How Can an LLC Benefit Your Small Business? [Infographic]
Whether you have a sole proprietor or partnership business in the USA, you should register it as an LLC. You can gain the protection of a corporation and the flexibility of a small company with an LLC.
An LLC is an excellent tool for small businesses to safeguard their assets and pass through dual tax compliance. Therefore, Limited Liability Companies in the US are accountable for 70.4% of all partnership returns.
So, if you are launching a new business in the culturally and economically rich New York City in 2021, you need to know how to obtain an LLC in NYC. It is pretty easy and profitable to set up your business in the rising NYC economy. In 2017, the New York GDP was recorded at $1.5 trillion, so you can quickly grow your business in NYC.
Let’s understand what an LLC is and how it can benefit your small business:
What is an LLC?
An LLC, aka Limited Liability Company, is a business model between a corporation and a sole proprietorship structure. It offers sole proprietorship’s pass-through taxation along with the corporation’s limited liability facility.
An LLC is not considered a separate entity; it doesn’t take taxes and losses on its own. All the company’s profits and losses are based on the LLC owners’ income tax. Alongside, LLC owners are protected from personal liabilities.
The prime features of the LLC businesses are:
- Owner’s Limited Liability: Limited liability feature means when the LLC is subjected to litigation or ordered to pay debts, its members can’t be personally held liable. Especially, creditors can’t come after LLC members’ personal assets.
- Taxation Flexibility: The Internal Revenue Service (IRS) doesn’t have a separate LLC tax category. It can be taxed as a partnership or corporate firm.
- Management Flexibility: Unlike corporation setup, LLCs offer management and operational flexibility to their members. An LLC doesn’t need to organize all members’ meetings or appoint a board of directors. Members have the flexibility to manage the day-to-day activities at their convenience.
How to Obtain an LLC in NYC?
Building your business on the right foundation is the stepping stone of long-term success. Selecting your business’s legal structure is one of the critical parts of forming your company.
If you are wondering how to obtain an LLC in NYC, and think of it as a challenging task, it isn’t. You have to file the Articles of Organization with the state and pay the fixed filing fees. The process is simple and you can form an LLC online with Windsor.
However, if you have no clue on how to obtain an LLC in NYC, you have to follow these simple steps:
- First, choose a unique and unused company name.
- Provide your office address; you can also give your home address if you work from home.
- Select your Registered Agent service to save your time and money.
- File your company’s Articles of Organization with New York State.
- Consider all New York’s publications for setting up a new LLC.
- Draft your Operating Agreement to define managers’ and members’ roles and responsibilities in the organization.
That’s it! Your LLC in NYC is now formed. How to obtain an LLC in NYC is super simple, but you can make it simpler with Windsor Corporate Services support. In our Standard and Ultimate packages, you will get end-to-end LLC formation solutions.
Benefits of Forming LLCs
LLCs contain benefits of the sole proprietor and corporate business models, such as:
- Management and Operational Flexibility
An LLC enjoys complete flexibility from management and operation perspectives. LLC owners have the facility to manage their company on a sole proprietor or corporate basis. They can single-handedly manage their organization or can appoint managing partners; they have full flexibility.
LLC members can decide their operating role within themselves. They can even at any time change their responsibilities with mutual consent in NYC.
- Taxation Leverage
Pass-through taxation is the common sole ownership scenario where LLC profits are treated as its owners’ income. LLC owners’ profits are directly subjected to their personal income tax. With an LLC, a double taxation system can be avoided as owners must pay only personal income tax — no corporate tax compliance.
LLC owners have to pay self-employment taxes, but they can get the Social Security and Medicare tax deductions that usually employees and employers pay. Additionally, LLCs in New York have to pay extra franchise tax as state-filling rates are higher here.
- Limited Liability Coverage
LLC owners receive the limited liability coverage that protects them from the company’s liabilities. If someone sues the company, plaintiffs are technically suing the company only — not partners. In this scenario, members’ personal assets are secure and can’t be liquidated to pay plaintiffs.
- Fewer Profit Distribution Restrictions
LLCs can distribute profit among members however they please. These businesses have fewer restrictions related to profit sharing. Unlike corporate organizations, where equal profit sharing is compulsory, LLCs can divide profit anyway. They can share profits based on capital contribution or individual members’ responsibilities.
How Can Small Businesses Benefit from an LLC?
Importantly, LLC owners can safeguard their personal assets through limited liability. Small business owners can keep their personal belongings aside in case the company is being sued. Moreover, limited liability is gained without any extract cost or corporate complications.
Secondly, LLC owners won’t have to file separate income tax and business tax. All your income and expenses will be treated in a personal income tax report. It is a major shortcoming of corporation setup where tax is paid on net profit before distraction. This makes business owners pay tax twice, but with LLCs, it’s not an issue.
For small businesses, having “limited” words behind their name makes them look more professional and credible. People will trust and recognize your brand better when they know you are a registered organization.
Quick LLC Registration in New York
To quickly and effectively obtain LLC in NYC, you have to contact Windsor Corporate experts. We can handle all technical parts of the job so you can focus on building your dream business. Our team has mastered the process in which you form an LLC in NYC; share your requirements with us and launch your business in no time.