Starting an LLC in New York can be a relatively easy process – just like in any other state, but with a few add-ons, like publishing in a newspaper and already having a default registered agent.
However, the process of maintaining the LLC for smooth operation can be trickier, if you forget a few things which we’re going to target. But if you stay compliant with things like the state, tax regulations and filling, your LLC will operate just fine without any problems.
Watching out for piercing of your corporate veil
One of the key factors for getting an LLC is of course the limited liability it offers. Often people lose this by messing up some way or another, like combining business and personal expenses, and so this is arguably the hardest part of operating an LLC in New York.
When your personal and business accounts mix your personal assets are at stake too, if your LLC is ever sued or goes bankrupt, which is referred to as piercing your corporate veil. To avoid any risk of this, you can do a few things. Firstly, one of the most important and essential things is opening a business bank account. This is great for many reasons; the most obvious reason for getting one is that it separates your personal assets from your company’s so you don’t mix the two, and it’s also great for making accounting and tax filing easier when everything’s recorded in one place. With a bank account, it’s also worth getting a business credit card to help separate personal and business expenses, as well as building your company’s credit history which is great to raise capital later on.
Another way to avoid mixing your assets is making sure all your LLC’s documents are signed by a representative of your LLC, like a registered agent, instead of you or other LLC members. This will also separate you from your LLC.
Following the law
Following the law while operating is relatively easy, and can help you with things such as your limited liability. You can reduce this liability by being compliant with employment laws, like verifying all your new employees, reporting your new employees, and posting workplace compliance posters around your workspace for people to see. You can see more on laws from the New York Department of Labor.
Getting business licences and permits
For most business types, getting permits or licenses for the things you want should not be too difficult, depending on your records and facilities. Some may take some time to get but they are very important in ensuring smooth-sailing for your LLC – if you do not have permits you could damage your current and potential future businesses. Working perfectly legally will make it very easy to operate your business.
Paying taxes for LLCs is much easier than that of a corporation, because there is no double taxation (unless you vote to have your business taxed like a corporation). Taxes are imposed on the members and not the LLC itself. If you’re a single-member LLC you are regarded as a disregarded entity – your taxes include only state income tax, employment tax etc. If you’re a multi-member LLC, individual partners pay taxes based on their share of the partnership.
Two additional taxes are sales tax if you’re selling a physical product, and employer taxes if you have employees.
Another great thing about operating an LLC is that you don’t have to do certain things like hold annual meetings. But, you still have to file a biennial report or you could risk fines or immediate dissolution of your company. You can use a registered agent who will do this for you to make life even easier.
Accounting seems dreadful but can be easily done – with two things: using a DIY accounting software or hiring a service. This will make life easier by tracking your finances, and simplifying your annual taxes.
TRUiC has lots of information on a New York LLC. Visit their site for more