You probably know that “LLC” is an acronym for Limited Liability Company. But do you know what makes LLCs different from Corporations or Sole Proprietorships? Do you need to know how to start an LLC or Sole Proprietorship? One of the most popular locations for entrepreneurs to establish their businesses is in the Empire State, so understanding LLC New York laws and regulations is essential for any budding business owner.
In this post, let’s discuss some facts about LLCs that you may not know. If you are planning on forming your own LLC, you should absolutely know these things beforehand:
- Limited liability is an integral part of LLCs. Members of an LLC are not liable to clear the LLC debt personally.
- The members of the LLC can decide the ownership percentage for each member. It can be split in any ratio. It is not necessary for each member to have an equal share.
- The tax paid by each member of the LLC depends on their ownership percentage.
- All members of the LLC also pay self-employment tax.
- For an LLC, you don’t need to maintain any records of meetings. Even resolutions are not necessary.
- You need to complete both state-level and federal-level filing for LLCs.
- You need to pay state-level filing fees every year from the time your LLC is formed.
Now that you have a better understanding of how LLCs work, let’s take a look at what it takes to form an LLC.
How to Form An LLC: Your Step-by-Step Guide
Here is what you need to do to form your own LLC:
Step 1: Apply for an LLC EIN (Employer Identification Number)
Step 2: File the Articles of Organization for your LLC.
Step 3: Make an Operating Agreement for your LLC. It should define all the functional details along with the financial framework.
Step 4: Pay the filing fees.
You can get all of this done on your own.
But if you don’t have the time, you can delegate all the work to professional services.
For more information on LLCs, check out the infographic below.