What happens if I don’t file newspaper ads for my LLC?

A reader had this question in response to my post “Taking Care of the LLC Publication Requirement“:

If I own an LLC just to protect the company name and I don’t file the newspaper ads, is the only issue that I lose the ability to do business in NY?

Yes, if you fail to publish and file the certificate of publication in the required time frame (120 days after formation), the LLC’s authority to carry on, conduct, or transact business in New York will be automatically suspended.

Click here for NY LLC Formation

What does that mean in practical terms?

Nobody really knows.  The law was amended in June of 2006 and the part about “carry on, conduct, or transact business” is new.  Would have been a nice gesture by the law makers to leave us some pointers, but no such luck.

I think, at a minimum, this follows from failure to publish:

The LLC will not be able to sue in New York courts, but can still be sued.

The LLC will not be able to obtain a “certificate of good standing” from New York’s Department of State.  The LLC may need such a certificate in order to get a larger loan or to participate in a major business transaction.

But, you can be sure of the following:
The members (owners) of the LLC will still be protected by the limited liability shield of the LLC.

Any contract between the LLC and any other party does not become invalid, because the LLC failed to publish.

Once the LLC  takes care of the publication requirement, the law provides that the LLC regains its authority to “carry on, conduct, or transact business in New York.”

About Imke Ratschko

Imke Ratschko is a New York Attorney helping small businesses, business owners and entrepreneurs with all things "Small Business Law," such as litigation, contracts, business owner disputes, shareholder and operating agreements, sale or purchase of a business, investors, and starting a business. You can reach her at 212.253.1027.

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