Starting an LLC is a great idea, and it can be even greater if you’re starting the LLC in New York. Here we’ve discussed some useful tips to keep in mind when forming your LLC, so that you can do so with ease and intelligence.
Is your name available?
A lot goes into the name of an LLC – and it’s more than just how nice it sounds. The name needs to be distinguishable from any other entity in New York, not contain certain words, and must contain the words ‘limited liability company’ or some sort of abbreviation of this.
A lot of businesses don’t look further than this in the naming category – after all, you may be thinking: what else is there to check? Well, there’s one more thing that could be hugely beneficial to you in the future, and that is checking that there’s a decent URL available. You may not have thought about having a website, but you should – if your business is successful it’s a great way to get clients in touch – so if your URL is available, buy it!
Should I get a registered agent?
One good thing about starting an LLC in New York is that a registered agent is provided to you by default – the Secretary of State’s office. However, when publishing your Articles of Organisation on two newspapers (this is required by New York state law), your principal address must be published in the newspaper as part of it. If you don’t want this, because of privacy, it is worth hiring a separate registered agent, so that you can put their address down instead.
As well as this, if your business is closer to New York city, the cost for publishing in your local county newspaper will be a lot higher – up to $1500. By using a registered agent’s address – someone from a cheaper area, means you can publish in their area instead, saving you a lot of money.
Registered agents can also be a huge help in speeding up this LLC formation process for you. Most offer this service, and are very experienced with doing so as it is everyday work for them. This can save you time and money, if you are already using them for your newspaper address.
What should I have in my Operating Agreement?
In New York, having an operating agreement is not a choice, and for good reason too. An operating agreement goes further than your Articles of Organisation, which only contains very basic information about your company. An operating agreement is the only proper way for you and your members to fully define roles and lock down your LLC’s management and ownership structure. It’s also a great piece to return to in case any disputes or lawsuits arise. Some basic things we recommend you have to maximise usage of your operating agreement include addressing:
- Each member’s responsibilities
- How new members will be added in
- How existing members can leave or transfer their membership
- How profits and dividends are distributed
Should I open a business bank?
An EIN (Employer Identification Number) is obtained from the IRS and it gives your business a unique identity. Every business is required to have this. With an EIN you can do many things like filing federal and state taxes, hiring employees, and opening a bank.
While opening a bank is not a mandatory part of the process, we strongly recommend opening one. This is great because it will keep all your earnings in one place, so you have a record which comes in handy for filing your taxes. As well as this, it really helps to protect the ‘limited liability’ part of your LLC; if you start combining personal and business funds, you could end up losing this, and a key part of LLCs is the protection they offer to you.
TRUiC has a detailed plan on how to start a New York LLC, with even more tips. Be sure to visit their site to read more.