Five Considerations to Take into Account Before Starting an LLC in New York
Starting an LLC in New York: Considerations to Make Before Taking the Plunge3 min read
For entrepreneurs who are planning to start a limited liability company (LLC) in New York, there are a few considerations to make before taking the plunge. Starting an LLC in New York can be a daunting process, but with the right preparation and research, it can be done quickly and efficiently.
When the LLC is formed, it will be responsible for board decisions, investing and setting up a robust business plan. In New York, it is important to understand the regulations and qualifications unique to the state; failure to do so can result in penalties and delays. It's for this reason that enlisting a qualified legal professional who is familiar with New York's regulations can provide an extra layer of trust and assurance that all of the requirements are met.
There are five considerations in particular that entrepreneurs need to take into account when forming an LLC in New York.
1. Choose the right business structure
When starting an LLC, the first step is to choose the type of business structure that best fits the company’s needs. There are a variety of business structures available, such as LLCs, sole proprietorships, S corporations, and C corporations. Depending on the type of business, each structure comes with its own tax structure, operational benefits, and liabilities.
Before choosing your business structure, it's important to assess the potential risks and weigh the benefits and drawbacks of each option. The most important factor when deciding upon a business structure is to ensure that the limited liability that the LLC provides is appropriate for the business. Generally speaking, an LLC allows members to avoid personal liability for the debts and court judgments of their business.
2. Select a name for the LLC
As part of the process of forming an LLC, entrepreneurs need to select a unique name for their company and register it with the State of New York. When it comes to selecting a name, it must follow the guidelines stated by the state; the name should be distinct from other business entities and should incorporate words such as Limited Liability Company, Limited Company, or LLC. Additionally, the name cannot contain words that may be deemed offensive.
Before selecting a name, it's important to do a search to make sure that there aren't any duplicate names registered in the state. It's also a good idea to make sure that the domain name, trademarks, and brand names are available to ensure that the business has legal protection of its intellectual property.
3. Consider filing a Certificate of Authority (CA)
After forming the LLC, a Certificate of Authority (CA) may need to be filed if the company plans on conducting business outside of the state where it was formed. For example, if an LLC in New York wants to operate a business in California, it must file a CA with the California secretary of state. The CA allows entrepreneurs to conduct business outside of the state where the LLC was formed without setting up a foreign LLC.
4. Obtain licenses and permits
As with any business, an LLC will need to obtain licenses and permits relevant to the industry or state in which they plan to operate. In New York, businesses may need to obtain various permits or licenses such as a certificate of authority, business tax identification number, or a vendor’s permit. It is important to research the industry to determine if any permits or licenses are applicable, and to comply with state and federal requirements.
5. Comply with the New York Law on Professional Corporations
New York enforces regulations on certain professional entities. This includes certain licensed professionals that provide services such as financial, legal, and medical services. Before forming an LLC, it’s important to research the regulations and to comply with the New York Professional Corporation Law (NPCL).
Starting an LLC in New York requires business owners to comply with the unique regulations of the state. Taking these five considerations into account is essential before taking the plunge and forming an LLC. If entrepreneurs are knowledgeable about the regulations and prepare correctly, they can form an LLC without hassle or delay.