NY LLC Publication Requirements are a Burden for Small Businesses

In order to form a Limited Liability Company (LLC) in New York, the LLC must first choose an available business name, the county in which your LLC will be located, and prepare and file Articles of Organization with the Department of State along with a check for $200.  However, if you do not take the extra step of publishing notice of the formation of your LLC within 120 days of formation, your authority to conduct, transact or carry on any business within New York state will be suspended.

Although the courts have not yet addressed what the consequences would be of operating without the authority to conduct business, it is possible that the members of the LLC might become personally liable for actions taken or that contracts could be voided if the publication requirement is not fulfilled.

LLCs cannot get around the New York publication requirement by forming their LLCs in a less expensive state.  Foreign LLCs doing business in New York are subject to the same publication requirement.

Section 206 of the NY Limited Liability Company Law calls for the newly formed LLC to publish notice of its formation, the location of its principal office (the county), the date of formation and a statement that the Secretary of State has been designated as agent against whom process may be served and several other items that can be found in the LLC’s Articles of Organization.  This notice must be published in one daily newspaper and one weekly newspaper, once each week for six weeks.

Fortunately for Long Island LLCs, the costs are much less than those found west of us in NYC.  Newsday and a weekly local newspaper cost between $300 and $500 for the six weeks.  Additionally, information about which designated newspapers are approved to fulfill the publishing requirement can be found online at the Nassau County Clerk and the Suffolk County Clerk websites.

At the end of the six weeks, the newspapers will send you an affidavit of publication which must be sent to the Department of State along with a Certificate of Publication and $50.

Although the requirement to publish is purportedly intended to protect the community, hardly anyone actually reads these notices in the paper.  The information itself is of little use, as it does not list an actual address or name the members of the LLC.  Newspapers rely on these notices as a source of income.  You may draw your own conclusion as to why the New York legislature included these provisions in the NY LLC law.

I conclude, however, that the publication requirement for LLCs in New York is unduly burdensome for small businesses and should cause local Nassau and Suffolk small businesses to think twice before choosing this form of business entity over incorporation.