All the Small Things – Part 1

In New York State, entities are formed through the filing of specific documents with the Department of State (“DOS”) and the payment of filing fees. There are various types of entities that can be created, which depend on what you are looking to accomplish in terms of structure, liability, tax considerations, management, etc. For purposes of this two-part article, we will only focus on limited liability companies (“LLCs”) and for-profit corporations.

When forming an entity, there are several requirements that can be easily overlooked but which can in the long run create significant problems.

PART I – LLCs

I. Required for Formation

A. Articles of Organization

The first step when forming an LLC is to file articles of organization with the DOS, pursuant to Section 203 of the New York Limited Liability Company Law (the “Act”). Once the articles of organization are filed with the DOS, the newly formed LLC will receive an official state filing receipt, which will officially allow you to conduct business in New York[1]!

That being said, you are not done with the process.

B. Publication Requirement

Once the LLC is formed, pursuant to Section 206 of the Act, you must publish a copy of the articles of organization or notice of formation of the LLC within 120 days after its articles of organization were filed with the DOS. The publication must be in two different newspapers, one printed daily and one printed weekly, once a week for six consecutive weeks in the county where the LLC’s office is located. Once the publication has run its course, the publisher or printer of each newspaper will provide an affidavit of publication, which shall be filed along with a certificate of publication with the DOS.

1. Consequences of Missing Publication. If an LLC fails to comply with the publication requirement within 120 days, its authority to carry on, conduct or transact business in New York State is suspended until the publication requirement is satisfied. In addition, the suspension generally precludes the LLC from maintaining an action or special proceeding in New York courts until the publication defect is cured.
2. Limited Impact of Suspension. The suspension does not limit or impair the validity of any contract or act of the LLC, and as a result won’t affect third-party rights or remedies under such contracts, acts, or omissions. Third parties retain the right to maintain actions or special proceedings based on the LLC’s contracts, acts, or omissions. The LLC retains the right to defend actions or special proceedings in New York. Most importantly, the suspension of the LLC’s authority to carry on, conduct or transact business in New York does not result in any member, manager or agent of the LLC becoming liable for the contractual obligations or other liabilities of the LLC, although you must always sign documents clearly identifying your representative capacity (e.g., [Your Name], as Manager of [LLC Name], LLC). Signing without clearly identifying your representative capacity can create ambiguity regarding the identity of the contracting party and, in certain circumstances, may support arguments for personal liability.
3. How to Solve the Suspension. As previously mentioned, the suspension does not terminate your business but rather restricts you from having access to certain legal privileges. This can be simply solved by completing the publication requirements. Once processed, the suspension is annulled and retroactively deemed annulled to the date of the LLC’s formation.
   
   

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[1] In the case of a sole proprietorship, no documents need to be filed with the Department of State unless the individual decides to operate the business under an alternate name, which would have to be registered.

[2] In addition to formation and corporate governance, the entity must also obtain an employer identification number from the Internal Revenue Service in order to open a business bank account and potentially obtain tax registrations depending on the LLC’s activities.

C. Operating Agreement

Under Section 417 of the Act, an LLC, regardless of the number of members, must have a written operating agreement. The operating agreement may be entered into within 90 days of the filing of the articles of organization. The operating agreement is meant to document the private agreements among the members and supplement or alter the default rules set out in the applicable LLC’s laws such as defining the company’s management structure, describing how the company’s profits are allocated and distributed, whether transfers of the membership interests are permitted, etc.

1. Consequences of not having an operating agreement. Although the Act requires an operating agreement, failure to adopt one does not invalidate the LLC. The company will be governed by the default rules provided in the Act, which may not align with your goals. Default rules often dictate that members shall share profits and losses equally, regardless of actual capital contributions.
2. Necessary Legal Paperwork. Most clients often consider an operating agreement as an additional “unnecessary” document that can wait since the members are “friends”, “siblings”, “been in business for years”. Rings a bell? The reality is that the operating agreement is meant to govern when communication between the members has broken down. The operating agreement is like a prenuptial agreement for a business. When the members take the time to discuss those points, in the end it will preserve relationships when trust is strained.
   
   

II. Required if Applicable to the Business’s Activities

A. Assumed Name

When forming your LLC, you have the option, not the obligation, to choose an alternate name for your business as provided in Section 204(c) of the Act. It could be that your preferred LLC name was unavailable[1], requiring you to select an alternative. Section 130 of the New York State General Business Law (“NYSGBL”) establishes the procedure and requirements for filing a certificate of assumed name with the DOS. Once filed, the certificate of assumed name remains in effect until either (i) the entity files a certificate of discontinuance of assumed name; (ii) the entity dissolves or ceases to exist; (iii) the entity amends its assumed name filing; or (iv) the DOS administratively terminated the entity for unrelated reasons. Unlike other states, New York does not require the entity to renew its assumed name filling.

