Lawyer Tracy Jong
Featured Attorney Patent Application
FIND US ON
2300 BUFFALO ROAD, BUILDING 100A
ROCHESTER, NY 14624
Meet Our Staff
Patent Searches - Domestic And Global
US Patent Applications (Provisional/Utility/Design)
PCT & Foreign Applications
Trademark Clearance Search
Learn More About IP Law
Restaurant, Winery & Liquor License Law
Buy / Sell Business
Permits / Licenses
State Liquor Authority Proceedings
Trademark, Copyright, Patent
Learn More About RWL Law
Tiered Pricing Options
Courses And Forms
Make A Payment
Business And Personal Blog
Intellectual Property Blog
Restaurant, Winery, And Liquor Law Blog
Contact Information & Directions
Make A Payment
For attorneys, I know your time is valuable, and so far, Tracy and Sue are the best, most down-to-earth lawyers I have ever met. It is my pleasure paying for their advice about my businesses because I know that ultimately it will save me money in the long term.
Roy Schukraft, RJS Janitorial & Schu-Shine Inn
Restaurant, Winery and Liquor
RESTAURANT, WINERY, AND LIQUOR LICENSE LAW INFORMATION
LIQUOR LICENSES AND LAW
WINERIES AND MICROBREWERIES
IP FOR RESTAURANTS, WINERIES, AND MICROBREWERIES
RESTAURANT, WINERY, AND LIQUOR LICENSE LAW INFORMATION
The average business owner may find it difficult to distinguish between the different types of business entities and to determine which is right for your business model. The short answer is that there is no one-size-fits-all solution – each type of organization has its advantages and disadvantages. The decision should be made after reviewing the tradeoffs to determine what works best for your particular situation. Consulting various professionals, particularly your attorney and accountant, can give you information that can help you make the decision.
Once you have determined the entity, you should understand the process involved in forming the business type properly to comply with state laws and regulations. Each entity has its own legal requirements to fill and its own set of documents that must be executed. Even after the entity is formed, you may be required to maintain corporate records with annual meeting minutes or resolutions to record changes. It is important that you understand your responsibilities.
After you have formed the business, it is equally important to know what your duties and responsibilities are through the life of the business. You should also be aware of your rights as a business owner and what action you can take when those rights have been violated.
Learn More About Business Formation:
Types of business entities
There are basically six types of business organization legally permitted by New York (and most states). Below is a general overview of the different entities and how they differ from one another:
A sole proprietorship exists when an individual goes into business selling goods or services. This individual has full control of the company, but takes full responsibility (called “assuming liability”) for what happens with the business. This means that if the business is involved in a legal case and a judgment is reach, the individual is personally liable to satisfy it.
From a tax standpoint, this type of business organization is attractive for people with multiple sources of income, as the business losses may offset the income earned from other sources. From a liability standpoint, this is risky because your personal assets are not protected.
When two or more individuals pool resources and share profits and losses from the business, they have formed a general partnership. Each partner can make decisions on behalf of the business (unless there is a partnership agreement that states otherwise). The partners equally assume the liabilities of the business.
Taxes are reported individually on each partner’s tax return. Like a sole proprietorship, a general partnership may be ideal if there are multiple sources of income that could be offset by losses in this particular business. From a liability standpoint, this is risky because your personal assets are at risk for not only your own actions, but actions of your partner on behalf of the business.
It is highly recommended to put in place a detailed partnership agreement so that one partner does not end up assuming liability for the actions of another. Not only does the partnership agreement protect each partner, but it can also outline the roles and responsibilities of each person involved.
A limited partnership has two types of partners: general partners who control the business and assume full personal liability for their actions and inactions regarding the partnership, and limited partners who have no decision-making authority and are only liable for their individual investment. A limited partnership requires a written partnership agreement to outline the roles and responsibilities of the various partners. Limited partnerships are only recommended when there are many passive investors because there are many required filings and administrative complexities.
