Corporate Law sub-chapter s in NY vs. LLC

[bjm_]

what is the advantages, if any to an LLC over a sub-s corp? You have to publish an LLC right? so the costs are greater. Is there any greater liabilty insulation or tax benefits? The company-to-be is small and can be incorporated as a sub-s.

Also, if there are no benefits to llc over sub-s, how do you file for a sub-s? Do you go to the Sec state like any other corp? 200no par value shares, etc?

 

[Michael Wechsler]

Here are a couple of quotes from a well known treatise on the subject and a few pointers that should answer some of your general questions:

The LLC Law is a "default" statute. Therefor, if the members do not cover a particular concept in their operating agreement, the relevant LLCL default provision for such concept would then govern in their LLC.

• LLC is very similar to Subchapter S
• not subject to strict organizational restrictions on S Corporations, e.g. who can be a shareholder, are there too many shareholders, kinds of securities issued
• LLC members can include certain LLC indebtedness in the tax bases in their LLC membership interest which enable them to treat a greater proportion of distributions as a nontaxable return of capital rather than taxable capital gains, and to deduct on their individual tax returns a greater amount of losses of their LLC, subject to the passive loss and at-risk limitations.
• LLC members, unlike S Corporation shareholders, may be able to take advantage of adjustments in their tax bases of the LLC's assets upon the transfer of interests in the LLC. Because the tax attributes of the LLC and its members and the comparison thereof to other entities are extremely complex, reference should be made to the tax literature for complete information on this subject.
• An LLC organized under the LLCL may be formed for any lawful business purpose or purposes except those which require another business entity or natural person to be formed or used for such business. [Section 201]
• Not intended for not-for-profit activity (likely)
• Uses "Articles of Organization"