Business & Banking Law
New York Business & Banking Law Attorneys
Coughlin & Gerhart is a full-service law firm with offices across New York and Northern Pennsylvania.
We maintain a comprehensive business and banking law practice to meet the needs of corporate and financial institution clients. The clients we serve range from small and emerging entrepreneurial businesses to some of the largest financial institutions in upstate New York.
With a thorough understanding of both business operations and the regulatory environment, the attorneys in the Business & Banking Practice Group are prepared to assist individuals or business entities in formation and organization; preparation of internal governance documents; drafting and review of contracts, leases, and agreements; commercial lending; and sophisticated merger, acquisition, and divestiture matters. By drawing on the combined experience of our attorneys, paralegals, and support staff, our firm offers the resources that businesses expect of their legal counsel.
We believe our approach is unique. Our attorneys have the singular goal of listening so we fully understand our client’s desired outcome. We work tirelessly to define and implement the appropriate solution. We adhere to a pragmatic, team-based approach, often working closely with attorneys in the firm’s other practice groups as well as with your trusted advisors, such as your accountant, financial advisor, or insurance agent. This helps us to consider every dimension of your situation and deliver our legal solutions efficiently.
The Business & Banking Practice Group offers its clients a full range of services relating to business banking matters, including:
- Banking Law and Creditors’ Rights
- Business Formation, Mergers & Acquisitions, Dissolution & Succession Planning
- Commercial Law & Commercial Real Estate
- Health Law
- Hemp & Cannabis Law
- Not-for-Profit Law
Contact Coughlin & Gerhart
To arrange a confidential consultation in which you can discuss your legal needs with one of our lawyers, contact our firm via email, or call our Binghamton headquarters at (607) 821-2202, toll free 800-646-3420.
Business & Banking FAQ
What are the common types of business entities in New York?
In New York, there are several types of business entities that you can choose from, each with its own characteristics and legal implications. Here are some of the main types:
Sole Proprietorship: A business owned and operated by a single individual. There is no legal distinction between the owner and the business entity. The owner is personally liable for all business debts and obligations.
Partnership: The relationship of two or more individuals to do business together who share profits, losses, and responsibilities. There are three common types of partnerships:
General Partnership (GP): A partnership where all partners are equally liable for the full obligations of the GP.
Limited Partnership (LP): A partnership with both general and limited partners. General partners have unlimited liability, while limited partners’ liability is limited to their investment in the LP.
Limited Liability Partnership (LLP): A partnership in which partners are licensed to provide certain professional services, such as attorneys or physicians. An LLP provides limited liability to each partner.
Limited Liability Company (LLC): An LLC offers limited liability protection to its owners (called members) while providing flexibility in management and taxation. It combines elements of partnerships and corporations to offer a flexible management structure. An LLC, by default, is not taxed at the entity level with the only tax being the personal tax of the members.
Business Corporation: A legal entity separate from its owners (shareholders). Corporations provide limited liability protection to shareholders and have a more formal structure with directors, officers, and shareholders. There are three common types of business corporations:
C Corporation: The standard type of corporation, providing limited liability to shareholders as investors. C Corporations are subject to double taxation. This means the corporation will pay tax on its profits and then shareholders will pay personal taxes on dividends or capital gains received from the C Corporation.
S Corporation: A type of corporation that elects to be taxed under Subchapter S of the Federal Internal Revenue Code. It offers limited liability to shareholders and certain tax benefits such as having no entity level tax on profits. An S Corporation cannot have more than 100 shareholders, shareholders must be a US citizen or US national, all shareholders must be private individuals and cannot be entities such as an LLC cannot invest in the S Corporation, and there can only be one class of stock with equal distributions among the shareholders.
Professional Corporation (PC): A corporation formed by professionals (e.g., doctors, lawyers) providing professional services. It provides limited liability protection but is subject to specific regulations for licensed professionals.
Not-for-Profit Corporation: A corporation formed for purposes other than making a profit, such as charitable, religious, educational, or social objectives.
How do I choose the right business structure for my venture in New York?
Choosing the right business structure for your venture in New York is a critical decision that impacts your legal obligations, liability, taxation, and operational flexibility. To make an informed choice, begin by evaluating your business’s nature, size, goals, and anticipated growth. Consider whether you want personal liability protection, as entities like LLCs and corporations can shield your personal assets from business obligations. Next, assess the tax implications of each structure; for instance, LLCs offer pass-through taxation, while corporations may face double taxation. Reflect on your desired management structure, as corporations have a formal hierarchy, while partnerships and LLCs offer more flexibility. Also, delve into compliance requirements and administrative overheads associated with each entity type. If your venture involves licensed professionals, an LLP or a PC might be appropriate. Coughlin & Gerhart can provide legal advice and help weigh the pros and cons of each option based on your specific circumstances.
