5 Considerations to Create an LLC in New York City
Creating a Limited Liability Company (LLC) in New York is a common way to form a business entity3 min read
Creating a Limited Liability Company (LLC) in New York is a common way to form a business entity. With the right representation from business lawyers, you can confidently set up your organization and substantially protect your personal assets while minimizing your taxes and taking advantage of the various benefits of having an LLC. If you’re based in New York City, here are the five most important things to consider when creating an LLC.
Choose the Right Business Lawyers
When creating an LLC, it’s critical that you understand all of the steps involved in the process. To ensure that you fully understand the right regulations and procedures for forming your LLC in New York City, it’s important to consult a new york business attorney who is knowledgeable in local business laws. They’ll be able to help you avoid any costly mistakes related to the necessary paperwork, meeting the requirements for licensing and permits, and more. As all states have their own laws governing LLCs, it’s important to consult with an attorney who is knowledgeable in New York business laws. If you’re looking for legal representation in New York City, consider using UpCounsel to bring on a freelance legal team that specializes in business law.
Follow the Rules for Business Names
In New York, the name of your LLC business must include either “LLC”, “L.L.C.” or “Limited Liability Company.” Before settling on a company name, you should also make sure that it’s not already in use by another business in the state. You can search and register a business name through the New York Department of State. It’s important that you go through the proper process for name reservation to avoid any complications down the line: this will help you reserve exclusive rights to the name for up to 150 days. Any misrepresentations in your name reservation and articles of organization applications may subject you to administrative penalties when creating an LLC.
Draft the Articles of Organization
The articles of organization for your LLC is a legal document that serves as your LLC's “contract” for formation and will include basic information about the company such as its name, address, managing members, and other important details. Depending on the state in which you’re registering your LLC, you may also be required to include other information such as your LLC’s registered agent and purpose. Once complete, you must file the articles of organization with the New York Department of State, where you will also have to pay the filing fee. In New York, the filing fee starts at $200 and may exceed $500 depending on the LLC’s assets.
Create an Operating Agreement
Having an LLC operating agreement is one of the most important steps in creating an LLC. Operating agreements outline the responsibilities of each member within the company, detailing how important matters such as capital contributions, distribution of profits, and more will be handled. Though it is not required by law in New York, it is still a good idea to draft such an agreement to protect the interests of all members and to ensure that your LLC survives any legal or tax disputes down the road. As such, you should always consult a local business lawyer to ensure that your operating agreement is drafted correctly the first time.
Understand the Tax Implications
Besides understanding the rules for New York LLC formation, tax considerations should also be taken into account when creating your LLC. LLCs are considered pass-through entities, meaning they don’t pay taxes directly but the owners must report any profits from their LLCs on their personal state and federal tax return (like a sole proprietorship or partnership). You should consult a business lawyer who is knowledgeable in local taxation to ensure that you are filing your taxes correctly and in compliance with the law.
Maintaining Compliance with New York State Laws
In addition to filing your business name, articles of organization, and tax forms, your LLC must also comply with New York State laws. This includes paying federal taxes, registering to pay state taxes, obtaining any necessary licenses and permits, and more. An experienced business lawyer can help you understand the rules on maintaining compliance, as well as assist you with other important steps in the LLC formation process such as filing forms and submitting paperwork correctly.
Creating an LLC in New York is a common way to form a business entity, but it’s important to seek help from a knowledgeable business lawyer to ensure that the process is done correctly the first time. From obtaining the correct licenses and permits, to filing your articles of organization and operating agreement, and understanding the necessary tax implications, getting the right legal counsel can help ensure your LLC is set up right and ready to do business.