Establishing a Limited Liability Company ("LLC") in the state of New York is unnecessarily expensive and a deterrent for many cash-strapped start-ups and small businesses. Aside from common costs associated with forming an LLC, like the filing fee for Articles of Organization (currently $200), the New York Department of State requires an additional hurdle: all new LLCs must publish in two newspapers a notice of their Articles of Organization for six consecutive weeks. The LLC publication requirement must be met within the first 120 days from the effective date of the LLC.
How much does the LLC publication requirement cost?
The cost varies depending on which county your LLC is registered. LLC publication costs are directly related to the current ad rates of the newspapers in each county. Not surprisingly, Manhattan is one of the most expensive locations with publication costs exceeding $1100. However, it's important to reiterate that the publication cost is not a fixed cost, but rather determined by the two particular county newspapers in which you are assigned to give notice.
Exacerbating the issue, the New York Department of State charges $50 to file your LLC's Certificate of Publication.
What are the steps to publish a notice of LLC in NY?
First, find your LLC's "filing receipt". If you do not have it, ask the person who formed the LLC. The receipt should have been mailed to the principal address which was required at the time of filing for the Articles of Organization.
Second, verify the county in which your LLC is registered and call the appropriate county clerk's office. If you are lucky enough to be registered in a county where the employees of the clerk's office actually answer the telephone, they will give you the names of two newspapers in which you must publish. Of course, if no one answers the phone then you will need to go in person. It is likely that the country clerk will ask for a copy of your filing receipt, so bring it with you or be prepared to fax it.
Third, contact the two newspapers and ask them to send you a sample notice. It would also be a good idea to double-check this information with the law itself: Article 2 - § 206 Affidavits of Publication.
Fourth, after the notice of LLC has run in the newspaper for six weeks, the newspaper will send you the affidavits of publication. You will mail the affidavits along with the Certificate of Publication and $50 to the department of state for filing.
There must be an easier way... right?
Of course, this is America isn't it? You can hire a publishing company to do it all for you. It's my understanding that hiring a publishing company to satisfy your LLC publication requirement can actually be cheaper than doing it yourself. I assume publishing companies can get better ad rates with newspapers since they are publishing a high volume of LLC notices. If you would like a publishing company to handle your LLC's notice, search Google for "llc publication new york" and click on any of the ads in the sidebar. Be sure to shop around, as prices vary.
What happens if I don't publish a notice of LLC formation with 120 days?
Technically speaking, your LLC's authority "to carry on, conduct or transact business" in the state of New York will be suspended until the publication requirement is met. That sounds pretty harsh, however, it's my understanding that the actual repercussions are likely inconsequential, unless your LLC needs to sue someone, in which case you would need to meet the publication requirement. My advice would be to consult your attorney.
Can I avoid the publication requirement by filing my LLC in another state?
No. Foreign LLCs conducting business in New York are required to publish their formation of LLC as well.
Why is there an LLC publication requirement in NY?
I wish Oliver Stone or 60 Minutes would answer that question. The intention of the publication requirement, supposedly, is to notify the public of fraudsters and modern day snake oil salesmen who have unscrupulously deceived the public in the past. However, I find this reason very hard to believe. For starters, the information listed in the notice is insufficient - it does not require the individual member's names, nor does it require the actual address of the LLC. Secondly, the likelihood that a person who has been swindled will discover their offender by perusing LLC notices in the classified ads of a particular newspaper is beyond far-fetched. Tying your LLC notice to the leg of a carrier pigeon would have a greater impact. And furthermore, the exact same information regarding new LLC formations is readily available online on the Department of State's website!
So what's the real story? A likely explanation of why there is a publication requirement for LLCs in NY is because manifold newspapers use these notices as a source of revenue, revenue that is being unjustly removed from the pocket of small businesses to subsidize local newspapers. In essence, the publication requirement is a bureaucratic tax levied by the state for the benefit of the private sector, i.e. newspapers. In my opinion, it is unfair to charge newly formed LLCs a publication "tax", especially if that money is not being appropriated for public services. If you agree, please write your NY state congressmen. You can find your representative by clicking here: New York State Assembly Member Search.