form 8822-B within 60 days.

Here is what getting this wrong costs. A consultant operates for two years as a sole proprietor under an EIN, then forms an S corporation in January and keeps giving clients the old EIN on Form W-9. Clients issue 1099s in the corporation’s name against the sole proprietorship’s number. The name and TIN do not match IRS records, the IRS sends the payers a notice of the mismatch, and the payers are required to begin backup withholding at 24% on future payments until it is resolved. On $180,000 of annual billings that is $43,200 held back, money that eventually comes home on the tax return, roughly a year later, after the cash flow damage is already done. Meanwhile the corporation’s Form 1120-S reports income the IRS matching system cannot tie to any information return, which is its own correspondence audit waiting to happen.

The common mistake: paying a third party for a free number. The second is naming the formation service or the attorney as the responsible party on the SS-4, which puts a stranger’s identity on the entity’s federal file and makes future authentication calls painful. The third is applying for the EIN before the state approves the entity name, then discovering the name was unavailable and now the federal record and the state record disagree. The fourth is failing to update the responsible party after an ownership change, which quietly breaks the entity’s ability to get transcripts or resolve a notice years later.

Going forward, treat the EIN as the anchor of the entity’s identity and keep the confirmation letter, the CP 575, somewhere permanent. Banks, payroll providers, insurers, and state agencies all ask for it, and the IRS does not reissue the original letter. Make sure the legal name on that letter, the name on the state filing, the name on the bank account, and the name on every W-9 you sign are character-for-character identical. Our bookkeeping team checks that alignment when a new entity comes on, because a mismatch discovered in January costs a filing season to unwind. As always, this is general information rather than advice about your situation.

A few practical notes on the application itself. The online tool runs on limited hours rather than around the clock, and a session that times out has to be started over from the beginning. There is no save. Applications get rejected with numbered reference codes: one of the most common signals that an entity with the same name and responsible party already has an EIN, another signals that the daily limit for that responsible party is used up. Neither is fatal, but both mean picking up the phone rather than resubmitting the same form and hoping.

If you lose the number, do not apply for a new one. The EIN can be recovered from a previously filed return, a payroll tax notice, the bank’s account records, or by calling the IRS business line, where an authorized person can have it confirmed. Applying again produces a second EIN attached to the same entity, and untangling two live numbers for one taxpayer is a months-long correspondence project rather than a phone call.

One more wrinkle for anyone buying a business rather than starting one. In an asset purchase the buyer gets a fresh EIN, because a new entity is doing the buying; in a stock purchase the corporation keeps its existing number along with its history and its liabilities. That distinction sounds administrative and is not. It is one of the clearest markers of which kind of deal you actually signed, and a seller who tells you to just keep using their EIN in an asset deal is describing a filing that will not reconcile at either agency.

Yes, and you need it before the first sale, not after. In New York a Certificate of Authority is what makes you a registered sales tax vendor, and collecting sales tax without one is itself a violation, separate from any failure to remit. Anyone learning how to register a business in New York should treat this as its own project rather than a footnote to the formation filing.

Two different documents share this name, which causes a genuine amount of wasted time. The sales tax Certificate of Authority comes from the Department of Taxation and Finance and authorizes you to collect tax and issue or accept exemption certificates. The Application for Authority goes to the Department of State and lets an out-of-state entity do business in New York at all. Different agency, different purpose, no relationship between them. Our Certificate of Authority guide walks through both.

The registration itself is free and runs through the Tax Department’s vendor registration page or New York Business Express. Apply at least 20 days before you begin business or start making taxable sales. The certificate must be conspicuously displayed at each place of business, and a business with three locations needs three certificates.

What triggers the obligation is making taxable sales in New York. Tangible personal property is taxable by default. Services are taxable only if the law names them, information services, protective and detective services, interior decorating and design, parking, certain maintenance and repair services, and others. Prepared food is taxable. Clothing and footwear priced under $110 per item are exempt from the state’s 4% rate and from local tax in some jurisdictions. In New York City the combined rate is 8.875%: 4% state, 4.5% city, and 0.375% for the Metropolitan Commuter Transportation District.

