Key Takeaways

  • New York allows most businesses to register online through the Department of State’s NY Business Express portal.
  • Business owners must comply with tax rules, licensing requirements, and ongoing obligations like biennial statements and, for LLCs, publication requirements.
  • A strong business plan helps with both management and attracting investors.
  • Entrepreneurs can access support from SBDCs, Empire State Development, and local chambers of commerce.
  • Acquired distinctiveness (secondary meaning) is a trademark law concept allowing descriptive terms to gain protection once the public associates them with a specific business.
  • Proving acquired distinctiveness often requires evidence of long-term use, significant advertising, market surveys, or sales data.

Starting an online business in NY requires the same process of acquiring permits and licenses as any other business. These rules are required according to the law governing the opening of a business in New York.

Ten Steps to Starting a New York Online Business

  1. Clearly outline your business idea.
  2. Choose the type of business structure you'll be operating under and register it.
  3. Be sure your business is set up in accordance to the New York tax code.
  4. Obtain the proper permits and licenses applicable to your business.
  5. Create an account at your bank dedicated to the business only.
  6. Pick a location for your business, if applicable.
  7. Have funding and financing in place for the business.
  8. Have a website designed and published for the business.
  9. Begin marketing the business.
  10. Stay current on trends, learn, and remain inspired.

Online Registration Process in New York

New York makes it possible to complete most business registrations online through the Department of State. Entrepreneurs who want to know how to register a business in NY online should follow these steps:

  1. Choose a Business Structure – Corporations, LLCs, and limited partnerships must be registered with the New York Department of State. Sole proprietorships and general partnerships register at the county clerk’s office where the business is located.
  2. File Formation Documents – For an LLC, file Articles of Organization; for a corporation, file a Certificate of Incorporation. These can be submitted electronically through the NY Business Express portal.
  3. Register a Business Name (DBA) – If you are operating under a name different from your legal name, you must file a “doing business as” (DBA) certificate. Sole proprietors file with the county; LLCs and corporations file with the state.
  4. Obtain an EIN – Apply for an Employer Identification Number with the IRS, required for most businesses, especially if you have employees or operate as an LLC or corporation.
  5. Tax Registrations – Register with the New York State Department of Taxation and Finance for sales tax (if selling taxable goods) and withholding tax (if hiring employees). This can be done online.
  6. Licenses and Permits – Depending on your industry, you may need local or state permits. For example, businesses selling alcohol, firearms, or regulated goods require additional approvals.

Completing these steps online helps streamline the process and ensures your online business complies with state requirements.

Understanding Acquired Distinctiveness in Trademarks

When registering your online business in New York, you may also need to consider trademark protection for your brand name or logo. Not all marks are automatically eligible for federal registration. Descriptive terms, surnames, geographic names, and certain slogans often face rejection unless they can demonstrate acquired distinctiveness (also known as secondary meaning).

Acquired distinctiveness occurs when the public comes to associate a descriptive term not just with the type of product or service, but with a particular business as its source. For example, a company using the phrase “Best Bagels in NY” may not initially qualify for trademark protection because the phrase is descriptive. However, if years of consistent use, extensive advertising, and consumer recognition make the public connect that phrase with one specific bakery, it may be registrable.

About Starting an Online Business in New York

Several things must be considered to successfully open an online business that adheres to New York small business law. It's vital that you obtain the proper licenses and permits to be considered a legally operating online business. The type of business you're establishing may require one or more licenses and/or permits before you can begin operation. These include authorization from the federal government, state government, and local city or county authorities.

If the business will be involved with dangerous activities such as firearms, drug manufacturing, or selling alcohol, federal permits and licenses are required. You likely won't need a federal license or permit if your business isn't involved in these types of activities. There's also a difference between an online business selling a product and providing a service in regard to the type of permit needed.

The information and resources you may need to start an online business are available on these websites:

  • New York State Department of State Division of Licensing Services for federal permits and licenses.
  • New York City Department of Consumer Affairs for local permits and licenses for New York City.
  • The New York Better Business Bureau. Visit this site for information about the type of business structure that addresses the needs of your business. An example would be setting up your business as a sole proprietorship or limited liability company.

Once you have any required permits and licenses, you'll need to register the online business with the New York Secretary of State for businesses structured as anything other than a sole proprietorship. A sole proprietorship registers with the county but isn't required to register on a federal level.

File Form SS-4 with the IRS to acquire an employer identification number. This number is necessary to identify your business when paying business taxes. If your business will be structured as a multi-member limited liability company or as a corporation, a federal identification number is required. A business that will be operating under a name other than the individual owner's name must apply for a business certificate or a fictitious name certificate.