Corporation (C-corp, S-corp and professional corporation)
A corporation is an independent legal entity. This means that if the business is involved in a legal matter, the liability is on the company itself, and not the shareholders of the company. There are several players involved in a corporation: shareholders own stock in the company and appoint the board of directors; the board of directors appoints the officers; the officers hold the highest authority in the corporation and are authorized to make the majority of business decisions.
C-corps face “double taxation” in that the corporation pays taxes as its own entity, and shareholders pay taxes on their dividends. Some corporations can claim S-corp status strictly for tax purposes. S-corp status allows shareholders to report corporate profit and loss on individual tax returns, so federal taxation is incurred only once. An accountant would be able to determine if this is advantageous and the best way to file the corporate taxes.
Individuals who hold a license in certain professions can form a professional corporation (PC). A professional corporation gives the business the benefits of a corporate structure while preserving the personal and professional relationship between them and the clients they serve. Only individuals licensed under the specific professional service can be shareholders.
It is worth mentioning that corporations are expansive to start up and are governed by more complex rules and regulations, such as annual meeting minutes. It is important to be very familiar with the by-laws, as they dictate how the business is managed and how changes in the corporate structure take place (for example, how you would elect a new officer or what must happen if someone decides to resign).
Limited Liability Company (LLC)
Like a corporation, an LLC allows owners or members to have authority, but they are not held personally liable for business debts and legal matters. An LLC is owned by members. The members can manage the company, or they can appoint a manager to run the company for them.
Taxes are generally reported on individual members’ tax returns. In this way, an LLC does not incur double taxation like a C-corp. In some cases, an LLC may prefer to elect to be treated for tax purposes like a corporation rather than a partnership with “pass-through” taxation.
Like a PC for corporations, professional limited liability company (PLLC) is available for licensed professionals, such as doctors, dentists, lawyers, accountants, etc.
LLCs tend to be more expensive to start up (in New York, they require the extra step of legal ad publication and subsequent filings with the NY Department of State). However, an LLC is not required to maintain corporate records with annual meeting minutes like a corporation. They tend to be a bit more costly to form, but less costly to operate over time.
Limited Liability Partnership (LLP)
An LLP is a general partners in which each partner is responsible for his or her own actions. Liability is limited for the actions of other partners and for signing contracts on behalf of the LLP. An LLP is primarily suited for professionals.
Sole proprietors: d/b/a, fictitious name and Assumed Name
If you are an individual or a partnership, you can visit your local county clerk and file a certificate of assumed name or partnership. The forms are generally available at the county clerk’s office and the current filing fee is around $33 outside New York City. You can also “create” your own form, as long as you include all of the required information. The following is an example:
Certificate Of DBA (PDF)
It is important to understand that filing this certificate merely places the public on notice that you are using a certain business name and where you can be located if someone wants to serve legal papers on you. Filing the certificate does not mean that the name has been checked for availability – that no other business is using that name in the state or that your use of the name is not infringing on someone else’s trademark. The county clerk merely collects a fee to record your document, but does not necessarily review it for any purpose other than sufficiency of basic filing criteria – a properly completed form and payment of the correct fees. Without undergoing a proper
, you may one day find yourself receiving a cease and desist from another business using that name or a similar name. It is possible to file for a name that someone has filed for and using in another county at the same time. There is no cross-check between state corporation filings and county clerk assumed name and partnership filings.
It is also important to understand that an assumed name is NOT the formation of a business entity. It is simply holding yourself out under another name. There is no legal protection between your personal assets and your business assets. Everything is on the line when you do business as a sole proprietor. Depending on the risk involved, this may not pose a problem and be perfectly appropriate for your situation. In fact, there are some circumstances where liability insurance mitigates the risk better than or as well as a corporate entity.
Assumed Name (d/b/a) for corporations
If a domestic or foreign corporation wishes to do business under another name, it must apply for a Certificate of Assumed Name (commonly called a “d/b/a” for “doing business as” or a fictitious name). The filing must be done in Albany through the Division of Corporations of the Department of State. In addition to the $25 New York Department of State filing fee, an additional county filing fee is collected based on the county (or counties) in which the corporation is doing business or intends to do business. The county fee is $25 per county, except for the counties of New York, Kings, Queens, Bronx and Richmond, for which the additional fee is $100 per each county. The completed Certificate of Assumed Name, together with the appropriate filing fee, should be forwarded to the New York Department of State, Division of Corporations, One Commerce Plaza, 99 Washington Avenue, Albany, NY 12231. All checks greater than $500 must be certified.
