Depending on your business, a limited liability company or LLC has offered many new businesses a long-lasting list of advantages. To some extent, this structure allows for better security of personal and business assets. The New York State and federal government rule out a ‘Corporate Veil’ that’s created when forming an LLC. This ensures members a separation of personal assets from the business, protecting their possessions in the event of the business failing, bankruptcy, or any other legal liabilities.
The short end of the structure also offers better flexibility, allowing more members to become part of the LLC, and also, allows for a wide variety of businesses to register as a limited liability company. The American economy has seen a significant rise in recent years and still holds firm as one of the biggest GDP economies in the world. Small-medium businesses have accounted for 61.8% of job creation for several decades. Additionally, these businesses are largely contributing to the growing U.S. economy and employment, both locally and territorially.
Why are LLCs so prevalent in the U.S. economy?
The benefits offered are not only restricted to New York State laws, but the overall implication of federal provision has seen a significant rise in job creation. Over the last few years, these business structures created around 1.9 million new private-sector jobs, and an overall 30.2 million small-medium businesses are currently registered in the U.S.
The federal government rolled out a strong mandate, which supports the growth and popularity of LLC structures. It’s imposed better federal tax legislation, which has filtered into various state laws. With this, these structures offer members better formation procedures and state support.
What are the benefits offered by an LLC business structure?
Depending on the member and operational structure, there are many positive benefits for LLC businesses in New York:
- A single owned LLC is taxed on sole proprietorship basis or income tax.
- There are also pass-through on any business losses if it’s a single owned LLC.
- Similar taxation applies to LLCs with multiple owners, but with the added benefit of operating as a corporate form.
- Owners or members can decide if they want their LLC to be taxed as a corporate or partnership entity.
- For both single and multi-member owned LLCs there is also the added limitation on personal liability exposure.
- Both citizens and foreigners can own an LLC in the U.S. and New York.
- Almost 80% of the owners are seen as a separate corporate entity.
Why choose an LLC over a Corporation?
The difference between these two structures easily overflows into each other, the popularity for LLCs are recognized on the easier formation and better membership benefits. Corporations have seen a decrease in federal taxation since 2017, but many new business owners tend to start an LLC, as it offers better financial security. Corporations are exposed to different legislation, and although it offers more investment opportunities, the filing and administration for corporations can quickly outgrow personnel capacity.
Both these business structures can be operated with multiple members or owners, and different income and business tax will change over state lines. In New York, LLC members are exempt from paying state tax, but rather a fee according to their profit earnings. This is possible for either multiple-member LLCs or a Limited Liability Partnership. Read more on how to start an LLC in New York online.
How do you decide if you should start an LLC in New York?
It comes down to the type of service or product offered by your business plan. In many cases, LLCs can grow into becoming a registered incorporated company, allowing for more investment opportunities, creating more jobs, and perhaps becoming a global brand.
In the end, LLCs are a safe way to move from a sole proprietorship towards a functioning business, with its own set of standards, regulations, and overall bigger economic involvement.