What are the legal requirements and procedures for registering an entity in New York?
To register an entity in New York, you typically need to follow these steps:
Choose a Business Structure: Decide on a legal structure (e.g., sole proprietorship, partnership, LLC, corporation) for your business.
Select a Business Name: Choose a unique name that complies with New York State regulations and is distinguishable from existing entities.
File Articles of Incorporation/Formation: Submit the required formation documents to the New York Department of State. For LLCs, file Articles of Organization; for corporations, file Articles of Incorporation.
Appoint a Registered Agent: Designate a registered agent with a physical address in New York to receive legal documents on behalf of your business. Your registered agent can be you, a co-owner, an employee, or other adult.
Obtain an EIN: Obtain an Employer Identification Number (EIN) from the IRS for tax purposes.
Register for State Taxes: Depending on your business activities, register for state taxes like sales tax, income tax, and employment taxes.
Apply for Permits and Licenses: Identify and apply for any required business permits or licenses based on your industry and location.
Open a Bank Account: Establish a business bank account to keep your personal and business finances separate.
It’s advisable to consult legal and tax professionals to ensure you meet all specific requirements for your business type and industry in New York. Coughlin & Gerhart can assist you in the process of forming your entity.
What are the advantages and disadvantages of forming a sole proprietorship in New York?
Forming a sole proprietorship in New York offers simplicity and control. Advantages include ease of setup, minimal regulatory requirements, and direct control over business decisions. You retain all profits and make quick decisions. However, there are downsides. You’re personally liable for business debts and legal issues, risking personal assets. Limited access to financing due to the absence of partners can be a challenge. Further, sole proprietorships may lack credibility compared to incorporated entities. Tax-wise, you report business income on your personal tax return, simplifying taxation but possibly facing higher rates. Coughlin & Gerhart is available to consult as to your particular situation and the best options for your business.
What are the key considerations for forming a partnership in New York?
When forming a partnership in New York, key considerations include:
Partnership Agreement: Draft a comprehensive partnership agreement detailing roles, responsibilities, profit sharing, decision-making, dispute resolution, and exit strategies to prevent future conflicts.
Legal Structure: Choose between general partnership (equal liability), limited partnership (limited liability for some partners), or limited liability partnership (partners who work in licensed professions and have liability protection) based on industry, risk tolerance and financial contributions.
Naming: Select a unique and distinguishable partnership name, adhering to state naming regulations.
Registered Agent: Appoint a registered agent with a physical New York address to receive legal documents.
Filing: File a Certificate of Partnership with the New York Department of State, except for general partnerships which may simply file a Certificate of Assumed Name.
Taxation: Partnerships are pass-through entities, meaning profits and losses are reported on partners’ individual tax returns.
Permits and Licenses: Obtain necessary permits and licenses based on your industry and location.
Liability: Understand partners’ liability for business debts and obligations.
Exit Strategy: Establish procedures for partner withdrawal, retirement, or dissolution in the partnership agreement.
What are the legal requirements for forming a corporation in New York?
To form a corporation in New York, you must fulfill these legal requirements:
Name: Choose a unique and distinguishable corporate name ending with “Corporation,” “Incorporated,” “Limited,” or an abbreviation. Verify name availability with the New York Department of State.
Registered Agent: Designate a registered agent with a physical address in New York to receive legal documents.
Articles of Incorporation: File Articles of Incorporation with the Department of State, including details about the corporation’s purpose, stock structure, and registered agent.
Bylaws: Draft internal bylaws outlining the corporation’s management structure, roles, responsibilities, and operating procedures.
Directors: Appoint an initial board of directors responsible for major decisions and corporate governance.
Initial Meeting: Hold an organizational meeting with directors to adopt bylaws, elect officers, and address other essential matters.
Employer Identification Number (EIN): Obtain an EIN from the IRS for tax purposes.
State and Local Permits: Obtain necessary licenses and permits for your business activities.
Franchise Tax: Register for and pay New York State’s franchise tax.
Shareholders Agreement (Optional): Draft internal shareholders agreement that all shareholders sign. This controls the rights and obligations of and among the shareholders of the corporation. While not required by law, a shareholders agreement is a common agreement entered into when forming a corporation.
There can be additional requirements to establish your corporation as a legal entity in New York. Coughlin & Gerhart is available to assist with this process.
How do I choose and register a business name in New York?
To choose and register a business name in New York:
Name Availability: Ensure your desired name is unique and distinguishable from existing entities. Search the New York Department of State’s business name database.
Name Rules: Follow naming rules for your type of business entity, including using appropriate endings like “Corporation,” “Incorporated,” “Limited,” or abbreviations. Avoid prohibited terms.
Trademark Search: Check for trademarks with the U.S. Patent and Trademark Office to avoid potential infringement issues.
Online Filing: Register your business name through the New York Department of State’s online filing system or by submitting the appropriate forms by mail.
