You’ve started a business, now what?
After having formed a corporation or an LLC, let’s look at some of the other boxes to check in your first six months of operation in New York State.
Owners’ Agreement
If you have a business partner or co-owner, be certain that you draft an operating agreement (for LLCs) or shareholders agreement (for corporations). These documents state who owns what portion of the firm, how profits and losses will be split, and the assignment of roles and duties. In addition, these documents may include the following:
- Contributions or the amount of money that each owner is investing in the business;
- Salaries and how profits will be divided;
- Titles or what will each owner be called in the company;
- Responsibilities and the accountability or metrics to be used;
- The way in which disputes between the owners will be resolved;
- Who’s liable for problems that may happen; and
- The process for making updates to the agreement, such as
- When an owner wants to leave the company;
- When an owner dies or becomes disabled and unable to work;
- When an owner divorces; or
- When an owner goes bankrupt.
Remember that 80% of business relationships fail. Be protected.
Website
If your business will have a website or an app, make sure you have properly written Terms of Use (aka Terms and Conditions) that state the legal agreements as to the use of your site. This should include user responsibilities and limitations. You also should have a Privacy Policy that describes the way in which user data is collected, used, and protected.
Client Contracts
A well-written, thorough client contract is the cornerstone for a successful working relationship with clients. Some of the key sections to include are the following:
- Scope of Work
- Payment Terms
- Project Timeline and Milestones
- Termination Clause
- Revisions and Amendments
- Confidentiality and Non-Disclosure
- Liability and Dispute Resolution
- IP Rights
- Client Responsibilities
- Force Majeure
A good client contract protects both you and your customers, providing legal security to both parties. It will assist in settling disputes if unforeseen challenges occur.
Taxes
Depending on the type of work you’ll be doing, you may need to register to collect sales tax. If so, you must register as a New York State Sales Tax Vendor. Apply to the State Department of Taxation and Finance for a Sales Tax Certificate of Authority. This registration authorizes you to collect sales and use tax on the sale of taxable tangible personal property, rentals, specific taxable services, and purchases of tangible personal property for resale. Certain sellers of taxable property or services are subject to a presumption that they are sales tax vendors who are required to register and collect state and local sales taxes.
In addition, you must consider licensing and permitting. Find and apply for the right state license or permit. Also, many counties, cities, towns, and villages in New York also require local permits and licenses. You must set up a NY.Gov ID to apply for new licenses and to manage your existing licenses and permits online.
Obtain an EIN
Your business must have a federal Employer Identification Number if any of the following are true:
- Have employees;
- Will need to pay employment, excise or alcohol, tobacco, and firearms taxes; or
- Withhold taxes on income, other than wages, paid to a non-resident alien.
If you don’t need an EIN for federal tax purposes, you can still get one for banking or state tax purposes. However, these numbers aren’t intended for other activities, such as state tax lien auctions, sales or lotteries.
Protect Your IP
Intellectual property or “IP” is probably one of your company’s most valuable assets. This term encompasses the original concepts, designs, discoveries, inventions, and creative work generated by an individual or corporate entity. You should determine if you have tangible assets that should be protected. You should also conduct an IP audit so that your intellectual property is protected.
Purchase the Correct Insurance
Unemployment insurance is required in New York and can be obtained through the State Department of Labor. Workers’ Compensation can be obtained through the New York State Insurance Fund or a private carrier.
Depending on your business structure, location, and employees, you may need disability insurance and health insurance. Disability insurance can be obtained through the New York State Insurance Fund or a private carrier. More information about health insurance can be obtained from the NYS Department of Health. If you have employees, or if you choose to opt in, you’ll need to get insurance for Paid Family Leave.
You should also consider some other types of insurance protection for your company. For example, errors and omissions (E&O) insurance is liability insurance that protects your business from claims of mistake or services you failed to provide. E&O insurance protects your business from customers’ claims of negligence, malpractice, errors, or omissions you allegedly made while providing a professional service. This insurance helps pay for your legal fees and any damages owed or settlements.
Also, Commercial General Liability (CGL) insurance protects business owners against claims of liability for injuries that occur on the business’s premises, property damage, from products, and personal and advertising injury, such as slander and false advertising.
Onboarding Process
If you are hiring employees, it’s easy to make mistakes that will cost you dearly down the road and it’s always best to get professional assistance.
First, have new hires sign an offer that which states their acceptance of the position at your company. You also must be sure the offer letter says if it is contingent on passing a background check and drug test.
The new hire paperwork should include the company’s employee handbook, and explanation of their benefits, such as health insurance, retirement plan, and other perks like PTO, vacation time, and sick leave.
Review company policies and procedures. Provide the new hires’ job description and go over it with them together to avoid confusion as to what their duties. Ask the new hire to complete any other new employee forms, which may include an equal opportunity data form, employee contract, Forms W-4 and I-9, a nondisclosure and noncompete agreement, and a direct deposit form.
Takeaway
The list is long and fairly complicated, but it is manageable with the help of an experienced New York business law attorney.
Reach out to us with your legal needs, and we’ll let you know the value we bring and the cost we charge. You’ll find that we stand by our motto: “Build. Not Billed.”®
LOVE LAW FIRM is here to help you build your business—not just bill you for it.
If you liked this article, check these out as well:
How to Choose the Right Entity for your Business
Why It's Important to be a Great New York Employer
Francine E. Love is the Founder & Managing Attorney at LOVE LAW FIRM PLLC which dedicates its practice to serving entrepreneurs, start-ups and small businesses. The opinions expressed are those of the author. This article is for general information purposes and is not intended to be and should not be taken as legal advice.
© 2025 LOVE LAW FIRM PLLC. All rights reserved.
