In New York State organizers form a limited liability company (LLC) by filing Articles of Organization with the Department of State. Any person or business entity may be an organizer. The next step is very important: LLC members must enter into an operating agreement, which sets forth the rights of the members and the rules for running the company. The Operating Agreement is the primary document that establishes such rights, powers, duties, liabilities and obligations of the members between themselves and with respect to the LLC. Failure to give a lot of thought to the Operating Agreement may have severe consequences.
A limited liability company (LLC) combines the attributes of a corporation and a partnership. The LLC offers corporate-like limited liability with partnership-like flexibility. The flexible management structure allows the owners to structure their LLC interests in a manner that meets the specific needs of their business relationship. The owners of an LLC are referred to as “members” rather than shareholders or partners. A member may be an individual, a corporation, a partnership, another limited liability company or any other legal entity. Like a corporation, the owners of an LLC are not personally liable for business debts. Federal tax law allows an LLC to elect to be taxed either as a corporation or partnership for income tax purposes.
New York recognizes many business forms including the limited liability company (LLC), corporation, limited partnership, sole proprietorship and general partnership. Each has its own advantages and disadvantages. For any particular venture, personal and business circumstances will dictate the business form of choice.
Attorney Adler focuses his practice on estate planning, wills, trusts and estates. He can be reached at 212-843-4059 or 646-946-8327.