Before starting a business in New York, it’s important to have a basic understanding of the most common New York business entities. New York offers several options in this area. However, deciding which one to choose can be complicated. Therefore, if you own a business or plan on starting a business in New York, please review the information below. For additional information on New York business entities, please contact a New York business formation attorney.
A corporation is a legal entity that exists separately from its owners. Corporations are controlled by shareholders, a board of directors, and officers, although one person may fill all these roles. Corporations are heavily regulated and must comply with complicated tax laws.
A sole proprietorship is the easiest business entity to establish, as only one person owns and operates the business. Anyone who launches a new business as the sole owner is automatically a sole proprietor under the law. With a sole proprietorship, there is no need to register with the state, although local business licenses and permits may be required.
A general partnership is a legal arrangement in which several partners actively manage a business and share in its profits and losses. A general partnership is the default business entity for businesses with multiple owners. Like a sole proprietorship, registration with the state isn’t necessary to form a general partnership.
A limited partnership is a registered business entity. Therefore, in order to form a limited partnership, an owner must file paperwork with the state of New York. There are two types of partners in a limited partnership: general partners and limited partners. General partners are those who operate, own, and assume liability for the business. Limited partners are those who only invest in the business. Limited partners have no control over business operations and have less liabilities than general partners.
Limited Liability Company
A limited liability company, commonly called an LLC, incorporates features of each of the other business entity types. LLCs are similar to corporations in that they offer limited liability protections. LLCs also have minimal paperwork and ongoing requirements, which is similar to sole proprietorships and partnerships. An additional benefit of an LLC is that an owner can choose how the IRS will tax his or her business. Specifically, the IRS can either treat an LLC as a corporation or a pass-through entity for tax purposes.
Contact a New York Business Formation Attorney
Running a successful business requires planning, knowledge, and experience. Therefore, if you need assistance with your business’s legal needs, our New York business formation attorney is here to help. At the Law Office of Angela Siegel, we assist business owners in the formation of legally sound business entities and help entrepreneurs devise business strategies that help them achieve their goals. Please contact us today to schedule a consultation.