If you conduct your business through a New York Limited Liability Company, you want to make sure that you keep up with all ongoing maintenance obligations so that you do not run into problems later, such as being accused of mismanagement or someone trying to make you personally liable for LLC obligations. Failing to make certain filings can also result in being NOT in good standing with the Secretary of State, which can become a problem if you’re in the middle of a transaction and they require a good standing certificate.
What should you look out for?
If you have not done the LLC publication, do it now, it will bring you back into good standing (§ 206(b)(5) NY LLC Law). As you may know, in New York, you must publish in newspapers that you formed an LLC. See “Taking Care of the LLC Publication Requirement” for more information.
Proper Record Keeping
Formation Documents: When you first formed the LLC, you received a filing receipt and a copy of the LLC’s articles of organization. These documents should be together in some binder or in a dedicated electronic folder. If you took care of the publication requirement, this folder should also have the documents relating to the publication, such as the filing receipt for the affidavit of publication filed with the Secretary of State.
The fully executed operating agreement should be kept in the formation document folder. LLCs are required to have an operating agreement (§ 417(a) NY LLC Law). While there is no direct penalty for not having one under the NY LLC Law, I implore you to get one. The NY LLC Law has default rules for LLCs without an operating agreement, but those rules are often not what you would like them or expect them to be.
Many small business owners formed their LLC through some legal formation service. This service usually sends a binder with a template operating agreement. The business owners don’t sign that template and don’t pay any attention to it. That is NOT a valid operating agreement. Even if you sign it, these template agreements usually don’t serve your needs.
Written Consents or Meeting Minutes: You want to document certain major actions by the LLC and keep a chronological file of any such actions. If the LLC action required a vote by the LLC members and a meeting resulted in a vote, you must have a written memo describing all major things that happened at such meeting.
If a vote of the members was taken by written consent (which is allowed under § 407 (a) NY LLC Law), you have to put the written consent into your chronological file. Since any written consent must be sent to the members who did not participate in that written consent (§ 407 (c) NY LLC Law), you should keep a copy of the consent letter to those members.
See also “Keeping Records for your LLC“
Make necessary changes to the Formation Documents
Some developments in your business could require you to make changes to the original articles of organization.
§ 211(d) NY LLC Law allows amendments to the articles of organization. In fact, it requires you to make the changes within 90 days after any of the following occurs:
(1) a change in the name of the limited liability company;
(2) a change in the county within this state in which the office of the limited liability company is to be located;
(3) a change in the latest date, if any, on which the limited liability company is to dissolve;
4) the continuation of the limited liability company under section seven hundred one of this chapter after an event of dissolution;
(5) a change in the name or street address of its registered agent in the state if such change is made other than pursuant to section three hundred two of this chapter;
(6) a change in the post office address to which the secretary of state shall mail a copy of any process against the limited liability company served upon him or her if such change is made other than pursuant to section three hundred one of this chapter;(7) a change in whether the limited liability company is to be managed by one or more members of a class or classes of members or by one or more managers or a class or classes of managers;
(8) the discovery of a materially false or inaccurate statement in the articles of organization; and
(9) the decision to change any other statement in the articles of organization.§ 211(d) NY LLC Law
An amendment requires that a majority of the members of the LLC approve the amendment (§ 213 NY LLC Law).
Once the required vote is there, the LLC has to file a certificate of amendment. The Secretary of State gives you a form and instructions on how to do that.
Some changes can be done with a “Certificate of Change”, which doesn’t require a vote by the members as the amendment requires (§ 211-A NY LLC Law).
A certificate of change allows to (i) specify or change the location of the limited liability company’s office; (ii) specify or change the post office address to which the secretary of state shall mail a copy of any process against the limited liability company served upon him; and (iii) make, revoke or change the designation of a registered agent, or specify or change the address of the registered agent. Again. the Secretary of State has forms and instructions.
Update the Operating Agreement
As the business goes on over the years, it may be necessary to amend the operating agreement. See “Can you amend an Operating Agreement.” For example, if a new member joined the LLC, it is usually necessary to amend the original operating agreement to document such a new member.
Some operating agreements have provisions that require you to update the value of the business periodically by an appraisal or other mechanism.
It is a good idea to review the operating agreement annually and determine whether any events require an amendment.
File a Biannual Statement every two Years
Every LLC must file a so-called biannual statement every two years (§ 301(e) NY LLC Law). Fortunately, they made this much easier by allowing for filing online. The fee is $9. The filing asks you to update any change in the address to which the Secretary of State would forward official papers, such as a summons and complaint.
Get an Assumed Name Certificate, if necessary
If your LLC started using a name in doing business that is different from the LLC’s name, you must file an assumed name certificate.
Tax and Accounting Obligations
Of course, running an LLC also requires you to keep up with all tax filing and accounting obligations. I will not go into these obligations other than to say: If the LLC has more than one member, engage a good tax accountant and bookkeeper. Keeping the books for a multi-member LLC is not that easy.