Frequently Asked Questions about New York as an Offshore Jurisdiction

What documents are required to form an LLC?

In order to set up a limited liability company, we require standard due diligence documents: certified copy of the passports and national identity cards of the managers and members, as well as knowledge of the intended activities of the company. The company itself is formed by filing the Articles of Formation with the Secretary of State; after publication (see below) two affidavits of publication are filed. The articles of formation are generally less than one page.

What documents are received from the government to confirm filing?

The Secretary of State will issue a filing reciept confirming the filing, the name, county and mailing address of the company, and the fees paid. If a certified copy of the articles or a certificate of goodstanding is required for your purposes, these must be ordered in addition to basic filing.

How long does it take to form a company?

It usually takes one to two days from the time of order for the Secretary of State to file the document and issue a filing receipt.

What other requirements are there to be in compliance?

Within 120 days after the company is filed, notice of formation must be published in two newspapers in the same county as the office of the company, for six consecutive weeks. The newspapers must provide the filer with an addidavit of publication, which is filed with the Secretary of State. This requirement is taken care of as part of our standard formation package, or our shelf companies prior to sale.

What is required to be in the name?

The company must contain the words "Limited Liability Company" or the initials (L.L.C. or LLC).

What information is publicly disclosed?

The articles of formation and notice of formation are the only public information on the company. The minimum information disclosed thereby is the company's name, county of office, method of management (by its members, or by managers) and the mailing a ddress of the company. There is no maximum for disclosure: the organizers or members may choose to put all the capital contributions, rules and regulations, names of members and managers, or just about any other details, into the articles of formation if they desire.

When can the company start conducting business?

The company can start conducting business as soon as the articles of formation have been filed by the Secretary of State. Failure to file an addidavit of publication only prevents the company from using the Courts of the State of New York; it does not affect the validity of any contracts or other agreements made by the company.

Is a company seal mandatory?

No. The law only states that the company is entitled to use a seal if it so wishes.

Who can be a member of an LLC?

A member can be a natural person (without regard to residency, citizenship or nationality), or legal persons of any type or nationality, including trusts, partnerships, associations, corporations or other LLCs.

What is the minimum and maximum number of members?

At least one member is required at all times from the moment of formation to dissolution. There is no maximum number of members.

Are managers required?

No. The company can be managed by its members, or a class of members, if it so chooses.

Who can be a manager of an LLC?

A Manager can be a natural or legal person, including trusts, partnerships, associations, corporations, or other LLCs. There are no nationality, residency or citizenship requirements.

Do the managers have to be members?

No.

Can the managers issue a power of attorney?

Yes.

What is the minimum capital?

There is no minimum capital required. In the operating agreement (or the articles of formation, if you want to disclose the information publicly) the initial contributions of the members are listed. The initial capital can be in the form of cash, services rendered or real or personal property.

How is an LLC taxed? Does it pay taxes?

An LLC has the option to be taxed (a) directly as a corporation or (b) depending on the number of members, a partnership or a sole proprietorship. If it elects under state and federal law to be taxed as a corporation, then all its worldwide income is subject to taxation at the entity level, and any distributions to the members are taxable as dividends. Therefore, most LLCs choose plan (b) to take advantage of"flow-through" taxation, in which the LLC records its profits and losses and allocates them to the members according to the operating agreement. If the company has elected to be taxed as a sole proprietorship, then there are no annual taxes or fees payable to the State of New York. Further, if the company elects with the state and federal governments to be taxed as a partnership, and if there is no US-resident members and no US-source income, then there is no taxes or fees to pay, nor returns to file with New York or the federal government.

What are the annual requirements to stay in goodstanding?

An LLC that elects to be taxed as a partnerhip and has New York members must file state and federal partnership returns, and pay an armual fee of $100 per member, with a $325 minimum. An LLC with US members but no New York members must file a New York partnership but pays no annual fee. A single member LLC that elects to be treated as a sole proprietorship, and an LLC with no New York or US-resident members, and no New York source or US source income, pays no annual fee and files no returns.

What kinds of records does an LLC have to keep?

The LLC must maintain the following records:
(1) If it is managed by managers, it must keep a current list of the full name and mailing address of each manager, in alphabetical order;
(2) a current list (in alphabetical order) of the names and mailing addresses of each member, along with the capital contributions and shares of profits and losses of each member - or information from which such share can be readily derived;
(3) a copy of the articles of organization together with any amendments;
(4) a copy of the LLC's federal, state and local income tax or information returns and reports, if any, for the three most recent fiscal years.

Are there any auditing requirements?

No, unless the company is listed on a public stock exchange.