New York asks a new business to register twice, with two different agencies, for two different reasons, and the two are easy to confuse. One is about the name the business trades under. The other is about collecting sales tax on what it sells. I have been through both myself, and I am not going to narrate it, because rules and forms change and the state’s own pages are what a reader should follow. Everything below comes from the New York State Department of State and the Department of Taxation and Finance, linked where used. It is a map of the two registrations, not legal or tax advice.

NYS Sales Tax Starting a Business, NYSTaxDept on YouTube

Two registrations, two agencies

Brick municipal building with stone steps on a clear morning

The name and the tax are separate filings

The assumed name question belongs to the Department of State, and, for sole proprietors and general partnerships, to the county clerk. The sales tax question belongs to the Tax Department. They are independent. Having one does not satisfy the other, and a business can need one and not the other.

Here is the short version of who handles what:

  • Assumed name: applies when a business operates under a name other than the legal name of its owner or entity. Filed with the county clerk for sole proprietors and general partnerships, and with the Department of State for corporations, LLCs and limited partnerships.
  • Sales tax: applies when a business sells taxable goods or services in New York. Handled through a Certificate of Authority from the Tax Department.

The rest of this post takes them in turn.

The assumed name certificate

Own name, nothing to file; another name, a certificate

The Department of State’s page on types of businesses operating in New York is plain about sole proprietors. Filing an assumed name certificate with the county clerk is required only if you operate under a name other than your own, and no formation document is needed. A person trading as Jane Smith, in her own name, has nothing to file. A person trading as “Smith Leatherworks” is operating under a name other than her own.

For general partnerships, the same page says the partners’ agreement is followed by a certificate of assumed name, filed with the county clerk where the business operates.

Corporations, LLCs and limited partnerships take a different route. The Department of State’s Certificate of Assumed Name form is issued “Pursuant to General Business Law §130,” and a completed certificate is filed with the Department of State’s Division of Corporations in Albany. Two notes on that form deserve repeating. It says “You are not required to use this form,” and it says the certificate “should be prepared under the guidance of an attorney.”

The Department’s instructions for completing the certificate give concrete details a filer trips on:

  • The entity’s exact name must match the Department of State’s records, with no abbreviation or other changes.
  • The assumed name cannot include words such as “Corporation” or “Limited Liability Company,” or their abbreviations.
  • The principal address must be a street address. The instructions say “A post office box is not acceptable.”
  • The filing is effective on the date the Department of State files it, and the filing receipt is the proof of filing.

Filing fees are listed in those instructions, and they differ by type of entity and county. I have left the amounts out, because fees change and the instructions are the place to read them on the day of filing.

Deciding what the business is before naming it

Calculator, folder of receipts and pencil on a desk

The entity comes first

The assumed name filing depends on a prior choice: what kind of business entity is being operated. The same Department of State page lays out the contrasts briefly. A sole proprietor has full personal liability for the business’s debts, the business ends on the owner’s retirement or death, and income is reported on the owner’s personal tax return. A general partnership is similar, with partners having joint and individual liability. An LLC files articles of organization and a certificate of publication with the Department of State, and the page says personal liability is limited for members.

That is a description of structures, not a recommendation. Which one suits a given business depends on risk, taxes and plans, and it is the right subject for the first meeting with an accountant or attorney. I covered what to bring to such a meeting in questions for a first accountant meeting, and the entity question belongs near the top of the list.

The assumed name filing follows from that choice, which is why the entity decision comes first.

Do you need to collect sales tax

It depends on what is sold, not how much

The Tax Department’s bulletin, Do I Need to Register for Sales Tax?, starts from what a business sells rather than how much it earns. A business that makes sales in New York subject to sales tax generally must register and obtain a Certificate of Authority.