Filing Fee: Pay the required filing fee.
Trade Name (DBA): If your business operates under a name different from your legal entity’s name, file for an assumed name with the office of the Secretary of State of the State of New York or file for a “Doing Business As” (DBA) with the county clerk’s office.
Renewal: Maintain your business name registration and renew it as required.
Can I change the legal structure of my business in New York after it's formed?
Yes, you can change the legal structure of your business in New York after it’s formed. The process often involves specific steps such as:
Choose New Structure: Select the desired new structure, such as converting from a sole proprietorship to an LLC or changing from a partnership to a corporation.
Conversion: If permitted by law, file conversion documents to convert the business entity into a different type of business entity.
Dissolution: If required, dissolve the existing entity. This might involve settling debts, notifying partners or creditors, or filing dissolution documents.
Formation: Form the new entity by filing the appropriate formation documents (e.g., Articles of Organization/Incorporation) with the New York Department of State.
Transfer Assets: Transfer assets, contracts, and licenses from the old entity to the new one.
Tax and Permits: Update tax registrations, permits, and licenses associated with the new structure.
Contracts and Agreements: Review and modify existing contracts and agreements as needed.
Employee and Payroll: Address any changes related to employees and payroll.
Consulting with professionals is recommended to ensure a smooth transition and compliance with regulations. Coughlin & Gerhart is available to assist with these complex legal issues.
What are the legal considerations for conducting due diligence in commercial real estate transactions in New York?
Title and Ownership: Verify the property’s title to ensure there are no liens, encumbrances, or disputes that could affect ownership. Review the chain of title, title insurance, and any recorded documents to identify potential issues.
Zoning and Land Use: Confirm that the property’s current and intended use align with local zoning regulations. Check for any variances, restrictions, or non-conforming uses that might impact your plans.
Environmental Concerns: Assess the property’s environmental history and potential risks. This may involve Phase I and Phase II environmental assessments to identify any contamination or hazards that could affect the property’s value or your ability to use it as intended.
Permits and Approvals: Review any necessary permits, licenses, or approvals required for the property’s use. Ensure compliance with building codes, health regulations, and other local requirements.
Lease and Tenant Analysis: If the property includes leased space, thoroughly review existing leases to understand tenant obligations, rent rolls, lease terms, and potential disputes. Evaluate the financial stability of tenants and any lease renewal or termination options.
Financial Analysis: Examine the property’s financial performance, including income, expenses, and potential for rental growth. Assess the property’s cash flow and potential for appreciation over time.
Physical Inspection: Conduct a comprehensive physical inspection of the property to identify any structural, mechanical, or maintenance issues that may require attention. This could include building systems, roof condition, foundation, plumbing, and more.
Easements and Access: Investigate whether there are any easements or rights of way that grant third party access to or use of the property. Ensure that there are no encroachments or boundary disputes.
Litigation and Liabilities: Check for any ongoing or potential legal disputes related to the property. This could include pending lawsuits, property tax appeals, or other liabilities that could impact the property’s value.
Utilities and Infrastructure: Confirm the availability and adequacy of utilities such as water, electricity, sewer, and telecommunications. Evaluate the property’s infrastructure to determine if any upgrades or repairs are needed.
Historic Preservation and Conservation: If the property is located in a historic district or has historical significance, assess any restrictions or requirements related to preservation and conservation efforts.
Public Records and Assessments: Review public records and tax assessments to ensure accurate property information, assess property taxes, and identify any potential discrepancies.
What are some of the legal considerations for financing commercial real estate transactions in New York?
Loan Agreements and Documentation: Thoroughly negotiating and accurately documenting loan terms, repayment schedules, interest rates, and collateral are vital to establish the legal framework of the financing arrangement.
Regulatory Compliance: Compliance with state and federal lending regulations is crucial. New York has specific usury laws that set limits on interest rates, and the federal Truth in Lending Act (TILA) requires transparent disclosure of loan terms.
Due Diligence: Lenders need to conduct thorough due diligence on the property to assess its value and potential risks. This includes examining property title, zoning regulations, environmental conditions, and any existing legal disputes.
Lease Analysis: If the property generates rental income, lease agreements and tenant stability play a significant role. Reviewing leases helps understand cash flow, potential tenant turnover, and any lease-related legal issues.
Property Valuation and Appraisals: Accurate property valuation through professional appraisals is crucial to determine the property’s market value. This valuation affects the loan amount and terms.
Default and Foreclosure Processes: Loan agreements should outline the procedures and legal rights in case of default. New York’s foreclosure process is judicial, involving court oversight and specific timelines.
Professional Consultation: Engaging legal and financial professionals experienced in New York’s real estate laws ensures that the financing structure complies with regulations, protects both parties’ interests, and minimizes potential legal pitfalls. Coughlin & Gerhart is experienced in these types of complex commercial transactions.
