Should LLC’s comply with New York’s publication requirements?
[Initial Note: Not every startup founder seeks VC financing or an IPO exit. As such, depending on the specific circumstances, it may make sense for a startup to use an entity other than a c-corporation, such as a limited liability company. If you are seeking VC financing, a Delaware c-corporation is a more appropriate choice of entity.]
New York State law requires any newly-formed limited liability company in New York to publish a notice announcing its formation in two newspapers for six consecutive weeks. Proper publication is to be completed within 120 days following the LLC’s formation. The cost for complying with this requirement in New York City varies, but is typically no less than $1,500. Adding another layer of complexity, the newspapers in which an LLC publishes its notice must be designated beforehand by the county clerk; a process that entails calling a designated individual at the county clerk’s office. Foreign companies seeking to do business in New York are likewise required to publish a notice.
It is near-impossible to justify this statute’s existence. Publishing a notice accrues to the benefit of nobody, except those newspapers collecting fees.
Depending on the context, this may be the unusual situation where it may be prudent not to comply with a legal obligation.
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