LLC Formation & Asset Protection In NYC

Part of being an entrepreneur is diverting attention away from the business and toward protecting your assets and mitigating inherent risks. This is why many people form Limited Liability Companies (LLCs). They are formidable business structures that are relatively simple to create and manage—and they prevent your personal assets from being taken to repay debts that were taken on by the business. The driving force behind this blog is to outline the essential steps for establishing one and what you gain by doing so.

The LLC Formation Process

The process begins by choosing a distinct name. New York’s Department of State has a business name database; entrepreneurs can reference it to ensure their chosen name isn’t being used. The next step is akin to scaffolding because you will build your business around it: Developing Articles of Organization. This is a legal document that formally establishes the existence of your business. (Filing the Articles of Organization is not the same as taking deliberate steps to protect your intellectual property.)

Every LLC in New York is required to have a registered agent. A registered agent is a legal guardian responsible for receiving documents and correspondence on the LLC’s behalf. If you are the sole owner of the LLC, you can fulfill this role yourself. If there are other owners, then one should be selected. Though forming an LLC comes with a fee of $200, this is a minimal sum when considering the level of protection you are getting.

Within 120 days of forming the LLC, you must publish a notice of formation. It will include the name of your LLC, the date you filed the Articles of Organization, and the registered agent’s address. This will appear in a daily newspaper and a weekly one for six consecutive weeks. If you bypass this step, New York will suspend your ability to conduct business in the state.

Lastly, you will obtain an Employee Identification Number (EIN) unique to your business. It is the equivalent of an SSN for an individual. Though they are not required in many states, NY has strict requirements regarding operating agreements. Anyone drafting an operating agreement should strongly consider having an attorney to assist them.

Asset Protection

One of the main draws of the LLC is how it separates the business’s liabilities and the owner’s personal assets. Items such as your home will be shielded from claims made by creditors. An attorney will advise you on maintaining that barrier in front of your personal assets. For example, owners will likely have separate bank accounts and credit cards solely used for the business to prevent the commingling of funds.

Owners should also consider incorporating an LLC policy into their overall business strategy because it can serve as an additional protection layer or even a safety net. They can be instrumental when owners have to face unexpected challenges. An insurance policy may prevent the issue from undermining your business goals and give you stability.

Speak with a Business Law Attorney

Forming an LLC is a strategic move that can strengthen your business’s foundation. Though the steps may appear intricate or overwhelming, the Drucker & Mattia PLLC legal team can provide clear advice and support during this process. We want to simplify the process and protect your assets. Contact our office today to set up a free initial consultation, and we will begin laying the groundwork for your LLC.