Corporations and LLCs in New York
At Strazzullo Law Firm, our New York City attorneys have been helping business clients with organize their business formations, merger, acquisitions, and more. We have helped small business owners move into corporations and limited liability companies both according to what fits their needs. Both of these business formations differ from others by limiting the personal liability of all the owners. Although we cannot tell you without consultation which is better for you, here are some general principles about regular corporations and limited liability companies.
The relative simplicity and flexibility of a limited liability company makes it the best choice for most small businesses. An LLC is especially beneficial if your business will hold property that is likely to increase in value. Regular corporations, sometimes referred to as C corporations, and their shareholders are both taxed on the increase of property value when it is sold or the corporation is liquidated. LLC owners avoid this double tax because the business tax liabilities pass through to them; the business does not pay taxes on its income.
Other factors in your business may be better suited to the organization of a corporation. These factors could include:
- You expect to have multiple investors or public donations. LLCs are geared well towards a few investors who will be active in the day-to-day operations of the business, but it may become difficult with more investors. Corporations provide a more functional solution to the complexities of many investors.
- You intend to provide extensive fringe benefits to owners. When you form a corporation you will most likely be considered an owner and an employee. For example, an owner can also serves as its chief executive officer, who is entitled to a tax-deductible salary, health insurance premiums, and reimbursement of medical expenses. In addition, these benefits are tax deductible.
- You want to offer stock options and stock bonus incentives to employees. LLCs don’t have stock. If you want to entice or keep key employees, offering ownership in your business may be an incentive.