How do I form a new company?

How you form a company, very much depends on the form of entity that you choose for your business. Some forms of business can be done with a handshake between partners. Some require a formal agreement, some require filings with the Secretary of State or the division of the Treasury, depending on what state you’re in. Those filings may need to be accompanied by a filing with the Internal Revenue Service, and in the case of limited partnerships and limited liability companies in the state of New York with an affidavit of publication of the existence of these entities in a paper of record for a period of time. How you form a company is very much dependent on the kind of company that you form.

What form of entity is best for my company?

The form of entity is very much dependent on the kind of business that you’re conducting, where that business is being conducted, and several other particulars to your individual business and individual tax situation. The form of entity is a custom suit. It is not something that you can take off the rack. You need to think through your business as it is and as you want it to be and properly plan your entity accordingly.

How do I get an employee identification number (E.I.N.)?

An employer identification number or EIN is a unique designator issued by the Internal Revenue Service. State agencies may issue a local registration number, but the most important registration number is the EIN. The EIN Is the number under which you will file taxes. You obtain an EIN through one of three ways. First, you can apply online and receive an instant PDF document with your EIN number. Second, you can prepare and execute a form SS4, which will be submitted via mail or facsimile to the Internal Revenue Service. Lastly, if you are unsure as to whether or not you have filed a form SS4 or applied online for an EIN, you can file under a letter 147C to obtain a duplicate or to verify your EIN.

How do I determine how my new company should be taxed?

Your new company will be taxed according to what kind of entity you formed, what elections, if any, you made with the Internal Revenue Service, and the state and local laws under which you work. Setting up a company should be done to promote the business and the operations of the company. Setting up a company should not be to try to skimp unpaying taxes. While the Supreme Court has said no one is required to pay more taxes than they’re legally required to do, twisting yourself into knots to lower the tax bill in a marginal way may end up causing greater corporate problems in your future. Therefore, I would always recommend to plan your form of business entity and the location of your business based on the type and location of business you want to conduct. Do not let the tax tail wag the business dog.

What is the publication requirement in New York?

New York is and has been for hundreds of years, the center of International Finance. Initially, finance was conducted through partnerships. Eventually, finance was conducted through corporations. In addition to partnerships and corporations, New York law allows for an entity called a limited partnership to be formed. A limited partnership allows only general liability to the general partners and limits the liability of the limited partners to the extent they put in money.

The limited partnership is the precursor to our modern limited liability company and is an early form of obtaining a tax-efficient investment structure. As part of the original limited partnership act, limited partnerships were required to publish in a paper of record or a period of weeks to give notice as to the limited nature of the liability of the limited partners. That publication requirement found its way into the modern limited liability company law. Any limited liability company, or for that matter, any limited partnership is required to publish in a paper of record for a series of weeks.

Once that is completed, the paper will provide an affidavit of publication or you’ll prepare an affidavit of publication and file it. Failure to do so may mean that a limited liability company may not be able to afford itself. The use of the court system.