When forming a business in New York, owners have several options. Each structure type offers pros and cons. Therefore, business owners should choose an organization form they feel best suits their short-term and long-term needs and goals.
To help determine if establishing a limited liability company will fit their objectives, business owners may find it helpful to consider some of the benefits that come from structuring as an LLC.
According to New York City Small Business Services, forming an LLC offers organizational flexibility to those who own a company. The members have the ability to manage the business in the manner they see fit, which may include appointing a manager to handle the general operations.
With other structure types, the owner of a business may bear financial responsibility for the company’s liabilities. When they structure as a limited liability company, however, members generally only have financial liability up to their personal investments. As such, they need not worry they may lose their homes or other assets in the event of legal disputes involving their companies.
According to the New York State Department of Taxation and Finance, limited liability companies do not generally qualify as independent entities from members with regard to taxation responsibilities. Rather than the company bearing state and federal tax responsibilities, the obligations pass through to the members. Those who own LLCs report the company’s earnings and losses through their personal income taxes.
The manner in which business owners choose to structure their companies may have significant impacts on how they operate day-to-day, as well as grow. Therefore, they may find it helpful to seek legal guidance to learn more about their rights and responsibilities.