In expanding your business, forming a corporation is a convenient way to meet your need for obtaining the capital necessary for the expansion without having yourself liable for the debts incurred in the process. There is a myriad of legal concerns that need to be addressed in forming a corporation, however. First, one needs to file a certificate of incorporation with the New York Department of State. Then one needs to create a set of corporate bylaws (rules for the corporation’s general operation). In doing so, it is often crucial to consult an experienced attorney regarding the bylaws’ implications in order to avoid any unintended consequences arising out of the bylaw. Perhaps more importantly, an attorney can help you in determining the tax and other regulatory obligation in creating a corporation, something that may be overlooked by former sole proprietors or partners who are making switch to a corporate structure. For example, businesses located in the New York City area may be subject to the NYC General Corporation Tax. Our experienced attorneys can help you based on your specific needs and assist in the process of forming the corporation as a whole.
Our firm can also help determine the type of corporation that may be the best fit for your business. There are a variety of forms available for upstarting firms ranging from a regular corporation to a Limited Liability Company (LLC) to what is known as a S Corporation. An S Corporation pays no federal income taxes except for tax on certain capital gains and passive income. The corporation’s profits and losses, instead, pass through to individual shareholders and are taxed at individual rates. LLCs have tax advantages of regular (i.e. non-corporate) partnerships with the limited liability of corporations. LLCs are formed by articles organization with the state and executing a formal operating agreement.