1. Consequences of not filing. Operating a business under an assumed name (“DBA”) without having filed the certificate of assumed name can lead to legal and practical consequences, depending on the circumstances.

   a) Regulatory Compliance Issues. Inadvertent noncompliance is typically a curable defect that can be addressed by filing the appropriate certificate of assumed name and undertaking any related corrective actions with affected third parties and agencies, such as banks, licensing authorities, permit issuers, and contractual counterparties.

   b) Misdemeanor Status. Section 130(9) of the NYSGBL provides that a person who knowingly fails to comply with Section 130, or knowingly makes a false statement in a filing, is guilty of a misdemeanor. While a consumer or vendor cannot use such Section as an offensive weapon against you, (i) the New York State Attorney General may prosecute or refer matters for prosecution depending on authority and circumstances; (ii) a defendant may attempt to raise the failure to comply with the assumed-name statute as a defense or challenge to the LLC’s standing or compliance, potentially increasing litigation costs and delay.

   c ) Deceptive Business Practice Claims. Under Section 349(b) of the NYSGBL, the New York State Attorney General can bring an enforcement action against any business engaging in deceptive practices, where the use of an unregistered name forms part of a broader deceptive practice directed at consumers. Note that injured consumers, and in limited circumstances other parties able to satisfy the statutory requirements, may bring a private right of action under Section 349(b) of the NYSGBL.
   
   

B. Foreign Qualification

If an LLC is formed in another state or in another country but is “doing business” in New York, pursuant to Section 802(a) of the Act, it generally must obtain authority to do business in the State of New York as a foreign entity by filing an application for authority with the DOS, together with

a certificate of existence or certificate of good standing, depending on the domestic jurisdiction of the LLC. A foreign LLC conducting business in New York is generally required to obtain authority to do business in New York.

1. What constitutes “Doing Business”? This is often the source of confusion. Section 1301(b) of the New York Business Corporation Law contains a nonexclusive list of what is not considered doing business, but the analysis is overall fact specific. The outcome relies entirely on the specific circumstances, as no exact legal standard applies.
2. Publication.
   a) First Time Application. As of January 1, 2026, per Section 802(b)(i) of the Act, if you are looking to obtain authority to do business in the State of New York for the first time, you must publish a copy of the application for authority or a notice to that effect within 120 days after the application for authority was filed with the DOS. The publication must be in two different newspapers, one printed daily and one printed weekly, once a week for six consecutive weeks in the county where the foreign LLC’s office is located. Once the publication has run its course, the publisher or printer of each newspaper will provide an affidavit of publication, which shall be filed along with a certificate of publication with the DOS.
   b) Catch-up Provision. If you already filed an application for authority before the amendment became effective (before January 1, 2026), you have until January 1, 2027, to comply with the publication requirement.
3. Consequences of Failing to Qualify or Missing Publication.
   a) Section 808 of the Act provides that a foreign LLC doing business in New York without authority precludes the foreign LLC from using New York courts to sue, though the foreign LLC may still be sued and can defend itself from a lawsuit.
   b) Section 802(b) of the Act provides that failure to comply may result in suspension of the foreign LLC’s authority to conduct business in New York, although contracts and limited liability protections generally remain unaffected.
   
   

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[3] Note that a desired name can be looked up in the DOS database to ensure it is unique and distinguishable. In addition, an individual or an existing domestic or foreign LLC may reserve a limited liability company name for use at a later date by filing an Application for Reservation of Name pursuant to Section 205 of the Act, which will reserve the name for 60 days.

KEY TAKEAWAYS

This article addresses only formation and initial compliance requirements. Additional ongoing obligations, including biennial statements, annual filing fees, tax registrations, tax filings, employment compliance, and industry-specific regulatory requirements, may also apply. Forming the entity is only the first step. Compliance is an ongoing process. The small items that seem unimportant on day one—operating agreements, DBA filings, foreign qualification, equity records, and annual maintenance—are often the very items that become material when the business seeks financing, faces a dispute, undergoes an audit, or is sold. Are you in compliance?

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Contact us for a confidential consultation:

Cindy M. Belvisi, Esq.  | Senior Council

646-428-3241 | cmb@dhclegal.com

This article is for informational purposes only and does not constitute legal advice. Every situation is different, and you should consult with qualified counsel to evaluate your specific circumstances.