It takes a certain amount of intestinal fortitude and fearlessness for anyone to start a business, but when that business will begin in New York, it is even more impressive given the competition and challenges. Regardless of the business idea and how viable it is, there are aspects of business law that cannot be ignored. One is determining what type of corporation to use. One of the most common is a C corp. Knowing the difference between the different alternatives is key to making an informed decision and avoiding problems as time passes. Legal help is always critical in any such endeavor.
With a C corp, the entity itself will be separate from the owners. Using this method provides protection for the owners. They can be taxed, garner profits and be legally liable for issues, but it also provides protection from personal liability issues. The tradeoff with using a C corp and having that protection is that it costs more than other types of corporations. The records must be kept more accurately and extensively, there are different processes for operation, and reporting requirements differ.
Corporations pay income tax on profits. This is different from a limited liability company (LLC), a partnership, and a sole proprietorship. They might even be taxed twice based on profit and dividends to shareholders. Shareholder departures will not impact the C corp. It can be useful to accruing capital because stock is sold to get the funds. For businesses in which there is a higher risk, a C corp is a solid alternative as it helps with raising money, allows for a public offering, and can be more easily sold.
For people who are starting a business, the formation is key to success. Understanding when it is wise to use a C corp or to consider some other method is one of the most important decisions that can be made. Having legal advice from the beginning can be crucial to choosing the right form. A law firm experienced in New York business law can help.