A corporation may have several assumed names. It is not uncommon for a business to have several trade names – different divisions, product names of business identities. Think about a cereal company or a car company. A car company has many different car brand names. A cereal company has many different cereal brand names. For each of these names, the company would need to file a Certificate of Assumed Name.
Understanding a Not-For-Profit
A not-for-profit is an excellent opportunity to contribute to the public and achieve a defined mission. While not-for-profits provide many benefits, they are heavily regulated and often misunderstood. It is important that before you spend the time and energy in setting up the not-for-profit and inviting people to join the board, you understand its structure and major regulations.
No one “owns” a not-for-profit – not even the founder. A not-for-profit is a public entity that cannot be unilaterally owned, sold or run. It is established for the public good.
Fundraising is an important aspect of a not-for-profit, but this area is highly regulated, and you should be aware of what you are and are not allowed to do to raise money for your organization. Many not-for-profits want to host games, raffles and auctions, but there are complex layers of law governing these types of fundraising. For example, in an auction, only the amount of money that the buyer spends above the market value (which must be disclosed before the auction) of the item is tax-exempt as a contribution. If you are going to help run a not-for-profit, be sure you understand exactly how to organize any fundraising event.
In order to gain 501(c)(3) status of a not-for-profit, you must be extremely precise in your mission and business plan. In today’s economy, potential contributors (especially the government) are much more selective about where their donations go. If you are looking for major contributions to your not-for-profit, you will need to display precisely and eloquently what you want ot accomplish and how you are going to do it.
Process for Forming a Business Entity
Before going through the process of forming a new business (whether it is an LLC, corporation, S-corp, partnership or not-for-profit) it is important to understand the process and all of the steps involved:
Meet with the attorney to determine any legal or practical barriers to forming a business entity; discuss goals for the business, what kind of entity will be formed, who will participate in the business, how it will be financed and how owners will be paid out from the entity.
Perform a name search to determine if the proposed name of the business is available for use.
Perform a trademark search, if desired (recommended, not required) to determine if the company name and/or logo is available for branding.
Determine the logistics of the new company and communicate with attorney to draft the appropriate documents, including:
best tax scenario for new entity (with business’s tax advisor)
financing (especially debt obligations of each owner) for the new entity
management scheme for new entity
profit-sharing scheme for new entity and how owners will take profit from the business
how owners come into and leave the business over the years
Drafting of formation documents (Articles of Incorporation/Certificate of Partnership/Articles of Organization).
Filing formation documents with the County Clerk or New York Department of State Division of Corporations to officially create the legal entity. The filing receipt that is issued is conclusive and presumptive evidence that the conditions incident to the formation of a business entity have been properly fulfilled.
Arrange for publication, if required.
Order a corporate minutes book, stock certificates and seal (if desired, not necessary).
Draft Operating Agreement/Bylaws/Partnership Agreement.
Obtain a Federal Employer Identification Number for the new entity; open a business bank account using the FEIN, if necessary.
Make and file tax elections for the new entity per the recommendation of the business’s tax advisor.
Client review of and comment on draft Operating or Partnership Agreement or Bylaws.
Prepare final Operating Agreement/Bylaws/Partnership Agreement and Organizational Meeting Minutes.
Execute agreements and minutes, issue stock or membership certificates.
File certificate of publication if required.
File Certificate of Assumed Name (“d/b/a”) if applicable.
The Organizational Meeting
In order to officially form the corporation, the Incorporator must hold the Organizational Meeting. At this meeting, the by-laws should be adopted, the Directors should be elected, officers are appointed and all other relevant business should be conducted.