The bulletin lists the kinds of sellers that must register. They include businesses with a physical presence in New York that sell taxable goods or services, and sellers who deliver taxable products to New York customers in their own vehicles at least 12 times a year. They include repair and installation businesses, and certain others such as restaurants and hotels. Wholesalers and manufacturers also register, to accept exemption certificates. Out-of-state sellers fall under the rule when their sales into New York pass certain thresholds, and marketplace providers and sellers have their own provisions.

Two items on that list matter to a small online or craft-fair seller. Home-based sellers are required to register if they sell taxable items, including online or at craft fairs, and the bulletin says location does not matter. And the bulletin says occasional casual sales from a home usually do not require registration, though taxable items may still require tax to be remitted using Form ST-131.

The bulletin also names businesses that generally are not required to register, including accounting and real estate offices, day care centers and home bakers selling baked goods, since those are not taxable sales. It is a list organized by what is taxable, and what is taxable is a matter for the Tax Department’s own publications or an accountant, not a rule of thumb.

Registering for a Certificate of Authority

Framed blank certificate on the wall behind a shop counter

Twenty days is a scheduling problem

The Tax Department’s page on registering as a sales tax vendor says every seller of taxable property or services must register “before beginning business.” The bulletin on how to register puts a number on it: register at least 20 days before you begin business, and a seller cannot make taxable sales until the certificate arrives. That makes the sales tax registration a scheduling problem. A shop that plans to open on a Saturday needs to have started weeks earlier.

Registration runs through New York Business Express and requires a NY.gov Business account. An Individual NY.gov account is not enough. A separate Tax Department Business Online Services account is needed later to file sales tax returns online. The Tax Department’s page does not mention a fee for the registration.

Once the certificate arrives, the bulletin says it must be prominently displayed at the place of business, including additional locations. A seller with no fixed location can attach it to a vehicle or stand used for business. The bulletin says failing to display it can bring a penalty. A framed certificate behind the counter is the ordinary answer.

Anyone buying some or all of an existing business’s assets has a separate step. The Tax Department’s business information bulletin says to send Form AU-196.10, “Notification of Sale, Transfer, or Assignment in Bulk,” at least ten days before paying the seller or taking over the business.

After the certificate

The state’s money passes through the till

Registration is the start of an obligation, and the same business information bulletin describes it. Once registered, a business acts as a trustee for the state and must pay all the tax it collects or is required to collect, even if customers have not paid. The bulletin says to keep sales tax receipts in a separate bank account and not use the money for other purchases or expenses.

Returns are due quarterly, part-quarterly (monthly) or annually, and must be filed by the due date even when no tax is owed. Sales Tax Web File is mandatory for vendors who do not use a tax preparer, use a computer to prepare filings, and have broadband internet access.

The records rules are specific. The bulletin says to keep records for at least three years from the due date of the return, or from the filing date if later. Every sale, its amount and the sales tax on it must be recorded, with a detailed daily record of cash and credit sales if no written receipt is given. Purchase records should show taxable, resale and exempt purchases. I looked at the general question of how long records last in business records and how long to keep them, and the Tax Department’s three-year rule is one input to that answer, not the whole of it.

The Tax Department’s sales tax page collects the rest: filing instructions, due dates, taxable and exempt sales, and a tool for finding rates by local jurisdiction.

An order of operations

Dependencies set the sequence

None of the sources lays out a sequence, but the dependencies point to one:

  • Decide the entity type, with an accountant or attorney if there is any doubt.
  • Check whether the business name differs from the owner’s or entity’s legal name, and file the assumed name certificate where the entity type requires.
  • Work out whether the products or services are taxable, and register for the Certificate of Authority at least 20 days before the first sale.
  • Open a separate bank account for sales tax collected.
  • Set up records that capture each sale and its tax.
  • Put the filing due dates on a calendar the day the certificate arrives.

For informational purposes only. This post does not give legal or tax advice, and fees, forms and rules change; confirm every step with the New York State Department of State, the Department of Taxation and Finance, and a licensed attorney, accountant or financial advisor before filing.

Sources