Not-For-Profit Law FAQ
What are examples of different types of tax-exemptions that not-for-profit corporations can achieve?
501(c)(3) Charitable Organizations: These are charitable, religious, educational, scientific, literary, or cultural organizations. They are exempt from federal income tax and can receive tax-deductible contributions. They often engage in public benefit activities and must meet certain criteria to maintain their tax-exempt status.
501(c)(4) Social Welfare Organizations: These organizations promote social welfare, such as community improvement or advocacy. They can engage in lobbying and some political activities, but these activities must not be their primary focus.
501(c)(6) Business Leagues and Trade Associations: These organizations are formed for the improvement of business conditions in a particular industry. They engage in activities that benefit their members, such as promoting education and networking.
501(c)(7) Social and Recreational Clubs: These clubs are organized for pleasure, recreation, or social purposes. They must be supported primarily by membership fees and not engage in substantial business activities.
501(c)(8) Fraternal Beneficiary Societies and Associations: These organizations provide benefits, such as life insurance or pension plans, to members. They must be organized for the exclusive purpose of providing these benefits.
What are some of the legal obligations and reporting requirements for not-for-profits in New York?
Incorporation and Governance: Register with the New York Department of State and establish a board of directors. Adopt and adhere to bylaws outlining the organization’s internal structure.
Tax Exemption: A not-for-profit corporation may apply for federal tax-exempt status with the IRS. File Form 1023 or 1023-EZ and meet ongoing IRS regulations, if applicable. Seek New York State tax exemption.
Financial Reporting: Maintain accurate financial records and undergo annual audits or reviews. Submit annual Form 990 or variation to the IRS, disclosing financial details, if applicable.
Fundraising and Solicitation: Register with the NY Attorney General’s Charities Bureau before soliciting donations. Provide transparent financial information to donors.
Board Oversight: Board members uphold fiduciary duties and oversee organization’s activities.
Public Disclosures: File annual financial reports with the Attorney General’s Charities Bureau. Make certain financial and organizational details available to the public.
Employee and Volunteer Compliance: Adhere to federal and state labor laws. Ensure that, employees and volunteers are classified correctly.
Program Reporting: Report program activities and outcomes to demonstrate mission fulfillment.
Lobbying and Advocacy: Comply with rules on lobbying and political activities to maintain tax-exempt status.
How does New York law regulate the governance and management of not-for-profit organizations?
New York regulates the governance and management of not-for-profit organizations through the New York Not-for-Profit Corporation Law (N-PCL) and related statutes. Here’s an overview:
Incorporation and Structure: Organizations must file Articles of Incorporation and adopt bylaws detailing internal procedures.
Board of Directors: The board oversees the organization and is regulated by, fiduciary duties of care, loyalty, and obedience. Conflicts of interest must be disclosed and avoided.
Meetings and Records: Regular board meetings are mandated, with accurate minutes and financial records kept.
Financial Oversight: Audits or reviews may be required, along with annual financial reports, including Form 990, if applicable.
Fundraising and Donor Relations: Registration with the Charities Bureau is necessary for fundraising. Transparent financial disclosures to donors.
Compensation and Transactions: Compensation must be reasonable, and material transactions with interested parties disclosed.
Membership: Some organizations have membership structures conferring specific rights.
Liabilities and Protections: Directors and officers are generally shielded from personal liability when fulfilling duties.
Public Accountability: Organizations must meet reporting and transparency requirements, ensuring public and donor accountability.
Additional laws may apply based on the organization’s activities. Legal guidance is essential to ensure adherence to these regulations and effective organizational management. Coughlin & Gerhart is available to assist with these issues.
How does New York law address the responsibilities and liabilities of board members and officers of not-for-profit organizations?
New York law addresses potential liabilities of not-for-profit board members and officers through the following mechanisms:
Fiduciary Duties: Board members owe fiduciary duties of care, loyalty, and obedience to the organization’s best interests.
Reasonable Care: They must exercise reasonable care and prudence in decision-making.
Conflicts of Interest: Board members must disclose and address conflicts, avoiding self-dealing and prioritizing the organization.
Indemnification: Organizations can indemnify board members for legal expenses incurred while acting in their official capacity, subject to limitations.
Liability Protection: When fulfilling fiduciary duties in good faith, board members are generally protected from personal liability.
Insurance: Liability insurance can further shield board members and officers from potential legal claims.
Proper Procedures: Adhering to proper organizational procedures and acting in the organization’s best interests can minimize individual liability.
Dissolution Responsibilities: Board members have specific duties during dissolution to ensure proper asset distribution.
Employee and Volunteer Oversight: Responsibility for compliance with labor laws and regulations rests with board members.
Legal Compliance: Ensuring the organization complies with federal and state laws is a key duty of board members and officers.