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Choice of Business Entities Blog Series: The Limited Liability Company

I am oftentimes asked about the best choice of business entity for a farm/ranch, agri-business or food entrepreneur.  There is no one-size fits all answer to that question as each type of business entity offers different strengths and weaknesses.  It is important to pick the right business entity for your specific type of enterprise – the answer to that question may change over time.  I would like to encourage all of my readers, no matter the size of your business, to have a relationship with a food and agriculture lawyer licensed in your jurisdiction and have an ongoing conversation on this topic.  This blog series will work through the major types of business entities.  You can also view my Powerpoint presentation on the choice of business entities here.  

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A limited liability company (“LLC”) is the newest (and arguably the most popular) choice of business entity in New York. A family limited liability company (“FLLC”) is a type of LLC owned by a family business.

Pursuant to NY Limited Liability Company Law, Articles of Organization must be filed with the NYS Department of State. The owners of a limited liability company are called “members.” Limited liability companies can elect to be taxed as a C-corp (for corporation tax) or S-corp (for pass-through tax-treatment). Unless otherwise provided, LLC’s have perpetual duration (so it outlives the members).

Please note that the members of a LLC can be kept private in New York. In other words, the Articles of Organization does not need to list the members. In some cases, this privacy can be helpful.

When forming a limited liability company, it is important to remember that New York has a publication requirement. Publication requirements can vary significantly depending on what county in New York the business is located. The publication requirement can be particularly expensive in New York City and surrounding counties (Westchester, Nassau, and Suffolk). This is one disadvantage in filing a LLC vs. a corporation; however, LLC’s have less administrative overhead over the long haul.

New York requires publication of the Notice of Formation in two publications for six successive weeks in the county in which the LLC is located (one daily paper and one weekly paper). Contrary to popular belief, you cannot just pick any publication that you want. You must work with your county clerk’s office (and your attorney) to ensure you comply with the strict publication requirement. Once you have completed the publication requirement, a Certification of Publication must then be filed.

This is an excerpt from my book that I co-authored with Pat Dillon, an Iowa food and agriculture lawyer.  You can purchase a copy of the book “Field Guide:  Legal Guide for New York Farmers and Food Entrepreneurs” on Amazon.com.  

Disclaimer:
"This blog is for informational purposes only and is not intended to create an attorney-client relationship. It is recommended that you speak to an attorney licensed in your jurisdiction before relying on the information in this blog."

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