If you are going to start a business then there are many business forms that you can choose from and this is what makes things tricky but the one business form that is famous among each and every type of entrepreneur is LLC. Even if you have never started a business, you must have heard about LLC at least once in your lifetime since LLC is one of the most popular business forms.
There are many advantages offered by LLC and this is one of the main reasons why many entrepreneurs love to stick with rather than choosing any other type of business form. From being able to keep the personal assets separate to gaining some of the best tax benefits, there are many positive aspects of forming an LLC.
But even after being so popular, there are many questions in the mind of people looking forward to forming an LLC. This is why, in this blog post, we will answer some of the most popular questions related to LLC in New York.
What is a New York Limited Liability Company (LLC)?
Before even asking how to register corporation in NY, most people are interested in understanding what does LLC actually means. This is a good place to start your LLC analysis as it gives an overview of LLC.
An LLC is a type of business entity that is created under the New York Limited Liability Company Law. You might find many people saying that LLC is a hybrid of both partnership and corporation but in actuality, it is considered as a separate corporate entity and even the interest of the members are not freely transferable.
It is a fact that LLC offers limited liability but this doesn’t mean that forming an LLC will offer you a shield against any type of personal wrongdoing but still, LLC is one of the most created business entities in New York.
Who can form an LLC?
Any individual, a partnership, a corporation, or even another LLC can form an LLC. The person forming an LLC can also be a non-residential alien. So, don’t worry about the type of organization or the type of nationality you need for forming an LLC.
What is the process of forming an LLC?
In addition to knowing how to register corporation in NYC, people also want to know the step-by-step process of forming an LLC. So, follow the below-mentioned steps to form an LLC in New York:
Select a name
It doesn’t matter which type of name you choose, it must be followed up by ‘Limited Liability Company’. But if you don’t want any trouble because you have an odd name in your mind then you should look at the requirement of the name in Section 204 NY LLC.
File Article of Organization
After choosing the name, you must file an Article of Organization with the New York Department of State division of corporations. But you don’t need to visit their physical office as they offer digital filing as well. Just follow the simple guidelines and file Article of Organization right from the comfort of your home.
Publication of LLC formation
After filing the Aritcle of Organization, you get 120 days to publish the facts related to LLC formation in at least two newspapers of the country where the LLC has been formed. One of the newspapers should be printed daily while the other one should be printed weekly.
Adopt Operating Agreement
After the formation of an LLC, you get 90 days to adopt an operating agreement. The operating agreement contains detailed information about the obligations and the right of all the members along with management, distribution of loss and profit, and even dissolution of LLC.
It is the most important agreement of LLC and this is why you should give proper time and effort in forming this agreement. It is always advisable to get yourself a lawyer if your LLC has more than one member.
What is the total cost of forming an LLC?
You have to pay $200 for filing the Article of Organization but there is no filing fee for a certificate of publication. For getting a certified copy of the article of organization you might have to pay $10 and for newspaper publication, you have to pay around $1299.
As you can see, newspaper publication covers around 86% of the overall cost of forming an LLC and while many people find it unnecessary, it is still a crucial aspect of forming an LLC. Without publishing information about your LLC in two newspapers then your liability shield will be destroyed or you might even lose your ability to do business.
How is an LLC taxed?
As an LLC, you don’t have to pay federal taxes. All the income received by the LLC is allocated to the members and then it is taxed on the basis of individual rates.