Unless the LLC elects to be taxed as a C corporation, all of the LLC's profits are passed through to the members. The choice will depend upon various factors, and is best made in consultation with a tax expert. An LLC with two or more members (called a multiple-member LLC) can choose to be taxed as a partnership, an S corporation, or a C corporation. An LLC with one member (called a single-member LLC) has the choice of being taxed as a sole proprietorship, an S corporation, or a C corporation. LLC pros: For federal tax purposes, an LLC has the most flexibility as to how it will be taxed.
There is no limitation of liability for a sole proprietor or a partner in a general partnership. A limited partnership (LP) gives limited liability to the limited partners, but not to the general partners, who are the ones who create and run the business. This means that a creditor of the business cannot go after the personal assets (home, car, bank accounts, etc.) of an LLC member.Ī corporation and a limited liability partnership (LLP) also afford limited liability, but the LLC has other advantages that will be discussed below. LLC pros: Owners of an LLC (called members) are not personally liable for the debts of the business, including debts resulting from most lawsuits against the company. These factors, as well as others, will be discussed in comparison with other ways of structuring a business. However, as will be seen, it's not quite that simple.
Whether a certain feature is an advantage or a disadvantage may depend upon the type of business structure being compared with creating a New York LLC.Īn LLC is often seen as having the same limitation of liability for owners as a corporation, but with more potential tax benefits and less complexity. Structuring your business as a limited liability company (LLC) in New York has both pros and cons.
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