One of the main reasons that New York residents avoid starting businesses even if they have a good product or service to sell is a failure to understand the legal details about how a business must be structured. Business law can be a key part of success. Failing to adhere to the law might result in many problems down the road. Lack of proper structure can even hinder a business from getting off the ground in the first place. The appropriate business form depends on the business at hand. There are many options available. One that is commonly used is a limited liability company (LLC). Before using this form, it is important to know what it is and how it can be formed.
When there is a business that is run by one or more people, is unincorporated, and they have limited liability, it is an LLC. By utilizing this structure, a limit is placed on the responsibility the owners have toward contractual obligations and different liabilities. Provided the business is lawful, it is possible to form an LLC. The idea behind the LLC is to use a combination of different types of corporation options and maintain the flexibility that is inherent in a partnership.
A LLC lets owners tailor their business to what they need. Instead of being partners or holding shares in the company, the LLC owners are considered members. Any legal entity – partnerships, an individual, a corporation – can be a member of an LLC. To form an LLC, there are certain steps that must be taken. For example, Articles of Organization must be filed in accordance with state law. There is no requirement for who can organize the LLC. It can be a person or a business entity. The organizer is not required to be a member of the LLC, but can be if they choose to.
People who are taking the risk of starting a business and wanting to know what form they should use must be aware of the benefits of an LLC compared to other business structure options. A law firm that understands all areas of business law can give guidance and advice when making the determination of whether an LLC is preferable over other options. Calling a business law firm is therefore often the first step toward getting a business off the ground and adhering to the legal requirements that come with it.