Why Choose an LLC for Your Startup in NY?
Organizing and developing a new business requires important decisions and careful planning. With so many considerations, setting up an LLC can be a smart move that can benefit numerous companies.
Forming an LLC offers absolute protection and corporate-level benefits for a small business. If you’re in or around New York and are considering starting a small business, read further to see how to open an LLC in NY.
Reasons To Choose an LLC for Your Start-up
Opening an LLC, or limited liability company is a method of declaring a business, its owners, and members and defining the different jobs or roles of the business associates. An LLC is also a form of protection against liability, debt, or other business-related defaults. Let’s look at some benefits of establishing an LLC in New York.
You Can Separate Your Assets From Professional Assets
Small business owners can separate their personal assets from the company’s by forming an LLC. This separation legally places a barrier between personal and professional operations.
For instance, if a small business, “A,” was sued by another person or company, and there wasn’t an LLC set up for business “A,” the plaintiffs could also sue for personal assets of business “A”’s owners.
Devastating financial news for a business shouldn’t necessarily wipe out the owners’ personal finances, as they are more likely to become a societal burden. Leaving small businesses the opportunities to rebuild or re-brand encourages further entrepreneurialism, a vital aspect of the American economy and workforce.
Easy to Setup and Low Upkeep Cost
Another important aspect of developing an LLC is the relative ease of formation and operation. To get started, a business must file Articles of Organization.
In essence, this outlines what the business is, what name the company will operate under, the chief operating officers and their titles, and what percentage of the business is owned by which members or managers.
To file these articles, the LLC must send the application via fax, online by email, or traditional ground mail to the state offices of New York. A $200 filing fee must be paid to the state before processing the LLC paperwork begins.
Once received and processed, the business will be sent its Employer Identification Number (EIN.) This number confirms the small business is doing work in the state and also allows certain business organizational and financial moves to be made.
For example, once incorporated as an LLC, it’s wise for the business to open a company bank account and begin using the business information as a conduit for all LLC legal and financial activities.
In New York, an LLC must post notice of its intent to operate in two newspapers for six consecutive weeks. The posts should occur within 120 days of the LLC receiving its EIN.
Once the notices have been posted, the newspapers will report proof of publication. This proof of publication must then be sent to the New York Department of State, along with a $50 filing fee and a publication affidavit.
An additional expense to consider is the drafting of an operating agreement. This document defines the member roles in the business, the percentage of ownership, and other details that can be determined before the company gets rolling.
Once these licensing and publishing fees are fulfilled, much of the cost of forming the LLC has been covered. Changes can be made as necessary, but there are usually only nominal fees to be concerned with. Find more details here about how to open an LLC in NY.
Pass-Through Taxes – No Double Taxes
With a corporation, there are often taxes for the business to pay, as well as taxing associates for their earnings about company assets, stocks, or dividends.
For a small business with fewer employees, members, or associates, an LLC only works as tax protection to charge the company for its earnings and not the owners.
Most dividends for a small business directly relate to its bottom line earnings since stocks and investment opportunities probably aren’t yet available. Otherwise, small business owners could end up paying taxes on their business earnings AND their earnings, which are more than likely to be the same.
You Can Create a Business Entity – Separate Credit Cards and Other Assets
Separating a small business from its owners’ personal assets allows small businesses to take risks to create a sustainable business model. If separation and protection weren’t available, only the wealthy would attempt to start businesses, which isn’t a very equitable capitalistic plan.
With an LLC, loans, credit cards, and other financial tools needed to grow a small business from the ground up can be used without fear of personal finances and assets suddenly being put in jeopardy if the company happens to fail.
Furthermore, an LLC helps maintain the separation between business and individual(s) if the business is mired in legal troubles. Having a business sued can be devastating for the company, but it does not have to spell ruin for the company’s founders.
An LLC helps to give a small business the benefits it may need to grow into a major corporation, but without as many rules or restrictions as a corporate entity will have to abide by.
Corporate business structuring usually requires a Board of Directors and formal officer listings, established by-laws, recording minutes of meetings, and presentations of company earnings and growth in annual sessions.
With an LLC, a business can forgo most of these official reports and statements and instead focus on establishing and growing the business and its brand.
Another important flexibility in LLCs exists in the forms of ownership and profit sharing. Businesses can register as either single or multi-member, with no restrictions on how many members there are in the company.
This flexibility often allows numerous small investors to bring an idea to fruition instead of relying on one or two large investors to hold all the stakes.
Then, the LLC members can decide to appoint a single partner as the main manager or can structure the company to be managed by each partner equally. The structuring is determined by the needs of the shareholders and can be adjusted as needed.
Profit sharing is equally organized and formalized by the individual partner-owners. Once put in writing and agreed upon, the LLC can draft its rules and regulations, assuming they abide by state and federal rules and regulations.
Unlimited owners and greater ease of profit-sharing through an LLC’s flexibility is a benefit for any start-up. Especially those looking to find their footing quickly and steadily in a competitive marketplace.
Is an LLC the Best Entity for Your Start-up?
Creating an LLC is the best move for most start-ups and should be one of the first formal steps of a burgeoning business. A few exceptions are law offices, accountants’ firms, medical offices, or partnerships. These businesses should file as Limited Liability Partnerships.
Key differences usually involve only allowing licensed professionals as members of an LLP, and there must be at least two partners starting the LLP. These businesses are unavailable for incorporation in all states, so check with state offices for your particular location.
Choosing a path that can protect the traveler and improve the journey is wise. Whether LLC or LLP, protection and support are important tools for start-ups.
How Can We Help You?
If you’ve found yourself or your associates ready to take a business plan to the next step, organizing and forming an LLC is an excellent move for many reasons. At Windsor Corporate Services, we’re ready to help you through those next steps, so your process of registration and declaration is a smooth transition into proper business ownership.
Our dedicated team of professionals can offer advice and service to help establish your business, regardless of size or scope. For three decades, Windsor services have helped tens of thousands of companies through the filing and publishing process for incorporation.
What Are Our Different Plans?
Depending on the size and scope of your LLC, as well as prior experience in filing, Windsor Corporate Services can manage all parts of the LLC process. We offer filing plans in three tiers.
- The Ultimate Package includes all services and filings necessary to register your LLC ASAP.
- A Standard Package includes all of the Ultimate, except a fee for expediting all state filings. This is the best choice if you aren’t in a time crunch.
- The Basic Package offers several actions and services, like an a la carte menu, so clients can pick and choose what they have taken care of vs. what they will handle themselves.
Get Started Today
Filing as an LLC shouldn’t be a daunting task. With the help of Windsor Corporate Services, your portion of the process may only take a few hours, and you can see your ideas become realities in no time.