The following actions are prudent at the Organizational Meeting by the Board of Directors Resolution:
Authorize S-Corp status (if applicable)
Adopt a form for the minutes of the Board meeting
Adopt shareholder agreements, if any
Elect Directors and Officers
Designate Chairpersons and member of committees
Delegate any duties or Directors that will be handled by officers or employees of the Corporation
Authorize the application of Federal IRS tax exempt status
Authorize the application of New York State Sales Tax
Authorize the application to United States Postal Service for Third Class Bulk Mailing Rates
Adopt any assumed names and logos, if necessary
Authorize a corporate back account
Authorize the payment of organizing expenses and filing fees
Authorize the establishment of a ledger and appropriate corporate records
Adopt a fiscal year for the corporation
Authorize a mileage reimbursement rate at the current year IRS rates
Ten Steps to Incorporate a Not-for-Profit Corporation in New York State
Step 1: Determine your broad charitable purpose. (Be sure it qualifies for not for profit status.)
Step 2: Gather your founding group of charitable members. These people should support the charitable purpose; however, additionally your goal is to assemble a group of individuals with diverse qualities and resources to aid in the mission and charitable purpose. You will need leaders, workers, financial people, and fundraising people to name just a few.
Step 3: Draft a Mission Statement to state your charitable purpose. This will be used by the founding group of individuals as objectives toward which the group may direct its collective energies. What do you intend to accomplish?
Step 4: Identify potential funding sources and to determine the availability of funds to conduct the Mission Statement of the organization.
Step 5: Obtain some “startup finances” which will serve to enable your organization to obtain some professional services. You will need legal and accounting services to get officially created and file for 501(c) not-for-profit status. The cost will likely range between $500 and $3,000 for this initial work unless the services are donated.
Step 6: Create a list of interested individuals from within your founding group who are interested in becoming the initial Board of Directors of the new Not-for-Profit Corporation. The minimum number is three (3) individuals and their names, addresses and telephone numbers must be collected for the incorporation filing paperwork.
Step 7: Incorporate the founding group into a New York Not-for-Profit Corporation. When trying to determine the name of the corporation, a ranked list of names should be created in order of preference. Each entry must include the work “corporation,” “incorporated” or “limited,” unless it is being organized for a religious purpose of daycare centers and clinics. The name cannot be similar, meaning it must be differentiated by words not mere numbers or letters, to any existing corporate entity without the permission of said entity, or imply that the corporation is a government entity, or imply that the corporation is a government entity, or be indecent or obscene, or contain a form of the word designating any licensed professional in New York State, or contain the word or synonyms of “museum” or “school.”
Step 8: Draft an initial set of Corporate By-laws which will serve as the procedure that the Board of Directors and the Shareholders of the Corporation utilize to make decisions on behalf of the Corporation.
Step 9: Hold the Organizational Meeting. The Incorporator must hold the Organizational Meeting to formally create the nonprofit corporation. At this meeting the by-laws should be adopted, the Directors should be elected, and all other relevant business should be conducted. You should consider applying for 501(c)(3) status and adopting a conflict policy.
Step 10: Begin your charitable work!
Role of the accountant
The account or tax advisor plays an important role in the business formation. It is through his or expertise that determines how the entity’s tax filings are recorded with the IRS. He or she can also set up the various financial aspects that are necessary for the daily operation of the business. The account should be able to:
Advise client on how to set up tax filings (for example, as an S-corp)
File for sales tax authority if necessary
File appropriate payroll-related items for employees (worker’s comp, disability, unemployment, state tax enrollment, etc.)
Open business bank accounts
Create a record keeping plan that meets tax needs
Owning a business: obligations and best practices
Forming the business entity is only the first of many steps to starting your business. Any business that hires employees is subject to the laws requiring the withholding of federal social security taxes, as well as federal and state income taxes. It is also responsible for paying for unemployment insurance, workers’ compensation and disability insurance, and for filing wage reporting reports. Below are other important actions to take or tips to keep in mind while establishing and operating your business:
Set up a chart of accounts to record financial transactions. Create a general ledger and bookkeeping system (either manual or computerized) to account for cash receipts and cash disbursements, assets and liabilities. Establish financial management, auditing and internal control systems to ensure accuracy.
