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New York LLC |
Advantages of Limited Liability Company
- Limited Liability: Owners of a LLC have the limited liability protection of a corporation.
- Flexible Profit Distribution: Limited liability companies can select varying forms of distribution of profits. Unlike a common partnership where the split is 50-50, LLC have much more flexibility.
- No Minutes: Corporations are required to keep formal minutes, have meetings, and record resolutions. The LLC business structure requires no corporate minutes or resolutions and is easier to operate.
- Flow Through Taxation: All your business losses, profits, and expenses flow through the company to the individual members. You avoid the double taxation of paying corporate tax and individual tax. Usually, this will be a tax advantage, but circumstances can favor a corporate tax structure.
Disadvantages of Limited Liability Company
- Limited Life: Corporations can live forever, whereas a LLC is dissolved when a member dies or undergoes bankruptcy.
- Going Public: Business owners with plans to take their company public, or issuing employee shares in the future, may be best served by choosing a corporate business structure.
- Added Complexity: Running a sole-proprietorship or partnership will have less paperwork and complexity. A LLC may federally be classified as a sole-proprietorship, partnership, or corporation for tax purposes. Classification can be selected or a default may apply.
By New York and other state law in order to proceed with forming a llc, you need to prepare a written abstract detailing your llc purpose, the names of your initial New York LLC members, the name and address of your New York registered agent, the details of which will be introduced into the body of your LLC operating agreement and related New York LLC formation documents assembled for application to the state of New York.
New York’s Business Tax Climate Ranks 49th
New York ranks 49th in the State Business Tax Climate Index, which measures the impact on business of five major elements of the tax system: the percentage of income taken by all taxes, the individual income tax rates, the corporate income taxes, the sales tax rate, and the complexity of the tax system. Neighboring states ranked as follows: Pennsylvania (22nd), New Jersey (34th), Connecticut (37th) and Vermont (45th).New York’s State/Local Tax Burden Highest in the Nation
For the past 14 years, New York has consistently had one of the nation’s highest state/local tax burdens. Estimated in 2004 at 12.9% of income, New York’s state/local tax burden percentage stands as the highest nationwide, well above the national average of 10.0%.
New York’s Individual Income Tax Collections Highest Per-Capita in U.S.
New York’s personal income tax system consists of five brackets with top rate of 6.85% kicking in at an income level of $20,000. This top rate ranks the state 17th highest among states levying personal income taxes. New York’s 2002 individual income tax collections were $1,337 per person, ranked highest in the nation.
New York’s Corporate Income Tax System
New York’s corporate tax structure is composed of a flat rate of 7.5% on all corporate income. Among states levying corporate income taxes, New York’s rate ranks 19th highest. Despite this, in 2001, corporate tax collections reached $153 per capita.