One of the easiest ways to legally structure a business (especially a small business) is through a limited liability company, known as Limited Liability Company or LLC. This type of company offers the protection of corporations, that is, it gives members limited liability, but with the difference that the legal requirements for its creation and operation are much more flexible. Creating an LLC in New York is relatively simple and here’s how to do it correctly.
As mentioned above, anyone who wants to launch a new business while protecting themselves against future business debt or lawsuits should consider creating an LLC in New York.
But how do you create an LLC? Is the procedure slow or fast? It’s hard? Actually, the steps to formalize an LLC are few and, in fact, the whole procedure can be completed easily and quickly.
Steps to create an LLC in New York
The process to create an LLC in New York is very similar to that of other states in the country, with its exceptions. Let’s see how it is done step by step:
1. Select the name of your LLC
The first thing you should do to start your LLC is give it a name that:
- Be unique and distinguishable of other business entities that are already registered on file with the New York Secretary of State.
- Contains the words “Limited Liability Company” or the abbreviations “LLC” or “LLC”
To know if the name you have chosen is not occupied by another entity, check its availability in the trade database of the Division of Corporations of the Department of State of New York.
If the name is free, you can reserve it for 60 days by submitting a Name Reservation Request before the Division of Corporations of the Department of State of New York. This request must be submitted by mail. Please note that the filing fee is $20.
If you do not want to use the legal name of your LLC to do business and advertise your goods or services, you can use a false name known as a fictitious business name or DBA (Doing Business As). To do so in New York, you must register this name with the Department of State by submitting an application by mail. Please note that the filing fee is $25.
2. Write the legal address of the LLC
Unlike other states, in New York you will not have to designate a legal representative, that is, a procedural agent for each LLC, since it is the Department of State that automatically receives any legal document that is directed to your business, especially if you have been sued. A section of the Department will take care of sending this documentation to your LLC, but to do so, it needs a physical address.
If you prefer, you have the option to appoint an additional legal representative in New York, either a natural person or a commercial company.
3. File the New York LLC Form
To create an LLC in New York, you must fill out the Articles of Organization, which is nothing more than the form. This document must include the following:
- The name of the LLC.
- The New York county where it will be located.
- The signature of the creator of the LLC.
- A New York address that will be where the Secretary of State will send legal paperwork to the LLC.
- The name and address of the filer of the forms.
The Articles of Organization can be presented as follows:
- By postal mail.
- Online. Of course: the filing fee in either of the two modalities is $200.
4. Prepare the operating agreement
Unlike most states, New York LLC law requires members of the business to enter into a written operating agreement. In other words, in this case, signing this internal document is not voluntary, but mandatory. The operating agreement can be entered into before, during or after the creation of the LLC. If you choose the last option, you will have 90 days from the date of delivery of the Articles of Organization.
This document will contain the powers, responsibilities, obligations, among others, of the members of the LLC, both among themselves and with the business. The document is internal, which means you will not need to file it with the New York Department of State.
What happens if the members do not draft and sign the operating agreement? Well, New York law doesn’t say anything about it.
#5 Meets press release requirements
In most states of the country, publication in the press is not required before the formation of an LLC, but in New York, it is. Within 120 days after the filing of the LLC becomes effective, you must order the publication of a copy of the articles or a notice of the formation of the LLC. This notice must be published in two local newspapers designated by your county clerk.
6. Carry out the necessary additional procedures
Some LLCs may be subject to certain additional tax or regulatory procedures, such as, for example, in the following cases:
- If the LLC has more than one member or if, having only one, it already has employees. In this case, you must process an EIN (Employer Identification Number) with the Internal Revenue Service (IRS). This procedure is free and you can do it online without having to visit an office.
- If your LLC is taxed as a corporation. In this case, you will have to do the same as in the previous point: process an EIN for your LLC. You also will not have to pay a fee for making this request.
- If the LLC is engaged in a special activity. Depending on the nature of your business, New York may require your LLC to obtain a special license or permit. Some counties may also have a special requirement regarding this section. For information on which businesses must apply for a license or permit in New York, call the Department of State or visit their website.
- If the LLC receives income, gains, losses or deductions derived from New York sources. In this case (and regardless of whether the LLC is domestic or foreign), it will be subject to the payment of an annual filing fee. The only exception in this section is for LLCs that have been taxed as a corporation, since, if so, they will be guided by another regulation. In order to send this annual presentation, you must fill out the Form IT-204-LL, called Partnership, Limited Liability Company, and Limited Liability Partnership Filing Fee Payment Form. You can find this form on the New York tax website.
The application must be submitted online using New York State approved tax software. Otherwise, you can also submit it by mail. The filing fee is $250. Do not forget to include in the application the certificate of creation of the LLC or any similar document. Of course: make sure that the certificate is not more than one year old.