Key Takeaways

  • The LLC/LLP Request for Information (TR-570) form is a required step after registering an LLC or LLP in New York.
  • LLCs offer flexible taxation options, including pass-through or corporate treatment.
  • LLPs are typically restricted to licensed professions and always taxed as partnerships.
  • Failure to respond to a request for information can lead to tax issues or dissolution.
  • LLCs and LLPs differ in ownership flexibility, management structure, and compliance requirements.
  • A clear understanding of these entities helps businesses maintain legal standing and avoid penalties.

What is an LLC LLP Request for Information?

An LLC LLP Request for Information (TR-570) is issued by the New York Department of Finance. If you have received one of these notices, you have already gone through part of the process of organizing your business as either an LLC or an LLP. 

An LLC is an unincorporated company with members that each have limited liability protection. An LLP is a partnership for professional services. Although both structures help to limit personal liability for the owners, LLPs operate as general partnerships with extra liability protection. Partners can make decisions for the company and share in the profits.

When and Why You Receive a TR-570 Form

Once you register your LLC or LLP in New York, the Department of Taxation and Finance typically issues a TR-570 form—known as the LLC/LLP Request for Information. This form is used to collect details about your entity, such as federal employer identification number (EIN), responsible party, and primary business activities.

You might receive this request shortly after registration or if the state detects missing or unclear details in your tax records. Failure to respond may result in processing delays, penalties, or classification issues that affect your tax status.

Advantages of LLCs and LLPs

1. LLCs and LLPs both protect your personal assets. 

2. LLPs are better designed for partnerships where the partners operate separately. 

Compliance Requirements After Formation

After forming an LLC or LLP, several compliance requirements ensure your entity stays in good standing:

  • Respond to State Notices: Including the LLC/LLP Request for Information.
  • File Biennial Statements: Required in New York for both LLCs and LLPs.
  • Maintain Accurate Records: Especially for tax classification, partner/member contributions, and business purpose.
  • Pay Annual Fees: New York imposes annual fees based on gross income for LLCs and LLPs.

Failure to meet these obligations can result in penalties, loss of liability protection, or dissolution.

Disadvantages of LLCs and LLPs

Depending on which state you live in, you may or may not be able to form an LLP since some states limit them to certain professions. 

Frequently Asked Questions About LLC/LLP Request for Information

What are the limits placed on the protections from an LLC and LLP?

In both cases, the protection that you receive from an LLC and LLP is limited. If your LLC/LLP is facing a lawsuit, your liability will be determined by looking at the following:

  • Who is being sued (i.e., the LLC/LLP, you, or one of your partners).
  • Why the lawsuit was filed.
  • If there was a criminal action involved that you were a part of. 

If your partner(s) or the LLC/LLP itself is being sued, you can be protected if you are not responsible for the situation that led to the lawsuit. If the lawsuit was filed for any reason other than a criminal action, you should also have your protections intact. However, you may lose your protection if you were complicit in any criminal activity involving the company.  

Is an LLP a viable alternative to an LLC?

The option to form an LLP can be a viable alternative to forming an LLC, but there are restrictions on forming an LLP. LLPs are not allowed in some states unless you are a part of one of the specified professions. These generally include:

  • Doctors
  • Lawyers
  • Accountants

What are the differences between LLCs and LLPs?

There are several key differences between an LLC and an LLP. These include:

  • LLPs must have at least two partners. LLCs, however, can be formed by a single person.
  • LLPs generally can only be owned by single entities/individuals. LLCs can be owned by other business entities like corporations or trusts.
  • LLPs and LLCs are taxed differently depending on your state's laws.  

State-Specific Considerations for LLCs and LLPs

Laws governing LLCs and LLPs vary by state. In New York, for instance:

  • LLPs are typically limited to licensed professionals such as attorneys, CPAs, and architects.
  • LLCs are available to nearly all types of businesses.
  • New York requires publication of LLC formation in local newspapers—a step not required for LLPs.
  • Some states require annual reports and fees for both LLCs and LLPs; noncompliance may trigger additional notices like the LLC/LLP Request for Information.

How are LLPs taxed?

LLPs are taxed in the same manner as general partnerships, as pass-through entities. A single tax form for the partnership is filed showing the overall performance of the partnership. Then, each partner claims his or her segment of the earnings from the partnership on personal tax forms. 

Can You Change the Tax Classification of an LLC or LLP?

An LLC can elect to be taxed as a sole proprietorship, partnership, or corporation (either S or C corp). This is done by filing IRS Form 8832 or Form 2553. This flexibility allows LLCs to choose a structure that minimizes their tax burden.

In contrast, LLPs are generally taxed as partnerships and have fewer options to change classification. All earnings "pass through" to the partners and are reported on their individual returns, which means there’s less administrative burden but also less flexibility.

What is the advantage of forming an LLC over an LLP?

LLCs have more flexibility in the way that they are taxed. While LLPs are taxed as partnerships to avoid double-taxation, LLCs can choose how they will be taxed between:

  • Sole Proprietorship, if the LLC has one member.
  • General Partnership, if the LLC has more than one member.
  • Corporation, if the LLC decides to do that. 

How are LLCs structured?

While LLCs share a default structure of dividing everything evenly among the partners, that is not always the case. If you create an LLC Operating Agreement when you form your LLC, You can decide on a new structure as well as lay out a process for decisions to be made. 

Steps to Form an LLC or LLP

1. File the appropriate organizational documents with the state agency that handles business filings.

  • You can find fees and forms on the agency's website.
  • In New York, this is the NYS Department of State.

2. Create a partnership or operating agreement, depending on if you plan to have an LLP or an LLC. 

3. Apply for an EIN on the IRS website.

4. On New York's LLC and LLP forms, you can check a box to note if the business should be taxed as a separate entity for state taxes.

5. Once the LLC or LLP successfully registers, the NYS Department of State Tax Department will send out a request for information that needs to be filled out. 

How to Fill Out the LLC/LLP Request for Information

Filling out the TR-570 form involves several steps:

  1. Verify Your Entity Details: Ensure your business name, EIN, and formation date are accurate.
  2. Identify the Responsible Person: Provide the name and contact information of the person authorized to manage the LLC or LLP.
  3. Specify Business Activity Codes: Use IRS business activity codes to describe your business.
  4. Declare Tax Treatment: Indicate how your LLC/LLP will be taxed (e.g., sole proprietorship, partnership, or corporation).
  5. Sign and Return Promptly: Complete and sign the form, then return it to the Department of Taxation and Finance by the specified deadline.

Not responding to the request may result in fines or even administrative dissolution.

Frequently Asked Questions

  1. What happens if I ignore the LLC/LLP Request for Information?
    Failure to respond may result in tax penalties, delays in processing, or possible administrative dissolution of your entity.
  2. Can I file the TR-570 form online?
    Currently, the TR-570 must be completed and returned by mail or fax. Check the form for specific instructions provided by the NY Department of Taxation and Finance.
  3. Are LLCs or LLPs easier to maintain?
    LLCs generally offer more flexibility, while LLPs have fewer filing requirements but are restricted to certain professions.
  4. Does receiving a TR-570 form mean I did something wrong?
    Not necessarily. It’s a routine request for additional information often triggered by the formation of a new LLC or LLP.
  5. Can I form both an LLC and LLP under one business?
    No. You must choose either structure. However, some businesses set up multiple entities for different operational or liability purposes.

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