Creating an LLC: Top 5 Things to Consider
Forming an LLC: A Great Way to Unlock Success and Protect Assets3 min read
Forming a Limited Liability Company (LLC) can be an excellent way to create a corporate entity, increase success, and protect personal assets from business liabilities and lawsuit judgments. When forming an LLC in the United States, there are considerations in regards to selecting the right business structure. If you're based in New York, finding the right counsel is critical to ensure the entity is properly formed and all required documentation is filed. Here are the top five things to consider when creating an LLC in New York.
1. Select Which Business Structure
Before forming an LLC, you must first select the right business structure for the corporation. There are a few different options available, such as LLC, Corporation, S-corporation, Limited Partnership, Sole Proprietorship, and Non-Profit Corporation. Each structure has its own set of advantages and disadvantages, and it's important to research and understand the differences between each type of business structure. A business lawyer can provide valuable insight on the advantages of each particular structure.
2. Name the Entity
Naming the LLC is important to ensure the company stands out and is easily identifiable in the marketplace. The name must be unique and cannot be similar to an existing LLC within New York. You'll also need to make sure the name falls within the regulations and requirements set forth by the State of New York. Consider hiring a business lawyer if there is any confusion in regards to the name for the LLC. Additionally, the name of the LLC should also be required to contain the terms “limited liability company” or one of its abbreviations, "LLC" or "L.L.C."
3. Draft and File the Articles of Organization
Once the LLC has been organized, the Articles of Organization must be drafted. This document is typically submitted to the state and includes important information, such as the name of the LLC, its purpose, and the individuals involved in the business. In some cases, the Articles of Organization may also require the signature of an attorney or the state. An experienced business attorney can help review the document to ensure all of the information is accurate and complete.
4. Create an Operating Agreement
It is important to create an Operating Agreement for the LLC to outline the legal responsibilities of the members and management. The Operating Agreement is an internal document which should include the percentage of ownership for each member, what each member is required to contribute to the business (such as capital, labor, and services), and how profits and losses are to be distributed among the members. Again, an experienced business lawyer can provide valuable advice on drafting and filing of Operating Agreements.
5. Obtain an Employer Identification Number (EIN)
Once the LLC is formed, you'll need to obtain an Employer Identification Number (EIN) from the IRS. An EIN is used to identify a business with the IRS and is required for reassignment of employees, opening a business bank account, and filing of taxes. An experienced business lawyer can help obtain the necessary forms and provide advice on filing the required paperwork.
Creating an LLC in New York can be a complicated process, but with the right counsel and advice it can be achieved successfully. An experienced business lawyer is key to ensure the LLC is properly formed, all the necessary documentation and filings are completed, and all the required regulations and laws are followed. With the right advice and counsel, creating an LLC can be a great way to open up new opportunities for your business.
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