Out-of-state sellers get pulled in by economic nexus. A remote vendor with more than $500,000 of receipts from sales of tangible personal property delivered into New York and more than 100 such sales in the immediately preceding four sales tax quarters must register. Marketplace providers collect on behalf of the third-party sellers on their platforms, which shifts the obligation but does not always eliminate the seller’s own registration.

Once registered you file returns whether or not you sold anything. Most new vendors are quarterly filers. Vendors whose taxable receipts reach $300,000 in a quarter move to monthly filing. Annual filing is available for very small vendors. A zero return takes two minutes and skipping it produces a notice.

Now the part that should get attention. Sales tax you collect is not your money. It is held in trust for the state. Under New York Tax Law section 1133, a responsible person can be held personally liable for the full amount of the tax the business failed to remit, and in New York that reaches officers, directors, partners, and members of a limited liability company, including in some circumstances members with no operational role. The corporate shield that protects you from a supplier’s lawsuit does not protect you here.

Run the numbers on a Manhattan retailer with $850,000 of taxable sales in a year. At 8.875% that is $75,437 of tax collected from customers. If the business spends it on rent during a bad quarter and never remits, the state assesses the tax, interest, and penalties against the company and can assess the same amount personally against the owner. A separate penalty applies for making taxable sales without a valid Certificate of Authority in the first place, accruing on a daily basis up to a statutory cap, confirm the current amounts with the Tax Department, since they have been amended.

The common mistake: starting to sell while the application is pending and collecting tax anyway, on the theory that the money will be remitted either way. New York treats collecting without authority as its own violation. A close second is assuming that because your product is exempt you do not need to register. A vendor that accepts resale or exemption certificates generally still needs a Certificate of Authority. Third is forgetting the return in a quarter with no sales, which produces a notice, a penalty, and eventually an assessment built on the state’s own estimate of what you owed.

Looking forward, decide your filing frequency and calendar it, keep exemption certificates on file for every non-taxed sale (an auditor who cannot find the certificate assesses the tax as if the sale were taxable), and reconcile sales tax collected to sales tax remitted every single month. Our client accounting services team builds that reconciliation into the monthly close. If you sell into multiple states, run the nexus analysis annually, because thresholds and rules differ state by state and the registrations compound quickly. This page is general information, not tax or legal advice for your business.

It is worth knowing what a New York sales tax audit actually looks like, because it shapes what records you keep from day one. Auditors commonly select a test period, a few months, or a single quarter, examine sales and purchase records in detail, compute an error rate, and project that rate across the entire audit period, which can run several years. If the records are inadequate, the auditor is permitted to estimate using external methods: markup analysis on purchase invoices, observation of a few days of business, or comparison to industry statistics. An estimate built from a bad week is very hard to argue down. Cash-intensive businesses feel this hardest.

Two housekeeping items round it out. Some vendors receive certificates with expiration dates and have to renew, show and entertainment vendors, and temporary vendors, are the usual cases. And when a business closes or stops making taxable sales, the Certificate of Authority has to be surrendered with a final return, because an open registration keeps generating filing obligations and notices long after the doors are shut. Owners who simply stop filing are the ones who receive estimated assessments two years later for a business that no longer exists.

Filing a beneficial ownership report was long treated as the final step in how to register a business. Under the federal rule in effect as this is written, a company created in the United States does not. That is a genuine reversal from where this started, so it is worth walking through how the requirement got here before you decide what to do.

The Corporate Transparency Act was enacted in 2021 and FinCEN’s implementing rule took effect January 1, 2024. It required most privately held corporations, LLCs, and similar entities to report their beneficial owners, anyone owning 25% or more, or exercising substantial control, along with company applicant information for entities formed after the rule’s effective date. New entities had 30 or 90 days to file depending on formation date, existing entities had until the end of 2024, and the penalties for willful failure were both civil and criminal.