Your business may use one of two bookkeeping systems: single-entry or double-entry. The single-entry system is easier to keep; the double-entry system, although more complex, assures better accuracy and control. In double-entry bookkeeping, your business keeps journals and ledgers. Transactions are entered in a journal and then, at certain times, summary totals are posted to ledger accounts showing income, expenses, assets, liabilities, and net worth. The system is self-balancing because, generally, each transaction is shown as a debit entry in one account and a credit entry in another. Total debits must always equal total credits; if they don’t, it is evident that an error has been made. At the end of an accounting period, your business will be able to prepare a profit and loss statement reflecting current operations, and a balance sheet showing the overall financial position of the business. Single-entry bookkeeping concentrates on the profit and loss statement and not the balance sheet. It is a partial system that records the flow of income and expenses using a daily summary of cash receipts, a monthly summary of receipts, and a monthly check disbursements journal.
If you are not familiar with bookkeeping and to not have the resources to hire an experienced bookkeeper, you should probably choose a software program like QuickBooks that is well-known and user-friendly. QuickBooks also has payroll processing options and an online service so that you can take care of your bookkeeping anywhere there is internet access.
In order to ensure compliance with federal and state tax regulations and to be sure that you are taking advantage of as many tax benefits as possible, retain an accountant or tax advisor for tax planning and to create accounting records and financial reports.
The Tax Department is required to collect wage reporting information based on definitions used by the Department of Labor in administering the unemployment insurance program. If your business falls under the provisions of the New York State Unemployment Insurance Law, you are required to file a quarterly wage report with the Tax Department. In addition, every employer paying wages or making certain other payments (such as pensions) subject income tax withholding must file a return and pay the taxes required to be withheld.
Within 20 calendar days of hiring (or rehiring) an employee, you must report to the Tax Department certain identifying information. The hiring date is the first day any services are performed for which the employee will be paid wages or other compensation. For each new employee, you must report the employee name (first, middle initial, last); employee address (street, city, state, and ZIP code); employee social security number; employer name; employer address (street, city, state, and ZIP code); and employer identification number (assigned by IRS). This information is best submitted on federal Form W-4 and mailed to the New York State Tax Department.
Most businesses are required to collect state and local sales and use taxes for the goods or services they provide. If this includes your business you will need to register the business as a vendor before selling your goods or services. In addition, your business must be registered as a vendor in order to issue most New York State sales tax exemption documents. This is important as it will keep you from paying too much tax. For example, when your business (including a wholesale distributor or manufacturer) buys goods or services that it intends to resell, it must provide the supplier with a properly completed exemption document (resale certificate) to make the purchases without payment of tax and, in most cases, the business must be registered in order to issue that document.
If your business is required to be registered as a vendor, it must obtain a Certificate of Authority from the Tax Department. This certificate gives your business the authority to collect the required sales and use taxes, and to issue or accept sales tax exemption documents, including resale certificates used for purchasing inventory. If your business makes taxable sales before it receives the Certificate of Authority, it may be subject to substantial penalties.
New York State law requires employers to provide short term disability, workers' compensation and unemployment coverage to employees. Information about these types of insurance and the forms needed to apply for the insurance are available from private insurance companies or from the local office of the State Insurance Fund. With all of your options, you should take the time to research and shop around. Depending on your business (and sometimes your lease agreement), you may also need to consider additional types of insurance, including general liability, property, professional responsibility, sexual abuse and non-owned auto liability.
You must establish a payroll system (manual or automated). Your payroll system will need to stay compliant with withholding requirements, requirements for payment of funds withheld and reporting requirements for funds withheld (federal, state & city). You will need to determine whether individuals performing services for the business are employees or independent contractors. Listing employees as contractors to avoid taxes can have severe and costly consequences. Establish a system for preparing and filing Form W-2s for employees and 1099s on behalf of independent contractors. The filing frequency is based on the size of your payroll.
Set up a mandatory system for maintaining records for each employee. State and federal law have certain minimum standards of recordkeeping which include (1) names and social security numbers, (2) W-4 and I-9 forms, and (3) for each payroll period the: (a) beginning and ending dates, (b) the days (weeks, etc.) each employee worked and the earnings for each day (week, etc.) and (c) all payments made to the employee, including bonuses and vacations.
