A limited liability company (LLC) is a good choice for entrepreneurs in New York who are new to owning a business and are in an industry that is susceptible to lawsuits. This type of business structure protects you from personal liability when someone sues the business, unlike a sole proprietorship. Although corporations offer this same protection, LLCs feature a few advantages compared to a corporation.
1. Tax filing flexibility
LLCs have the flexibility of choosing to file their taxes as a sole proprietorship, partnership or corporation. The IRS doesn’t view an LLC as a separate entity, so members of the LLC choose how they file their taxes.
2. Easier to form
To create an LLC in New York, all you must do is submit the Articles of Organization to the Department of State. It costs $200 to file the articles. You need to consult a lawyer if you have questions about the law. The Department of State can’t answer legal questions. It can only answer questions about submitting the articles.
Most states don’t require that LLCs have an operating agreement, but New York does. State law only gives you a maximum of 90 days to submit the operating agreement. You can send your operating agreement before or when submitting the Articles of Organization.
3. Fewer formalities
You don’t need to make as many decisions during the business formation and planning of an LLC as you do with a corporation. Corporations have a lot of regulations that you need to follow. There is also a certain structure that corporations take. You have more flexibility in how you run your business with an LLC. However, you still need to have a well-thought-out plan for your LLC since New York business law requires an operating agreement. It’s not as difficult to create as you may initially think. A lawyer could assist you in writing an effective operating agreement.
Both LLCs and corporations are great business structures. Which one you choose depends on your unique situation. LLCs are easier and cheaper to form. They allow for more flexibility in how you operate the business and pay its taxes.