Then the litigation started. A federal district court in Alabama entered judgment against the statute in March 2024 in a case brought by a small business association, other courts issued nationwide injunctions and stayed them, and the filing deadline moved repeatedly across late 2024 and early 2025. On March 2, 2025 the Treasury Department announced it would not enforce penalties against U.S. citizens or domestic reporting companies. On March 21, 2025 FinCEN announced an interim final rule, published March 26, 2025, that redefined “reporting company” to mean only entities formed under the law of a foreign country that have registered to do business in a U.S. state or tribal jurisdiction, and formally exempted every entity created in the United States along with its beneficial owners.

So the current picture is this. A domestic LLC or corporation formed in New York today has no federal beneficial ownership filing to make. Foreign-formed entities that register to do business in a U.S. state remain reporting companies, and those registering on or after March 26, 2025 have 30 calendar days from notice that their registration is effective to file. Even those entities do not report U.S. persons as beneficial owners. Read FinCEN’s own BOI page before relying on any of this, because it is an interim rule, and this requirement has changed direction more than once already.

Work an example of each side. A Brooklyn founder forms a New York LLC in the spring of 2026 to run a design studio. No federal BOI report is required, and no filing service needs to be paid. Compare a private limited company incorporated in the United Kingdom that files an Application for Authority with the New York Department of State on March 1, 2026 to open a U.S. sales office. That entity is a reporting company. It has 30 calendar days from effective registration to file its initial report identifying its beneficial owners, excluding any who are U.S. persons, and its company applicants. There is no fee to file directly with FinCEN.

New York added its own requirement, and the federal exemption does nothing about it. The New York LLC Transparency Act, enacted in December 2023 and amended in 2024, requires limited liability companies formed in or authorized to do business in New York to disclose beneficial ownership to the Department of State, with an effective date of January 1, 2026. It applies to LLCs only, not to corporations, and it borrows the federal statute’s exemption categories, with exempt companies expected to attest to their exemption rather than simply staying silent. Because the state law was amended before it took effect and the federal rule shifted twice, confirm the current filing window, the form, and the penalties directly with the Department of State.

The common mistake: paying for a report you do not owe. FinCEN has issued public warnings about correspondence that requests payment to file beneficial ownership information, references a nonexistent “Form 4022” or “Form 5102,” or claims to come from a “US Business Regulations Dept.” that does not exist. There is no fee to file BOI directly with FinCEN, and FinCEN does not send initial penalty correspondence by phone or email. If a letter about beneficial ownership arrives with a payment request and a QR code, it is a scam. The second common mistake runs the other way, a New York LLC owner reads that the federal requirement went away and concludes the state requirement did too. Different government, different statute.

Going forward, put a recurring reminder to check the federal rule’s status at least annually, and treat any undated article on this subject as worthless. Keep an internal ownership schedule current regardless of what the filing rules say, the exercise of listing everyone with 25% or more and everyone with substantial control is useful for your operating agreement, your bank’s own customer due diligence, and any future sale of the business. Our business management team keeps that schedule alongside the entity documents. This is general information rather than legal advice, and the reporting rules here have been unusually unstable, so confirm the current requirement with counsel before you file or skip anything.

Two practical reasons to keep the ownership analysis current even with no filing obligation. Banks conduct their own customer due diligence when you open a business account and periodically afterward, and they ask essentially the same questions the federal rule asked: who owns 25% or more, and who exercises control. Having a clean schedule ready turns a two-week account opening into a two-day one. And any eventual buyer, lender, or institutional investor will ask for the identical information in diligence, along with the ownership history behind it. Companies that reconstruct ownership from memory during a transaction lose weeks and give up negotiating room.

Finally, keep perspective on the penalties that made this such an anxious topic in 2024. The statute carries civil penalties that accrue daily, adjusted annually for inflation, plus criminal exposure for willful violations, which is why the on-again off-again deadlines caused so much alarm among small business owners. None of that applies to a domestic entity under the current interim rule. It could apply again if the rule changes, which is the whole argument for keeping the underlying information organized rather than deciding the question is closed.