5 Things to Consider Before Starting an LLC in New York
Forming an LLC in New York is an important step to take when starting your business3 min read
Forming an LLC in New York is an important step to take when starting your business. An LLC shields you from personal liability and can offer tax benefits. But before signing on the dotted line, there are a few key items to consider. This article will provide the top five things to consider for starting an LLC in New York.
The first thing to consider is the name of the LLC. An attractive and fitting LLC name helps the business stand out and communicate its point of difference in contrast to competitors. After choosing a company name, business owners must file the appropriate paperwork with the New York State Department of State in order to reserve the name. There are certain legal requirements that must be followed when choosing the business name, such as avoiding language that implies a false purpose or organizing structure. Every LLC in New York must have the "LLC" designation or abbreviation in the name and must also have a unique name, one that is different from the names of any other business registered with the state.
We next have the required documents. Paperwork requirements include submitting articles of organization, paying filing fees, filing the required business taxes, and filing any additional paperwork needed for the specific type of LLC. It’s always important to review the legal requirements pertaining to starting an LLC in your state.
After looking into the name and paperwork, the third item to consider is the business address. A business address can be both a physical and mailing address. According to the New York State Department of State, “the LLC’s principal office address must be a street address in New York State, not a P.O. Box.” It can be the home address of the business owner or a different location such as a commercial building.
The fourth item is the Operating Agreement. Even though it is not required by New York state, an Operating Agreement should always be created. This document is an incredibly important document that sets forth the rules and regulations that will govern how the business will operate. It must contain the names of the LLC’s members, explicate the percentage of ownership of each member, and describe how profits and losses will be divided among members. Additionally, it can act as written evidence of the agreed-upon operational rules of the business . An Operating Agreement should be created to prevent potential disputes among parties and should be reviewed regularly.
The fifth and final item is the governance of the LLC. This includes selecting a member or manager(s) to oversee operations and making sure the company complies with all laws applicable to it. The LLC will need to comply with federal, state, and local laws in order to remain in good standing. These laws may require various filings, such as taxes, licenses, and even reports, in order to remain in compliance. It’s important to ensure that the business meets all applicable laws and regulations, or else the business could face fines, penalties, or even dissolution.
Starting any business can be an intimidating process and starting an LLC in New York is no exception. Before signing on the dotted line and officially forming the LLC, consider these five things to ensure the business is up and running properly: name of the LLC, required documents, business address, operating agreement, and governance. With these steps taken, the business can be assured to start off on the right foot.
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