For New York business owners who are looking for help in determining which type of business entity is right for them, understanding the differences between an Incorporation and a Limited Liability Company (LLC) is a critical first step. This article will explore the key differences between Incorporations and LLCs, as well as the particular benefits each option brings to business owners located in the State of New York.

Frequently Asked Questions regarding Inc vs LLC

1. What is the Difference Between an Incorporation (S-Corp or C-Corp) and an LLC?

The primary difference between Incorporations and LLCs is the business structure and the liability protection they provide to business owners. An S-Corp or a C-Corp is the formal, legal name for an Incorporation, while an LLC stands for Limited Liability Company. An Incorporation is a business structure that is legally distinct from its owners, and it offers greater levels of liability protection than a partnership or sole proprietorship. An LLC is a more relaxed business structure that is treated as a partnership or sole proprietorship for taxation purposes, but it also offers limited liability protection for its owners.

2. What are the Benefits of Incorporating as a Business?

Incorporations offer several key benefits to New York businesses. Incorporating provides business owners with liability protection; this means business owners are not personally responsible for the debts and obligations of the company. An Incorporation also allows businesses to easily access capital by going public and selling shares in the company. Incorporations may also offer tax benefits; depending on how the company is structured, business owners may be able to take advantage of a “double taxation” break in which the company’s earnings are taxed separately from the owners’ personal income.

3. What are the Benefits of Setting Up an LLC?

Like Incorporations, LLCs offer business owners the benefit of limited liability protection; LLC owners are not personally liable for the debts and obligations of the company. LLCs are also appealing because they are much easier to set up and maintain than Incorporations, and they may offer tax savings due to the “flow-through” nature of how LLCs are taxed by the government. This means that income from the LLC is passed along directly to owners and taxed at their personal income tax rate instead of the higher corporate rate.

4. What is the Difference Between an S-Corp and a C-Corp?

The main difference between an S-Corp and a C-Corp is the taxes that are paid by the business. A C-Corp pays income taxes on its profits at the corporate level, and then again on the dividends paid to shareholders. An S-Corp only pays taxes on the dividends that are distributed to shareholders, which can provide significant tax savings to the business. An S-Corp is also limited to a maximum of 100 shareholders, while a C-Corp can have an unlimited number of shareholders.

5. What Are the Requirements for Incorporating as a Business in New York?

In New York, businesses must meet certain legal requirements in order to become an Incorporation. These requirements include preparing and filing incorporation paperwork with the New York Department of State, obtaining a number of permits and licenses, as well as selecting and appointing officers and directors for the company. Business owners must also prepare documents outlining the company’s operating procedures and ownership structure.

6. What Are the Requirements for Setting Up an LLC in New York?

In New York, the process for setting up an LLC is much simpler than setting up an Incorporation. Business owners must prepare and file Articles of Organization with the New York Department of State, appoint a registered agent, and register the company with the IRS for tax purposes. In addition, all LLCs must have an operating agreement that defines the ownership structure and outlines the company’s internal operating procedures.


Deciding between an Incorporation and an LLC can be a complex process, and business owners in New York must weigh the benefits that each entity provides against their individual business needs. Incorporations offer robust liability protection, easy access to capital, and the potential for tax savings, while LLCs are appealing because they are much easier to set up and maintain and offer tax advantages due to their “flow-through” tax structure.

When deciding between Incorporating and setting up an LLC, it is critical for New York business owners to understand the specific requirements of each option and consult with experienced legal counsel who understand local regulations. This will ensure that business owners have the necessary information to make an informed decision about which business structure is best suited to their particular business.




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