Many businesses start from humble beginnings where one or more individuals become self-employed workers. When starting a business, the Laufer Law Firm recommends that an entity be formed to personally protect oneself from the liabilities associated with running a business.
A Limited Liability Company (LLC) is one popular entity used by new business owners. A Limited Liability Company is a business that conducts activities like a sole proprietorship/partnership, but with the benefit of limited liability similar to a corporation. It can be formed by one or more individuals, and such individual(s) will become members of the Limited Liability Company.
A Limited Liability Company formation is a relatively quick process in many cases. However, it is important to file and prepare the correct documentation to avoid problems in the future. A key document that should be prepared is an Operating Agreement. An Operating Agreement sets the relationship among members, governs how the Limited Liability Company operates, and regulates the members’ financial rights and duties. Since this document is not required to be filed in New York State, the Operating Agreement is often overlooked. However, a properly constructed Operating Agreement will help resolve conflicts and protect the members from the potential of costly legal action.
Please note that there are other business entities that can be formed; such as an S-Corp. However, each business entity has different tax consequences. The Laufer Law firm recommends talking with an accountant prior to forming any business entity to determine the best option for you.
The content of this website has been prepared by the Laufer Law Firm for general informational purposes only and should not be construed as legal advice. The laws are consistently evolving and the content of this website may not represent the most up to date changes. The material posted on this website is not intended to create, and receipt of it does not constitute, a lawyer-client relationship, and readers should not act upon it without seeking professional counsel.