Basic Legal Maintenance for New York Businesses
Disclaimer
The information in this guide is not legal advice and is not intended to be relied upon as legal advice. The guide highlights some essential steps; it does not cover all the related laws and regulations. This guide was last updated on May 30, 2023 and some of the information may have since changed. If you have a legal issue, you should not rely on this information and instead speak to an attorney.
Introduction
Taking care to ensure that you have properly formed your business in New York is a critical first step, but ongoing and regular legal maintenance is equally important to preserve the legal protections and tax benefits throughout the life of your business. Different business entities (LLCs, S-Corps, Professional Corporations and LLCs, etc.) may have unique maintenance requirements.
The following are some of the regular corporate maintenance checklist items that should be in your company’s standard practices:
1. File a Biennial Statement with NY Department of State
a. Due every other year in the calendar month on which your Certificate of Incorporation (for C-corp or S-corp) or Articles of Organization (for LLC) became effective.
b. Filing and payment of nominal fee may be completed online.
c. Professional Corporations (P.C.’s) must also file a Triennial Statement every three years with the relevant licensing agency.
2. Ensure Local, State, and Federal Tax Compliance Quarterly
a. Confirm the business or its accountant has prepared and filed all applicable local (e.g., NYC Department of Finance), state (i.e, NY State Department of Taxation and Finance), and federal (Internal Revenue Service) tax returns.
b. Ensure payment of all applicable taxes, including withholdings, sales, use, excise, and franchise taxes.
3. Review and Update Corporate Records Annually
a. Maintain processes for calendaring and preparing minutes for annual shareholders meeting (required for corporations) and annual directors meeting, including details on all significant corporate actions.
b. Confirm mailing address on record with NY Department of State for official communications and service of process for legal documents.
4. Review Certificate of Incorporation/Articles of Organization and By-Laws/Operating Agreement Annually
a. Reflect on prior year to determine if amendment is needed to Certificate of Incorporation (for corporations) or Articles of Organization (for LLC), such as: the company’s purpose, its management or operations, shareholder or membership types and voting.
b. Reflect on prior year to determine if amendment is needed to By-Laws (for corporation) or Operating Agreement (for LLCs), such as: streamlining or improving management and/or voting structure; and compensation, liability, and indemnification provisions.
5. S-Corporations: Confirm Entity Eligibility Annually
a. For S-Corporations and LLCs with an S-Corporation election, ensure continued eligibility for this business entity, including: (i) fewer than 100 shareholders total, (ii) no more than one class of shares, (iii) no shareholder is a partnership, corporation, or non-resident alien (i.e., neither a US citizen nor lawful permanent resident).
b. Note: New York City does not recognize the S-Corporation form and NYC’s General Corporation Tax will apply to S-Corporations located in or conducting business within the City.
6. Professional and Design Corporations: Confirm Entity Eligibility Annually
a. Confirm all shareholders, directors, and officers have up-to-date licenses for all relevant professional services, unless an exception applies.
b. Review and renew any applicable licenses in the name of the business. (See, e.g., PLLC Guide.)
c. File a Triennial Statement every three years with the relevant licensing agency.
7. Reflect on Significant Corporate Events and Update Internal Policies Annually
a. Identify significant events in the preceding year and in upcoming year that may have legal, tax, or regulatory ramifications, such as:
i. Changes to business purpose, business name or assumed name, or potential for converting to another legal business form or reclassification as a Benefit Corporation;
ii. Identify key legal documents that need drafting, review, or revision such as client, vendor, and employment agreements, commercial leases, and investment and loan agreements;
iii. Identify actual or potential issues such as legal disputes that may lead to litigation or arbitration, and regulatory or licensing issues.
iv. Amend or modify business insurance coverage appropriately with respect to future risk exposure.
b. Review the business’s internal compliance and operations needs, such as:
i. Draft or revise data and privacy policy, document retention and technology policy, employee handbook, etc.;
ii. Consider affirmative intellectual property protections such as trademarking the business name or logo, copywriting the business’s written products, or patenting the business’s unique invention;
iii. Ensure compliance with applicable employment laws including ERISA, FLSA, anti-discrimination ordinances, and wage laws particularly in connection with independent contractors.
8. Consult with a Small Business Attorney as Needed
a. An attorney with experience advising new and existing businesses on these issues is an integral part of your business’s team to ensure the law does not stand in the way of success.
Thank you to attorney Arthur Kats for his help creating this guide.