It can be difficult trying to keep up with all of the requirements involved in payroll processing, so it preferable to use a payroll company to handle this part of your business. An accountant or a reputable payroll service provider can provide these services and will assume the liability for failure to pay withholdings. Software services such as QuickBooks can also facilitate payroll processing.
Smart Business Practices
Compose job descriptions for staffing needs. Hire staff and set compensation levels. Prepare a personnel manual. Each of these actions will set a standard that employees can use to understand and meet expectations and to which you can refer when an employee is failing to do his or her part.
Determine your tax responsibilities as a new business owner. These will vary depending on the type of organization or entity you operate. Determine if your business may have registration and bonding responsibilities for taxes administered by the Tax Department.
Find out if your business has any licensing and registration requirements with federal, state and local regulatory authorities.
Every employer must meet federal and state recordkeeping requirements, which include payroll information (including direct deposit authorization), insurance and other benefits information and a personnel file that saves disciplinary, review and promotion documentation. Additionally, employers must maintain records that show they have reviewed documents that identify each employee and show that each employee is eligible to work in the United States. Your business must have each employee complete federal Form I-9, Employment Eligibility Verification. Employers must keep these forms for three years after the date an employee is hired or one year after the date that employment ends, whichever is later. Medical information, payroll, personnel and I-9 files should all be retained separately (as opposed to filing all information for one employee in a single file).
Cigarettes and Tobacco Products
If your business sells cigarettes and other tobacco products (such as cigars, pipe tobacco, and snuff), at retail in New York State, it must register with the Tax Department before making any sale. There is also a $100 nonrefundable fee for each retail location. (If your business intends to sell cigarettes at retail in New York City, there are additional filings).
Owners or operators of cigarette or tobacco product vending machines located in New York State must also register with the Tax Department before making any sales. There is a $25 nonrefundable fee for each vending machine to be registered.
Registrations for either of these permits expire on December 31 of each year and must be renewed annually. The Tax Department automatically sends the renewal application prior to the renewal date.
In addition, if your business owns, operates, or maintains one or more cigarette vending machines located at premises owned or occupied by another person, your business must file as a wholesale cigarette dealer that only operates vending machines. There is no application fee or bond required.
Sure ways to make your business fail
New entrepreneurs often unintentionally cause the demise of the business that they worked so hard and invested so much time and money to build. To avoid this trap, avoid the following common mistakes:
Being too nice or too pushy. Letting competitors and customers walk all over you is a sure way to sink your business. Likewise, an overly aggressive demeanor or “ruthless” reputation will not win you the loyal customer base that small businesses need to survive. Instead, know your boundaries and approach sensitive issues firmly, but with tact.
Go it alone. It is rare that one person can handle all of the business decisions, financial planning and daily operations without burning out or making mistakes. Experts and professionals are not out there to steal your hard-earned money. Choose your consultants wisely and utilize their expertise and resources to ensure that your business runs smoothly and complies with laws and regulations.
Broadcast your competitive advantages. If you are lucky enough to have discovered or developed something that will set you apart from you competitors (called a “trade secret”), find a way to implement it without disclosing it entirely.
Confuse your business and personal lives. If you find yourself desperately trying to recall the last time you spent quality time with friends or family or devoted some time to your favorite hobby, then it’s time to take a step back. Ignoring the importance of a work-life balance puts you on the fast-track to entrepreneurial burnout.
Collecting your bills: Service of Process on debtors
At some point during the life of your business, you may run into an issue in which you wish to seek a legal remedy, usually when customers fail to pay the bills. You should know the process of filing a legal suit against a person or entity so that the right steps are taken at the right time to ensure the likelihood of being granted any remedies.
The first step to initiate the suit is to file a legal document called the Summons and Complaint. Before filing this document, you must identify the potential defendants that fall under the jurisdiction of the Court.
