Creating an LLC in New York: What You Need to Know
Creating an LLC in New York: Seeking Experienced Legal Advice4 min read
When deciding to create a limited liability company (LLC) in New York, you need experienced legal advice to ensure you keep the business compliant with the regulations that apply to LLCs operating in the state. It’s essential to understand the particular statutes that apply to your business’s formation, and any LLC operating in New York must follow all New York state laws and regulations. As such, enlisting experienced counsel from experienced business lawyers will be crucial in helping you stay on the right track.
Whether you’re an entrepreneur or the buying party in an acquisition, understanding the step-by-step process of creating an LLC in New York is imperative to getting the job done right. UpCounsel helps you find the right business lawyer for your needs, whether you’re looking for a one-time consult or ongoing legal assistance. Having a business lawyer with local New York expertise available to wield the vast regulations and navigate the legal challenges you may face, throughout the process of forming and operating your business, is necessary.
To help you become more confident in the process of creating an LLC in the state of New York, here are some of the most frequently asked questions and the answers you’ll need to get started.
What Protections Does an LLC in New York Offer?
When creating an LLC in New York, you’re best served by having a business lawyer who knows the state’s laws and regulations in detail. The extent of liability protection a business can expect to get when forming an LLC in New York will depend on how exactly it’s structured.
The classic LLC offering is limited liability protection. This means that you, as a business owner, can’t be held singularly accountable for the LLC’s debts or obligations. Of course, exceptions to this basic protection exist, including for founder fraud, when a business owner or a director is found to have acted fraudulently, or for failing to follow the legal framework of maintenance that applies to New York LLCs. You should feel empowered to ask your lawyer any questions that arise about the limitations of the protections of forming an LLC in New York, and receive an answer that satisfies your concerns.
How Do You Form an LLC in New York?
The foundational step when forming an LLC in New York is to submit Articles of Organization. Your business lawyer can help you understand exactly how to complete the Articles of Organization, as well as the form in which you must submit the Articles of Organization. All LLCs must name a registered agent for service of process in New York, and your lawyer will know what the specific requirements are for the service of process agents in the state.
Once the Articles of Organization have been filed, you will need to draft an Operating Agreement. This document outlines the governance measures, the delineations of the roles of the manager(s) or members of the LLC, the breakdown of the ownership of the LLC, and other information you may deem vital for the successful operation of your LLC.
Finally, an LLC in New York must submit an LLC Fee at the time the Articles of Organization are submitted. This small fee is used to cover the filing costs of creating the LLC, and drafting an Operating Agreement will also incur an additional cost.
Are There Any Other Obligations When Creating an LLC in New York?
Once created and operational, an LLC in New York must pay the annual Franchise Tax, which due date depends on the anniversary date of the LLC’s formation. This is separate from the small filing fee that must be submitted when creating the LLC.
If the principal business address and/or designated office of your LLC will be located outside of New York state, you must also submit a biennial statement. This filing is to verify the filings of the LLC still comply with the laws of both the principal business address’ state and/or country, and the New York state regulations.
In addition, depending on the size of the LLC, you may be required to file certain reports with the New York Secretary of State if the LLC earns income outside of the state of New York. An experienced attorney will have the expertise to help you understand these specific reporting requirements.
It's important to note as well that the United States Internal Revenue Service (IRS) requires an LLC to provide a Federal Employer Identification Number (FEIN) before it begins operations. Your legal counsel will be experienced in helping with the filing for the FEIN, as well as with Processing Form 2553 for the IRS in order to elect classification of Subchapter S tax status. A tax classification with the IRS may minimize your tax liabilities, and it is an important step to take should you want to be eligible to pursue potential asset protection opportunities.
When considering creating an LLC, it’s important to understand that the process may vary across states, so having the counsel of an experienced business lawyer in New York is essential. There is no one-size-fits-all answer for those interested in creating their own LLC, but the knowledgeable lawyer community at UpCounsel is the perfect place to start.
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