Although municipal law may apply to operational issues such as the acquisition of business licenses, and federal law applies to the offering of corporate shares to outsiders, New York corporate law is mostly state law. You don't have to do business within the state of New York to establish a corporation there.
A New York corporation is formed by filing a certificate of incorporation with the New York Department of State and paying the appropriate filing fee. The certificate of incorporation requires you to list a name for the corporation that is different from that of any other business entity authorized to do business in New York. The name must also indicate its limited liability status by including a suffix such "Corporation," "Incorporated," or "Limited," or an abbreviation thereof. You must name a registered agent to receive the corporation's official correspondence, and you must name at least one director.
Generally, the shareholders of a New York corporation cannot be sued for the corporation's debts. Nevertheless, corporate creditors can sue a shareholder who personally guarantees a corporate debt. State law also allows corporate creditors to sue individual shareholders if the corporation fails to act like a separate legal entity -- some ways of failing to act like a separate legal entity include not filing corporate tax returns or by co-mingling corporate and shareholder funds.
Generally, New York corporations must pay corporate income tax at the federal, state and local level. However, any income generated by an S corporation is reported on the individual tax returns of the shareholders, rather than being taxed at the corporate level. New York's state corporate income tax is called the franchise tax, and is based on income derived from in-state activity. New York offers a reduced state income tax rate for businesses with net incomes of no more than $390,000 and total capitalization of no more than $1,000,000. Municipalities such as New York City impose income taxes on corporate income derived from local activity. New York City does not offer a reduced corporate income tax rate for small businesses.
A New York corporation must approve corporate bylaws that deal with basic issues of corporate governance. Shareholders and directors must govern the corporation, although officers may be appointed as well. Certain decisions, such as the decision to dissolve the corporation, can be made only by shareholders. The corporation may operate with as few as one shareholder and one director, but it may appoint additional directors and issue shares to new shareholders if permitted by the bylaws. The shareholders must hold a formal annual meeting, even if there is only one shareholder. The directors may take action without a meeting if all directors consent to the action in writing. Directors do not have to be residents of New York or shareholders of the corporation unless required as per the certificate of incorporation or bylaws.