New York at a glance
Partnership law
UPA (original)
LLC default split
Proportional to capital
Operating agreement
Written required
Community property
No
Formation cost
$200
Annual cost
$25 biennial statement fee + publication costs
New York is the only state that requires a written operating agreement for LLCs. The state also imposes a publication requirement: within 120 days of formation, LLCs must publish a notice of formation in two newspapers (one daily, one weekly) in the county where the LLC is located. Publication costs range from approximately $395 in cheaper counties to $1,795 or more in Manhattan. New York also still follows the original UPA for partnerships.
Default partnership rules in New York
New York follows the original Uniform Partnership Act (UPA), not the revised version. Partnerships are treated as an aggregate of their partners. A partner's departure, death, or bankruptcy automatically dissolves the partnership. Profits and losses are shared equally by default. Partners are jointly and severally liable for partnership debts. Given New York's large business community and the high cost of disputes, written partnership agreements are critical.
The most important takeaway: profits are split equally by default in New York, regardless of capital contributions. If you and a partner start a business and one of you invests $100,000 while the other invests $5,000, you still split profits 50/50 without a written agreement. This is true in every US state, including New York.
LLC defaults in New York
New York allocates LLC profits and losses in proportion to capital contributions by default. New York is the only state that requires a written operating agreement (oral agreements are not sufficient). The state also imposes a publication requirement: within 120 days of formation, LLCs must publish a notice of formation in two newspapers designated by the county clerk. Publication costs vary dramatically by county, from approximately $395 in less expensive counties to $1,795 or more in New York County (Manhattan). Failure to publish can result in suspension of the LLC's authority to do business. New York imposes both a state income tax and a city income tax (for New York City businesses).
New York defaults to proportional distributions based on capital contributions, which aligns better with many founders' expectations than equal-split states. However, capital contributions alone rarely tell the full story. A founder contributing time and expertise may receive nothing if they didn't invest cash. An operating agreement can account for all types of contributions. Our equity calculator can help you determine a fair arrangement.
What happens when a partner leaves in New York
Under New York's UPA, a partner's departure automatically dissolves the partnership. The remaining partners must wind up the partnership's affairs before reforming if they want to continue. This is a significant risk for New York partnerships. A well-drafted partnership agreement with continuation clauses is essential, especially given the high cost of business disputes in New York.
Important: Because New York follows the original UPA, a partner's departure automatically dissolves the partnership. This is a significant risk that can disrupt the business, alarm creditors and clients, and create tax complications. A written partnership agreement with a continuation clause is essential for any New York partnership with more than one partner.
Marriage and business equity in New York
New York is an equitable distribution state. Business interests acquired during marriage are marital property and divided equitably. New York courts consider 13 statutory factors including the income and property of each spouse, the duration of the marriage, the loss of inheritance and pension rights, and any other factor the court finds just and proper. The appreciation of a separately owned business during the marriage may be marital property if it resulted from the efforts of either spouse.
Even though New York is not a community property state, marriage can still affect your business equity. In equitable distribution states, courts divide marital property based on what is fair, which may include business interests acquired or grown during the marriage. A clear equity agreement and proper documentation of ownership can help protect your business in the event of a divorce.
Formation and cost considerations in New York
| Formation cost | $200 |
| Annual/recurring cost | $25 biennial statement fee + publication costs |
| State income tax | Yes |
| Partnership law | UPA (original) — partner departure dissolves the partnership |
| LLC default distributions | Proportional to capital contribution |
| Operating agreement | Required in writing |
Frequently asked questions
What is New York's LLC publication requirement?
Within 120 days of formation, New York LLCs must publish a notice in two newspapers (one daily, one weekly) designated by the county clerk. Costs range from about $395 in cheaper counties to $1,795 or more in Manhattan. Failure to publish can result in suspension of the LLC's authority to conduct business in New York.
Does New York require a written operating agreement?
Yes. New York is the only state that requires a written operating agreement for LLCs. An oral agreement is not sufficient. The operating agreement must be adopted within 90 days of the filing of the Articles of Organization and must address the matters required by the New York LLC Law.
Does New York use UPA or RUPA?
New York still follows the original UPA. A partner's departure automatically dissolves the partnership, requiring the remaining partners to wind up affairs and reform. Written partnership agreements with continuation clauses are essential.
How much does it cost to form an LLC in New York?
The filing fee is $200, and the biennial statement fee is $25 every two years. However, the publication requirement adds $395 to $1,795 or more depending on the county. Total first-year costs in New York City can easily exceed $2,000 before legal fees.
Related resources
- Equity calculator: find a fair split for your business
- Does your small business need an equity agreement?
- Equity for small businesses: the complete guide
- Dead equity calculator: how much is yours costing you?
- Slicing Pie calculator
- What is an operating agreement?
- All 50 states: partnership and LLC default rules
Partnership laws in neighboring states
Disclaimer: This page provides general information about New York partnership and LLC default rules and is not legal advice. Laws change, and the information here may not reflect the most recent amendments. The formation costs and annual fees listed are approximate and may vary. Consult a qualified attorney licensed in New York for advice specific to your situation. Equity Matrix is a software tool for tracking contributions and calculating equity; it does not provide legal services.
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