Everything You Need to Know About Establishing an LLC in New York!

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The benefits of an LLC are that it offers a limited corporation liability while also giving the flexibility and lack of formalities provided by a partnership or sole proprietorship. This means that if your LLC fails, the owner’s personal assets are not.

Why should I form an LLC?

An LLC offers tax benefits such as avoiding double taxation, enhanced flexibility with financial instruments, and flexibility to share profits with other shareholders. With proper documentation, your business assets and the assets of its members are protected from creditors.

To maintain the level of protection offered by the LLC, it is critical to maintain an LLC bank account and an LLC IRS Form 1120 (Statement of Ownership) for keeping records and avoiding any disputes. While the above advantages are many, for some small businesses, it may be hard to justify the expense associated with establishing an LLC. 

We are here to help with a step-by-step guide about how to start an LLC in New York. 

What are the advantages and disadvantages of forming an LLC?

On the plus side, An LLC is a “pass-through” entity, and owners can still own a personal property. While it is not an automatic ownership, a company with no owner but an active governing board can exist under an LLC. A corporation can be established at the Secretary of State office as a simple file. Since you have separate income and different owners, you may be able to set up a dual corporation. Some states will allow a corporation or partnership not to pay income taxes.

The major disadvantage of an LLC is if you leave your organization before your one-year holding period, your assets are no longer protected by the LLC and you can have lawsuits initiated against your assets if the organization itself fails.

What is the New York LLC formation process?

Unlike corporations, LLCs are established when the formation papers are filed with the appropriate state’s Division of Corporations. The New York State Division of Corporations is in Albany, New York. To establish an LLC in New York, it is vital to get a license with the state.

Although the process can vary depending on the size of the LLC and the state it is set up in, New York’s Uniform Forms & Forms 3, UFOC, and New York LLC Forms provide the needed help to establish an LLC in New York. Before you can do this, it’s essential to have a general understanding of LLCs. A basic understanding of how to incorporate an LLC can help you understand how to set one up.

If you’re an entrepreneur seeking to start a business in New York, then you’ll want to know how to form an LLC. To form an LLC in New York, you will have to file your Articles of Organization with the New York Department of State.

Get started on your business today by following the step-by-step guide below to form a New York LLC. You’ll be your own boss in no time!

 

1. Name Your LLC

Choosing the right company name is an essential first step in starting your LLC in New York. The name you choose should be unique enough to identify your company and easy to search for, on the web. Deciding on a company name can be challenging. You want something memorable and easy to spell, but you also want it to be distinctive enough that it won’t infringe on anyone else’s trademark.

New York’s LLC naming guidelines are:

  • Your name must include the phrase “limited liability company” or one of its abbreviations (LLC or L.L.C). Failure to do so will result in a $500 fine and can also subject you to penalties for fraud.
  • For naming your company, there are certain words you can’t use. Things like “FBI” or “Treasury” are not allowed because they could confuse your company identity with a governmental agency.
  • Restricted words require a licensed individual, such as a doctor or lawyer, to be part of your LLC. It’s essential to know the legal implications before you get started.
  • Your name must be distinguishable from any other New York limited liability company, limited partnership, or corporation. New York is a crowded space, and you need to make sure that you’re not too similar to another business.
  • Get some helpful information about naming your business entity on the New York Department of State’s website.
  • Make sure your chosen name is available. To find a name that isn’t taken, you can do a name search on the State of New York website. You’ll be able to find a list of available names and check to see if they are already registered.
  • Make sure a corresponding URL is available. If you’re thinking about starting a business, check to see if your desired web domain name is available. When you buy it now, it will be yours forever, and no one else can use it.

 

2. Designate a Registered Agent in New York

If you’re a New York LLC, you’ll want to choose someone in charge of managing your company’s finances. A registered agent is a person you designate as the person responsible for ensuring that all of your financial obligations are met. There are two important reasons you need a registered agent:

  • To reduce publication costs–you are required to publish a public notice of formation in area newspapers, costing approximately $1,500 if the primary address is in New York City. A registered agent service located outside the city significantly reduces the cost of publication.
  • To maintain privacy – New York’s LLC publication requirements mandate that your principal LLC address be publicly shared. Hiring a registered agent service will allow you to use their address instead of yours, which will protect your privacy. After the publishing requirements are met, you can move your principal office to anywhere in New York State. You will not need to publish additional notices.

 

3. File LLC Articles of Organization in New York

To register an LLC in New York, you’ll need to file Articles of Organization with the Secretary of State. There are several ways to do this, but the best way is by filing online or by mail. If you have an existing LLC, you will need to form a Foreign LLC to expand your business into the state.

 

4. Adhere to New York LLC publication requirements

New York LLC law requires that within 120 days of formation, all LLCs publish a copy of the articles of organization or a notice related to the formation of the LLC in two newspapers (one weekly and one daily).

The local county clerk must approve newspapers that you would designate in your Articles of Organization. After publication, the printer or publisher of each newspaper will provide you with an affidavit of publication.

 

 

5. File your Certificate of Publication

To register an LLC in New York, you’ll need to file Articles of Organization with the Secretary of State. There are several ways to do this, but the best way is by filing online or by mail. If you have an existing LLC, you will need to form a Foreign LLC to expand your business into the state.

 

6. Establish a New York LLC Operating Agreement

Choosing a unique business name is important because your business will be the only one in the state to have that name. It’s important to consider your audience when choosing a unique name, as well as how it will be received by potential customers.

All New York LLCs are required to have an operating agreement. This may be a verbal or written agreement. A comprehensive operating agreement can help your company avoid legal disputes. It also protects you from disagreements with employees, partners, and other business owners.

Those with business partners should create an operating agreement before filing the articles of the organization to ensure everyone agrees. For single-member LLCs, it’s helpful to have something in writing in case you’re incapacitated.

 

7. Obtain a New York LLC EIN

EIN stands for Employer Identification Number. EIN is a nine-digit number assigned by the Internal Revenue Service (IRS). It is a Social Security number for a business. The EIN is used to identify an individual as a company or organization. It’s often used to identify the employer in Internal Revenue Service tax forms.

Final thoughts

The application process for a corporation or partnership has its unique process and requirements. If you want to apply for a limited liability company in New York, you should go over the ins and outs of establishing your LLC before applying.

Your business license is an excellent first step toward establishing your LLC. You’ll also want to be sure you have a registered agent in the state where you plan on doing business. Your LLC may provide you with a lot of flexibility, allowing you to take risks and create new opportunities that would not be feasible otherwise. Get in touch with Windsor Corporate Services to get started with the process!

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