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Entity formation considerations: LLC or corporation?

You've obviously accomplished much already as an entrepreneur if you're now at the next-stage juncture of legally establishing the business you created through hard effort and creative smarts.

What business form do you now choose at the key inception stage? The American commercial realm offers a number of distinct choices for your enterprise going forward, with each of them having distinct characteristics that may play out optimally - or not - for your new company.

Two mainstay business models in the commercial universe are limited liability companies (LLCs) and corporations, respectively. Opting for one of those business forms can be a simple slam dunk for some entrepreneurs, given their specific commercial plans, contemplated size, management structure and other factors. In other cases, it's not quite so simple.

One in-depth online overview readily implies the timely due diligence required in many instances of business principals seeking to make an optimal entity choice. As it centrally notes, there are inherent "advantages and disadvantages of both corporations and LLCs."

In other words, making a sound formation choice entails doing some homework, which a proven legal team of practiced commercial law attorneys well versed in entity selection can fundamentally assist with.

Some initial considerations that will unquestionably be addressed in any LLC-versus-corporation discussion include these matters:

  • The models' differentiated treatment concerning taxation on income and property
  • Projected number of owners and size of business
  • Profit-sharing mechanisms
  • Benefits to be provided principals and employees
  • Liability concerns

Rich Michaelson Magaliff's long-tenured legal team of New York business attorneys provide broadly diverse clients with tailored help addressing all their commercial concerns, including entity formation. We welcome contacts to the firm and the opportunity to promote our valued clientele's goals across all key business dimensions.

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