One of the best things about New York is that it recognizes a wide array of business forms, including LLC, limited partnership, corporation, general partnership, sole proprietorship, etc. But people make the mistake of finding the best business form, and this is a big mistake since there is nothing like the best business form as every business form listed above has its advantages and disadvantages. So, it comes down to the purpose of starting a business or which type of business you are planning to start.
It would help if you were very careful while choosing the business form, as every business form has its liability and financial conditions. Well, the same thing can be said about the very famous LLC. But forming an LLC should be done with precision and only after proper analysis as you might have to deal with special responsibilities after forming an LLC. If you are not aware of these responsibilities, you might have to deal with a long list of issues.
This is why, in this blog post, we will look at all the special responsibilities linked with forming an LLC in New York.
But before moving into the details of special responsibility, let’s first understand the basics of a limited liability company.
What is an LLC?
LLC or Limited Liability Company is an unincorporated business organization formed by one or more than one person. The people forming an LLC have limited liability for the contractual obligation and all other firm liabilities.
The Limited Liability Company law deals with all the different rules and regulations of running and forming an LLC. Therefore, this law ultimately governs the formation of LLC. We can say that LLC is a type of hybrid business form that combines the responsibilities and benefits of both partnership style business and corporation style business.
The process of forming an LLC
One of the first things you will have to do while forming an LLC is filing the Article of Organization with the Department of States. If you are looking forward to gaining more information about filing the Article of Organization, you can always go through Section 203 of the Limited Liability Company Law.
It will be the responsibility of the organizers to file, sign and even prepare the Article of Organization for forming an LLC according to the rules and regulations. An organizer can be anybody, a business entity, or even a person. But the important thing that you have to keep in mind is that the organizers don’t necessarily need to be members of the LLC.
The special responsibilities
If you are planning to form an LLC, you must understand that every member of the LLC is liable to adopt a written Open Agreement and need to adopt it without any fail. If you are looking forward to a more detailed overview of the written Open Agreement, you will need to go through Section 417 of the LLC law. The timing of the written Open Agreement is vital, as it has been discussed in brief in Section 417.
You must understand that the Operating Agreement must be entered before or at the time of filing the Article of Organization. But, you also have an option of joining the Operating Agreement before 90 days of the filing of the Article of Organization.
The Operating Agreement is one of the essential documents that build the base for all the members’ duties, liabilities, powers, and rights. All these are linked within the members themselves and even in terms of the LLC.
But you don’t need to file the Operating Agreement with the Department of State as this document is considered an internal document of the company that has been or is going to be filed as an LLC in New York. And the law is entirely silent when it comes to not adopting the critical Operating Agreement. This is the main reason it has been considered a special responsibility while forming an LLC.
The Department of State has nothing to do with the Operating Agreement, and this is one of the main reasons you should never expect any advice from the Department of State regarding forming an LLC.
Suppose you are planning to forming LLC in New York. In that case, you must go through the basics of a Limited Liability Company as the responsibilities, duties, roles, and liabilities in the case of LLC are entirely different from other business forms. We have given you only a glimpse of the unique responsibilities and liabilities of the members of LLC as the world of LLC is vast, and you will have to provide enough time to explore it.