How to Prove Acquired Distinctiveness

The U.S. Patent and Trademark Office (USPTO) requires applicants to submit evidence when claiming acquired distinctiveness. Common forms of proof include:

  • Duration of Use – Continuous use of the mark for at least five years is strong evidence under Section 2(f) of the Lanham Act.
  • Advertising and Promotion – Records of substantial marketing campaigns that highlight the mark.
  • Sales Figures and Market Share – Demonstrating commercial success linked to the mark.
  • Consumer Recognition – Survey results showing that consumers identify the term with a single source.
  • Media Coverage – Articles or industry recognition that connect the mark with the applicant.

This evidence helps show that the descriptive or otherwise weak mark has crossed the line into distinctiveness in the minds of consumers.

Tax and Compliance Considerations for Online Businesses

After registering, online businesses must remain compliant with New York’s tax and regulatory environment. Key obligations include:

  • Sales Tax Collection – Online sellers must collect and remit sales tax for goods shipped to New York addresses. The state requires regular filings, which can be completed electronically.
  • Payroll Taxes – Employers must register for New York State withholding tax and unemployment insurance if they hire workers.
  • Publication Requirement for LLCs – New York requires LLCs to publish notices of formation in two newspapers for six consecutive weeks and then file a Certificate of Publication with the Department of State.
  • Biennial Statements – Corporations and LLCs must file biennial statements to keep their business records current.

Failure to stay current on these requirements can result in penalties or administrative dissolution of the entity.

Challenges With Acquired Distinctiveness

Business owners should also be aware of the challenges when relying on acquired distinctiveness for trademark protection:

  • High Burden of Proof – The USPTO often demands extensive documentation, and not all businesses—especially new startups—have the resources to provide it.
  • Time-Consuming Process – Establishing secondary meaning can take years, delaying protection for your brand.
  • Risk of Rejection – Even with strong evidence, examiners may still reject the application if the mark is considered too generic.
  • Competitor Use – While building distinctiveness, competitors might use similar terms, making it harder to show exclusive association.

Because of these challenges, many businesses choose inherently distinctive marks (fanciful, arbitrary, or suggestive terms) at the outset rather than relying on proving acquired distinctiveness later.

Tips for Honing a Business Plan

It's recommended that a potential business owner create two basic business plans. One plan will detail how the business will be managed and operated. The other plan will outline the finances and budget of the business. Both plans need to be thought out, detailed, and in a professional format. Next, create a cover list that includes the following:

  • The business name.
  • The business address and phone number.
  • Owner(s) name.
  • Primary goals.

Business Plan

Because one of the goals of a business is to attract investors, additional information promoting the business should be included in the plan. This information can include the outstanding features that your business will provide, any relevant experience you or your partners bring to the business, several reasons why your type of business will succeed, and the advantages your business has compared to similar businesses.

Financial Plan

The financial plan also needs to be in-depth with pertinent information relevant to start-up costs and the funding of the business. Include information such as an estimation of the businesses operating expenses, estimation of income, an analysis of cash flow, and an estimation of how much volume is needed for the business to break even.

Additional Resources for New York Entrepreneurs

In addition to drafting a strong business plan, entrepreneurs should take advantage of New York’s resources designed to support small businesses:

  • NY Business Express Website – A one-stop portal for filing, licenses, and permits.
  • Small Business Development Centers (SBDCs) – Provide free consulting on financing, marketing, and compliance.
  • Empire State Development – Offers funding programs, grants, and business incentives.
  • Local Chambers of Commerce – Networking opportunities and support for online businesses entering the market.

Using these resources can save time and help ensure that your business is positioned for growth.

Frequently Asked Questions

  1. What is acquired distinctiveness?
    Acquired distinctiveness, or secondary meaning, is when a descriptive mark becomes identifiable with a single business through long-term use and consumer recognition.
  2. How long does it take to establish acquired distinctiveness?
    Often five years of consistent use, backed by strong evidence like advertising and sales data, is required to prove distinctiveness.
  3. Do I need acquired distinctiveness to register my business name in New York?
    Not for business registration itself, but you may need it to obtain federal trademark protection if your name is descriptive.
  4. What evidence helps prove acquired distinctiveness?
    Advertising records, sales figures, market surveys, and media coverage are common forms of evidence.
  5. Should I choose a distinctive trademark instead?
    Yes. Inherently distinctive marks (like unique words or creative logos) are easier to protect and avoid the costly burden of proving acquired distinctiveness.

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