New York is the biggest central district in America. If you’re interested in running a business in the city, you’ll need to settle on the organizational structure you’re going to set up. LLC (Limited Liability Company) and corporations are entities worth venturing into.
These two differ in many aspects. Here are some of those:
LLCs can allocate the firm’s profits and losses any way the members of the firm like. In a corporation, on the other hand, losses are based on the percentage of stock a shareholder owns. For example, if a shareholder owns 25 percent of the firm, he or she can receive no more than 25 percent of the firm’s profits. With an LLC, however, members may own 25 percent, yet receive 40 percent of the firm’s profits.
The corporation setup has a double taxation implication. It must pay taxes as a business. Owners, on the other hand, must report income received from the business using their personal income tax return. With an LLC, the firm can elect for taxation as a sole proprietorship, a partnership, or a corporation. As it’s a pass through entity, there is better flexibility on taxation.
If you’re not 100 percent sure of what type of structure you want to set up, consult a professional to determine which will work best. Look for a provider of online document filing services to incorporate your business in an affordable and reliable way.