Once a Complaint has been filed with the Court, it will need to be served on each defendant with a copy of the complaint. The plaintiff has 120 days from the filing of the Complaint to serve each defendant with process papers. The procedure for service of process is complex with numerous rules and regulations that must be followed EXACTLY as detailed below. Failure to comply can result in the dismissal of the case.
Method of Service
The server must be a person who is at least 18 years old and not a party of the lawsuit. If a private process server is used, the vendor must possess a license to serve process in New York State.
SERVING AN INDIVIDUAL
An individual may be served as long he/she is not a minor (under the age of eighteen (18)), an incompetent person, or a person whose waiver has been filed. Further, for all the methods listed below, as long as the individual is clearly identified and presented with the process papers, they are deemed to be served. For instance, if the individual opens the door to his residence, sees the process server, and closes the door or flees, the server can leave the papers at the door as long as he clearly identified the individual as the person to be served.
There are four methods by which an individual can be served:
First, the individual may be served by delivering the process papers to him/her personally.
The second method of services is by “delivering the summons within the state to a person of suitable age and discretion at the actual place of business, dwelling place or usual place of abode of the person to be served” AND by mailing the summons by first class mail either to the person at his/her actual residence or place of business. New York State describes someone of suitable age and discretion someone that can be reasonably expected to give the papers to the individual that is being served. For instance, a fifteen year old child of the defendant would be very likely to give the documents to the parent and therefore satisfies this requirement. If the process papers are to be mailed to the individual’s residence, mailing to his/her last known residence will suffice. If the process papers will be mailed to the individual’s place of business, the envelope must bear the following characteristics: (a) must bear the legend “personal and confidential” (b) cannot indicate on the outside (including by return address) that the package is from an attorney or concerns an action against the person to be served (c) the delivery and the mailing must be effected within twenty days of each other. The proof of service must be filed within twenty days of either the delivery or mailing – whichever is effected later.
A third method is to deliver the process papers to an agent:
A person may be designated by a natural person, corporation or partnership as an agent for service in writing, executed and acknowledged in the same manner as a deed, with the consent of the agent endorsed hereon. The writing shall be filed in the office of the clerk of the county in which the principal to be served resides or has its principal office. The designation shall remain in effect for three years from such filing unless it has been revoked by the filing of a revocation, or by the death, judicial declaration of incompetency or legal termination of the agent or principal.
The fourth method to serve an individual is used as a last resort when the other methods could not be completed with due diligence. The server can affix the process papers to the door of either the “actual place of business, dwelling place or usual place of abode within the state AND by either mailing the summons to his/her residence of place of business. If the process papers are to be mailed to the individual’s residence, mailing to his/her last known residence will suffice. If the process papers will be mailed to the individual’s place of business, the envelope must bear the following characteristics: (a) must bear the legend “personal and confidential” (b) cannot indicate on the outside (including by return address) that the package is from an attorney or concerns an action against the person to be served (c) the affixing and the mailing must be effected within twenty days of each other. The proof of service must be filed within twenty days of either the affixing or mailing – whichever is effected later.
SERVING A PARTNERSHIP
There are two methods for serving a partnership:
First, personal service can be upon either partner as outlined above (see serving an individual).
The second method is to serve the summons to the managing or general agent of the partnership or to the person in charge of the office of the partnership AND by mailing the summons to the partner thereof (should be mailed by first class mail to last known residence or place of business).
If the first two methods above cannot be completed with due diligence, service can be fulfilled by affixing a copy of the summons to the door of the actual place of business of the partnership.
Finally, personal service can be made on a partnership upon any other agent or employee of the partnership as authorized by appointment/designation.
SERVING A LIMITED LIABILITY PARTNERSHIP
A limited liability partnership can be served by personally serving any managing or general agent or general partner of the limited partnership in the state or any other agent appointed/designated to accept service of process.
SERVING A CORPORATION
Process papers may be served to an officer, director, managing or general agent, or cashier (any officer of a moneyed institution, who is entitled by virtue of his office to take care of the cash or money of such institution) or assistant cashier or to any other agent authorized by appointment or by law to receive service (A receptionist or secretary may not be authorized to receive process even if they receive all other mail). A business corporation may also be served pursuant to section three hundred six or three hundred seven of the business corporation law.
