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NY Business Entity Structures for Start-Ups

Choosing the right NY business entity structures for start-ups is one of the first major decisions an
entrepreneur—foreign or domestic—must make prior to launching a business. The structure chosen affects everything from the liability and risk of the business owner and tax ramifications to the daily operations of the business. Having experienced legal counsel such as Prewitt Law, P.C. to help when choosing your NY legal business entity can make the difference between success and struggle.

What Are the NY Business Entity Structures for Start-Ups?

What Are the NY Business Entity Structures for Start-Ups?

Prewitt Law will help you make the right choice.

There are several business entity structures to choose from for your start-up in New York. Francine Prewitt of Prewitt Law, P.C. will help you make the best choice for your business to save you time and money.

General Partnership

The easiest NY business entity structures for start-ups to form where there are two or more owner/operators is the general partnership. In NY partnerships, two or more people operate the business for profit acting as co-owners. All partners share profits and losses equally unless agreed otherwise in a contract. This also means all partners have unlimited liability for any debts the business accrues and are personally liable for lawsuits filed against the business.

Limited Liability Partnership

A limited liability partnership, or LLP, works well where there is one owner/operator and multiple investors. In this structure, one partner is personally liable for all the business debts and lawsuits, while the other investors have a more hands-off role and are only liable to the extent of their financial investment in the company.

Of the four NY business entity structures, NY LLPs provide liability protection for more of the partners than the other entity structures. However, these partners, called limited partners, do not participate in the daily running of the business. Instead, they hold a passive investment in the partnership.

Corporation

NY corporations are legal entities that are separated from their owners. Taxes and legal structures are independent, and it’s easy  to separate personal assets from business debts. The owner’s personal liability is limited solely to the amount invested in the business. While this does offer protection to the owners, there are strict guidelines on operations, including filing requirements, holding annual meetings, recording minutes, and keeping records of shareholders.

If you’re thinking of taking the business public or raising capital by selling stocks, establishing as a corporation is the best method to do this.

Limited Liability Company

A limited liability company is a popular option when deciding which NY business entity structure is best for your business. NY LLCs combine the qualities of a corporation and a partnership. Like a corporation, you can separate your personal assets away from business debts, and there is no limit to the number of owners the business can have. However, like partnerships, LLCs aren’t subject to business taxes and any profits and losses are reported on the owners’ personal tax returns.

Help Choosing between NY Business Entity Structures of Start-Ups

When you’re ready to get your business off the ground, let Prewitt Law, P.C. help you discover which NY business entity structures for start-ups may be best for your new business. We will explore every option to determine the correct path for you to take and help you navigate the red tape that can often hold up foreign investors and entrepreneurs. Contact Prewitt Law, P.C. at 646.583.1206 or email us at info@prewittlawfirm.com. We’re excited to help you establish your business and join the thriving New York economy!

We're excited to meet you and understand your business aspirations.

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