While an LLC is not a partnership or corporation, establishing an LLC in New York allows a business to enjoy the flexibility of a partnership while enjoying the same protections of a corporation.
An LLC is not a corporation, therefore, LLCs are not required to keep formal minutes or hold meetings. Instead, an LLC runs more like a partnership— with pass-through taxation and management flexibility.
LLCs can avoid double taxation (that is paying corporate tax and individual tax). With an LLC, the company chooses whether it will be taxed at the company level and then to individual members or it can choose to be taxed as a partnership with no tax at the LLC level (excluding franchise fee).
LLCs also enjoy flexibility at the management level. An LLC can have many members or as little as one member. LLCs should have an operating agreement that sets forth ownership, profit sharing, responsibilities and how the company is to be managed.
The most attractive aspect to forming a New York LLC is that the LLC shields owners and members from personal liability. An LLC is a separate entity, similar to a corporation, which means LLC members are personally protected from any liability of the LLC and judgments against the LLC.
Other benefits include the credibility of having LLC after your company name, the ability to deduct health insurance premiums and flexible profit distribution.
While forming an LLC has many advantages, there are also some disadvantages to take into consideration, such as limited life span, going public and added complexity.
Before deciding whether or not to form an LLC for your company, call the New York City Law Offices of Albert Goodwin at 718-509-9774 to discuss if an LLC is right for you.