Have you been thinking of launching a new business in the ever-boring New York? Well, it is most likely if you can see potential in the flourishing state. Limited Liability Company (LLC) is also becoming a popular option for many people because of its flexibility, ease of management, and limited liabilities.
However, as with any business, there will be risks involved. For you, today we highlight one of the best ways to co-manage risk and potential, ‘LLC’ or Limited Liability Company.
For a smooth journey closer to launching a business, the LLC formation process is provided. It covers the most critical actions required to do so in New York, which will finally lead to a successful LLC venture for you.
Why form an LLC in New York?
Asset Protection: The greatest advantage is that LLCs protect your assets from your business liabilities. In other words, if your company is sued or liquidated, your assets are, for the most part, safe.
IRS-recognized taxation for LLCs: They’re quite flexible in taxation. LLC’s members can choose to report their share of profit/loss on their tax return. It can work out well for people who pay a lower tax rate or want to cover up business losses.
Operating Flexibility: An LLC is more operationally flexible as compared to a corporation. You have the freedom to design business operations as per the requirements including the distribution of profits and the role of the members in control.
Credibility and Professionalism: Getting an LLC allows one to build more credibility and professionalism toward the business. It shows the level of seriousness towards the business venture and helps in being more appealing to future customers or investors.
Simplified Management: LLCs tend to be more administrative light than corporations. This may reduce the legal and accounting costs that would have been spent on the practice.
Step 1: Pick An Exclusive Name For Your LLC
Adhere to The Please Use the Correct Name Guidelines: The name of your LLC should contain the words “Limited Liability Company” or the abbreviation “LLC” or “L.L.C.” This indicates the nature of the business entity being created.
Check Availability: The name that you choose must be that which has not been registered by any other entity in New York. Check whether the name is available by conducting a thorough name search on the New York Department of State’s website. It is also advisable to have a few backup names which can be used in case the initial choice does not work.
Reserve Your Name (optional): On the other hand, if you feel that you cannot file the required documents at the moment, you can still file an Application for Reservation of Name with the Department of State for a maximum period of 60 days. This reservation fee is a nominal amount to ensure that this name has been reserved solely for use by yourself.
Step 2: Designate a Registered Agent
Role of Registered Agent: An LLC must have a registered agent for receiving legal documents including but not limited to service of process notices, government letters, and also compliance notifications.
Who can be nominated: They should be people residing in New York or business companies that are registered to do business in the State. A trustworthy agent should be picked as they will be required to be present at all times during working hours.
Step 3: File Articles of Organization
Complete the Form: The Articles of Organization (Form DOS-1336) is a fundamental record which when filed with the Department of State, recognizes your LLC as a legal entity. Also, other information needed to be included is the primary name of the LLC, its main address, and the name and address of the registered agent.
Submit and Pay the Fee: The Articles of Organization can be submitted to the New York Department of State, either via the Internet, by post, or by delivery. It is $200 because that is the filing fee required to set up your LLC legally.
Step 4: Make an Operating Agreement
Purpose: An Operating Agreement is an internal document that describes what the management structure, roles, and responsibilities within your LLC will be. This document provides a framework for dealing with internal conflicts and making business decisions.
Requirement: You are not obligated to submit this document to the state, nevertheless, according to New York law, an LLC shall adopt an Operating Agreement within 90 days following the filing of the Articles of Organization. This agreement should be customized for the operational needs of the business.
Step 5: Apply for an EIN (Employer Identification Number)
What is EIN: An Employer Identification Number (EIN) is a nine-digit number issued by the federal government for taxation purposes. It is the business version of a Social Security number.
Application: There is nothing complicated about applying for an EIN as the application process is simple. This can be done online on the IRS website and is free of cost. This number is bound to be required in many business activities.
Purpose: If an LLC requires the services of employees, an EIN will be necessary as well. Moreover, it is almost always a requirement when one intends to open a business bank account with a land-based retail bank. It also provides a clear picture of your business to the government to its federal taxation.
Step 6: Meet the Publication Requirement
Publication: Within 120 days after the formation of your LLC, you are required to publish a notice of its formation in two newspapers (a daily and a weekly) in the county where your business is situated. The county clerk will identify the relevant newspapers for the purposes.
Certificate of Publication: Once the publication requirement is fulfilled, complete the Certificate of Publication and submit it to the New York Department of State with the applicable filing fee of fifty dollars. This stage is important if you are to retain the legal registration of your LLC in New York.
Step 7: In compliance with Ongoing Activities
Biennial Statement: The only balance of record-keeping that may be done not less than every four years is recording the Biennial Statement with the Department of State to show the constant update of your LLC. The charge for this filing is nine dollars.
Taxes: Be alert about state taxes such as sales tax, income tax, or any relevant licenses/permits that may be required during the business operations. Tax consultants can enhance how tax compliance is achieved and how the tax regimes may be managed.
If the mentioned steps are followed correctly, your LLC is made to comply with the legal requirements of New York’s jurisdiction, as well as setting an appropriate atmosphere for relative ease of doing business. By starting today, you can reap the benefits of limited liability, flexible business operations, and perhaps favorable taxation. Further assistance, if needed, may be obtained from lawyers with business formation and compliance specialties.
Book a free consultation for clear guidance on how to set up a New York Limited Liability Company and any other services that you may need.
Frequently Asked Questions (FAQs)
Is it possible for someone who is not a resident of New York to establish an LLC in New York?
Of course, non-residents especially foreigners can register an LLC in New York. There are no requirements of residency or citizenship for owners of the LLC.
Do New York LLCs have any annual requirements?
Each LLC is required to submit and pay a biennial statement to the Department of State that is $9 in amount. Furthermore, LLCs have an annual assessment fee which is set regarding the income that is produced by the business.
How much does it cost to set up an LLC in New York?
The Articles of Organization has a filing fee of two hundred dollars. The use of washing facilities, the cost of which shall revolve around the different counties, is among the other expenses. A legal or consultant’s fee may also be incurred if a professional is used to assist in the process.
Is there a provision for foreign LLCs that want to conduct business in New York?
A foreign LLC may conduct business in New York but must first register with the New York Department of State. This requires acquiring an authority application and satisfying a filing fee that is Two hundred and fifty dollars.
Nabin Adhikari
