Click here to get this post in PDF
Starting a business means wearing many hats at a time. From building a new marketing plan to recruitment, a business owner needs to take care of many things to commence a business successfully. But there are some aspects of running a business or complying with the rules that might sound absurd, and the same goes when you file for a New York LLC.
If you are filing for New York LLC, you have to fulfill the completely unnecessary and expensive publication requirement. Well, this is something that has been a hot topic of debate for many years, but still, it is there, and you have to comply with it.
The publication requirement for New York LLC means you have to arrange for notice of starting your business in two New York newspapers for at least six weeks each. Sounds ludicrous? Yes, it is why many people have tried to fight this requirement in court, and all of them have lost. It is still alive and well in the legal books.
Complying with the LLC publication requirement
If you are already on a low budget while starting a business, then you should know that the publication requirement for Limited Liability Companies will add up to around $1300 to your formation cost. Even starting a foreign LLC isn’t not going to exempt you from this additional expense.
But you can save on the publication cost if the principal office of your firm is located outside New York City, and this doesn’t mean you won’t have to fulfill the publishing requirement then. It is just that newspaper ads are much cheaper in other cities. The newspaper cost in Manhattan might be $1300, but in upstate New York, it is not more than $300-$400.
The best part is nobody can stop you from changing your principal office to New York after fulfilling the publication requirement. You don’t have to publish an ad again even if you change the name of your Limited Liability Company.
The consequences of not complying with the publication requirement
Because of the money-guzzler nature of this publication requirement, you might have started looking for ways to skip it? And you might have started thinking, is the only consequence of not fulfilling the publication requirement is losing the ability to do business in New York?
Yes, if you don’t comply with the essential publication requirement while starting an LLC in NY. In that case, all your rights of conducting, carrying on, and transacting business in the city of New York will be automatically suspended accordingly. If you still have doubts about it, you can go through Section 206 (a) of the New York Limited Liability Company Law. And it is not only about publishing the ad, but it’s also about doing it within 120 days from its formation.
The actual meaning of suspension
According to the law, if you search for the actual meaning of suspension, you get ready to end your search on a dead end. The purpose of suspension in practical terms is still unclear.
The existing law changed in June 2006, and every aspect of carrying on, conducting, and transacting a business has been modified. It would have indeed acted as a relief if the lawmakers left some pointers regarding the amendment, but no such luck for people starting an LLC in NY.
But still, this will follow in case of not being able to publish:
The limited liability company can’t sue in the New York State court, but the company itself can be sued. Well, in the case of sue from a non-published LLC, New York has allowed continuing with the case only after the fulfillment of the publication requirement. So, no harm done.
Even a case where a complaint filed by an LLC that didn’t fulfill the publishing requirement was dismissed. If you are on the hunt to find whether an LLC is published or not, you have to order a good standing certificate from the Department of State. So, don’t even try to find such information on the online platform since such information is not made public until a standing certificate is presented.
The common misconceptions
After starting an LLC in NY, you must comply with the publication, and even if you don’t do so, this doesn’t mean your liability shield will be destroyed, and you won’t even lose your right to run a business.
All the LLC members will always be under the protection of the LLC shield, even in the case of non-publication. Even the contracts between LLC and any other company will be valid in the case of non-publication.
Complying with the LLC publishing law might sound absurd, but just because it’s unnecessary and expensive, you can’t skip it. Look for ways to reduce the overall cost of publishing an ad in the newspaper and comply with the law for running your business without any issue.
You may also like: How to Choose a Registered Agent for Your LLC
Image source: Pexels.com
