Limited Liability Company is a United State business structure that provides personal liability protection with pass-through taxation of a solitary partnership. In case you want to structure your business then LLC is the easiest way and it also protects your asset in case your business is sued. However, setting up LLC is easy, but many people fall into pit holes and make mistakes. Newcomers are prone to such mistakes so it is wise to learn from the mistakes of others. Here are a few mistakes that you must avoid to avail all the benefits of an LLC.
Fit in the wrong state
The majority of the people will incorporate LLC in their own state since it’s the most sensible thing to do. Others have different perspectives and wish to register in another state may be due to tax benefits or legal perks as there are many other states with such facilities for LLC. If your business is expanding and pretty large then this might be beneficial. For a smaller business, this can be a pitfall as you may need to pay more fees, huge paperwork like loops. You also need a registered agent in the state your business is corporate and even in the state, your business is registered. All these are extra hassles and will waste your time and money.
Filing articles of organization
When it comes to filing an organization’s articles, you can create your own documents, use the forms from the Division of Corporations, or hire a service provider or lawyer. But without expert guidance, the process can sometimes become complicated and may lead to mistakes; which can put the formation of your new company on hold and also affects the legal protection a Limited Liability Company gives you.
Requirements for LLC Publication
According to the New York State Law; LLCs must file a notice within 120 days after the effective date of the initial articles of an organization. It means that an LLC must publish a notice of the creation of the LLC in 2 newspapers for 6 weeks. The county clerk of the county, where your LLC office is located as mentioned in the articles of an organization, is responsible for choosing the newspapers. Once this publication has been done, the publisher or printer of each newspaper will give you an affidavit of publication. You must submit a Certificate of Publication along with the publication’s affidavits of the newspapers attached to the New York Department of State, Division of Corporations.
If you are unable to get a Certificate of Publication from newspapers where you publish the articles of your organization, getting some expert help would be a handy option.
Selecting the wrong entity
With different LLC types, it is imperative that you go with the one that suits your business strategy. The common types are –
- Multi member
All these are the LLC types and have different features for you. So, if you pick the right one it can positively impact your business. It’s crucial that you make a wise decision or your mistake will cost you badly. For instance, if you don’t want to indulge yourself in huge paperwork; but still desire liability protection then a single-member LLC is excellent for you. You will need to file taxes every quarter and profits which are passed on to the business owners as taxable income. If you choose a single member then you are taxed as a sole proprietor.
In case you want to change you will need to contact the IRS to change it to another type such as a double member. So if you are still unable to make any decision it is better to consult a professional. Professionals will help you in getting an LLC that best suits your business.
Apart from that, professionals will prevent you from getting in awkward situations while getting an EIN (The identification number of your business), business licenses (federal, state, or local), and filing annual statements.
Relying on random legal documents found online
Sometimes, we just find ourselves in difficult business circumstances because of using random legal documents that are available online. Templates and forms are examples of such documents; which help you save the time and money that you need to invest in hiring an attorney for preparing legal documents. It can become a big pitfall that may stop your LLC from getting approved. This is why it is important to always review those documents before adopting them into your LLC. If you have some confusion, then asking an expert legal professional is a great idea.
Avoiding such common pitfalls is important if you want to set up your LLC without any trouble. Still, if you need help regarding forms, taxes, and a Certificate of Publication; then contacting Windsor Corporate Services will offer you relaxation and satisfaction that you are in safe hands now.