A New York LLC (Limited Liability Company) and a Delaware S Corporation (S corp) are both popular business structures that provide liability protection to their owners. However, there are some key differences between the two:
LLCs are formed at the state level and are governed by state laws. To form a New York LLC, you must file Articles of Organization with the New York Department of State. S corps, on the other hand, are formed under federal law, but they must be registered in the state where they do business. To form a Delaware S corp, you must file Articles of Incorporation with the Delaware Secretary of State.
LLCs are typically taxed as pass-through entities, meaning that the company's income is not taxed at the business level. Instead, the income "passes through" to the owners, who report it on their personal tax returns. S corps are also pass-through entities, but they have to meet certain requirements, such as having no more than 100 shareholders and only one class of stock. S corps may also be subject to state-level taxes in addition to federal taxes.
LLCs can be managed by their owners (known as members) or by managers appointed by the members. S corps, on the other hand, are managed by a board of directors elected by the shareholders. The board of directors is responsible for making major business decisions and appointing officers to manage day-to-day operations.
LLCs have less formal compliance requirements than S corps. For example, LLCs do not have to hold annual meetings or keep minutes of those meetings, whereas S corps are required to do so. However, both LLCs and S corps must file annual reports with their state's governing agency and keep their business records up to date.
the main differences between a New York LLC and a Delaware S corp are their formation and taxation, management, and compliance requirements. Deciding which structure to choose depends on a variety of factors, including the size of the business, the number of owners, and the company's growth plans. It's important to consult with a lawyer or accountant before making a decision to ensure that you are choosing the right structure for your business.
Silvia Sun, Esq.
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