To identify individuals who may be authorized to receive service of process, there are three options:
Call the company and ask who is authorized to accept service of process.
Search the online database for New York business entities at http://www.dos.ny.gov/corps/bus_entity_search.html
Contact the New York Department of State, Division of Corporations for this information at (518) 473-2492.
Another option is to serve the New York Secretary of State in Albany, New York if the defendant is a corporation that is incorporated or licensed to do business in New York State. Papers must be delivered, NOT mailed to the Secretary of State’s office at One Commerce Plaza, 99 Washington Avenue, Albany, NY 12231 (Two Copies of the Process with Process Cover Sheet and DOS Search Page(s) must be served to the location). Process should be brought to the Customer Service Counter located on the 6th Floor with a check to pay the fee of $40.00 for serving the Secretary of State.
In order to serve the Secretary of State, the process server must complete three steps:
The Process Server must determine the identity of the entity intended to be served. In many cases, the name of the entity intended to be served may be similar to, or even the same as, the name(s) of other entity(ies). The Process Server, and not the DOS, is responsible for identifying precisely which entity is intended to be served. The Process Server may provide DOS with the presumed name of the entity intended to be served, and request DOS to search its official data base for entities with that name. The DOS will provide the Process Server with a list of entities having names that are the same as, or similar to, the name provided by the Process Server.
The Server is required to obtain the “DOS search page(s)” for the entity the Process Server intends to serve, and staple it to the process papers. When the Process Server determines which entity is to be served, DOS will provide the Process Server with the "Current Status Information" (and, if applicable, the "Filing History Information" and/or the "Name History Information") for that entity. The "Current Status Information" (and, if applicable, the "Filing History Information" and/or the "Name History Information") are referred to as the "DOS Search Page(s)." A process server with access to the official DOS database may print his or her own copies of the DOS Search Page(s) for the entity he or she intends to serve.
Finally, the process server must complete the “Service of Process Cover Sheet” which can be found at http://www.dos.ny.gov/forms/corporations/0277-f-l.pdf.
A complete guide on serving the Secretary of State can be found at the department of state website (http://www.dos.ny.gov/corps/servinstr.html).
SERVING A LIMITED LIABILITY COMPANY
Process papers may be served personally to any member if the management of the company is vested in its members (member-managed LLC), to any manager of the company if the management of the company is vested in its managers (managing member-managed LLC), or to any other person authorized/designated to receive service.
“NAIL AND MAIL”
“Nail and Mail” is a method of service authorized by New York state law that can be used as a last resort if the methods outlined above are ineffective.
After a process server makes three (3) attempts at service at different times of the day, the server can tape a copy of the summons and complaint to the door of the defendant’s home or office AND mail a copy by certified mail, return receipt requested, to the defendant’s home address.
PROOF OF SERVICE: CONTENTS
A proof of service in the form of the server’s affidavit is required to prove service to the court. The proof of service must specify the papers served, the person who was served, and the date, time, address, or, in the even there is no address, place and manner of service. Also, the proof of service must set forth facts showing that the service was made by an authorized person and in an authorized manner.
Whenever process papers are served on an individual, proof of service must also include a description the person to whom it was delivered, including, but not limited to, sex, color of skin, hair color, approximate age, approximate weight, height, and other identifying features. Finally, the proof of service must also include the dates, addresses and the times of attempted service.
PROOF OF SERVICE: RECOMMENDED PRACTICES
In order to preempt any potential objections to the method of service of process, several precautionary measures should be taken. First, the process server should take digital photos of the service and premises to hedge against potential objections regarding service and each affidavit of service should have a detailed “report” (i.e. notes) from the process server describing each unsuccessful/successful attempt. Also, for each service of process, two original affidavits be completed, each with a copy of the summons and the first page of the complaint stapled. A preferred affidavit of service is attached.
Tracy P. Jong, Esq. |
| Developed by
Signature Sharpe Solutions
This website may constitute attorney advertising in some states. All rights reserved.