How to Form an LLC in New York!

Forming an LLC in New Hampshire can provide a number of legal benefits.

Freedom of Contract

The New York LLC statute gives LLC members contractual freedom to customize their capital contributions and their shares of profits and losses.  An LLC’s members can specify a method for allocating profits and losses in an LLC Agreement that is greater or lesser than their portion of capital contributions.  This gives members contractual flexibility to tailor their income streams and risks of loss to further their big-picture asset management plans.

Perpetual Duration

The New York LLC statute provides for an LLC’s unlimited life.  The “death, retirement, resignation, expulsion, bankruptcy or dissolution of any member” does not cause an LLC to dissolve unless the operating agreement provides otherwise.  An LLC’s existence is therefore not restricted to its members’ lifetimes.

Privacy for Owners

The New York LLC statute does not require filing of members’ names.  A “person” may organize an LLC, and the person does not need to be a member of the LLC.  The definition of “person” includes almost any kind of business or legal entity.  An LLC’s members may therefore have an entity or person who is not a member file the LLC’s Articles of Organization with the New York Secretary of State.

Creditors Only Get Passive Rights, Not Control Rights

The New York LLC statute protects membership interests from members’ creditors.  An LLC member’s judgment creditors have only the rights of assignees.  The member’s creditors are only entitled “to receive, to the extent assigned, the distributions and  allocations of profits and losses to which the assignor would be entitled.”  They are not entitled “to participate in the management and affairs of the limited liability company or to become or to exercise any rights or powers of a member.”  This enables members to keep others from unexpectedly joining the LLC as members.

Forming an LLC in New York May Be a “Life Preserver”

New York also has a very active and debtor friendly federal bankruptcy court, and a company can file for a Chapter 11 Reorganization either where headquartered or formed.  Therefore, being formed in New York gives you access to New York’s federal bankruptcy courts to protect your business from creditors, should the business go “over the falls.”

Here are the steps you will need to follow to successfully set up a New York LLC.

Step 1. Choose a Name

Every LLC formed in New York needs to include “Limited Liability Company,” “L.L.C.,” or “LLC.” The name must also be distinguishable from every domestic or foreign business entity in New York, and cannot contain the words:

“Board of trade,” “chamber of commerce,” “state police,” “state trooper,” “community renewal,” “tenant relocation,” “urban development,” “urban relocation,” “corporation,” “incorporated,” or “partnership”

“Acceptance,” “annuity,” “assurance,” “attorney,” “bank,” “benefit,” “bond,” “casualty,” “doctor,” “endowment,” “fidelity,” “finance,” “guaranty,” “indemnity,” “insurance,” “investment,” “lawyer,” “loan,” “mortgage,” “savings,” “surety,” “title,” “trust,” or “underwriter”

“Blind,” “handicapped,” or “exchange”

“School,” “education,” “elementary,” “secondary,” “kindergarten,” “prekindergarten,” “preschool,” “nursery school,” “museum,” “history,” “historical,” “historical society,” “arboretum,” “library,” “college,” or “university”.

Step 2. Appoint a Registered Agent in New York

A New York LLC must continuously maintain an agent for service of process in the state.  A commercial registered agent service may act as a New York registered agent.

Step 3. File Articles of Organization

An “organizer,” who can be any person, forms an LLC by filing Articles of Organization with the Department of State and paying the $200 filing fee. The articles of organization must include: The LLC name, the county where its principal office is located, and the name and address of the registered agent (which can be the Secretary of State).

You can also include any additional provisions that you want to be part of the public record, such as a pre-set date of dissolution or the purpose of the business.

Step 4. Complete the Publication Requirement

New York is unique in that it has a publication requirement for new LLCs. Within 120 days of formation, the articles of organization must be published once a week for 6 consecutive weeks. This must be in both a daily and weekly newspaper in the county of the LLC’s principal office. Affidavits of publication must be filed with the Secretary of State.

Step 5. Prepare an Operating Agreement

New York LLCs must have a written Operating Agreement within 90 days of formation that sets out the management and membership relations and other internal affairs.

There are some additional steps you will need to take after you form your New Hampshire to finish setting up and maintaining your business.

Get an EIN Number

If your New York LLC has multiple members or employees, you’ll need to obtain an EIN from the I.R.S.

File Biennial Statements

Every New York LLC must file a biennial statement with the Department of State to maintain its status, along with a $9 filing fee.

Taxes

Any New York LLC with New York income has to file annual income taxes, based on how much revenue the LLC earned in New York.

Foreign QualificationQualifying Foreign LLCs

Failing to qualify a foreign LLC on time has a very small penalty and costs only slightly above what it would have cost the foreign LLC had it qualified when it started doing business in New York.  A foreign LLC may defend itself in a New York court if it has not qualified in New York, but it may not be a plaintiff in a New York court until it has qualified.  A plaintiff in a New York court may serve process upon a foreign LLC that has not qualified in New York by paying a fee and serving the New York Secretary of State.  During the lawsuit, the court may order the foreign LLC to reimburse this fee.  The fee is only $40.

The other unusual aspect of New York is that it does not require a registered agent to be a private entity.  Many New York LLCs name the New York Secretary of State as the company’s only registered agent.  A foreign LLC cannot qualify to do business in New York unless it designates the New York Secretary of State as a registered agent.  Naming an additional registered agent is optional.