From Taxation point of view LLC or S corp in NYC? Since the company won't make profits first year which is better?
Contracts / Agreements Lawyer
Contact an accountant for a "taxation point of view." As far as opening an entity, an LLC is more expensive to start up at first but has less up-keep throughout the life of the entity. A corporation is cheaper to start up, but you must have annual meetings among other obligations.
Your question really depends on a number of factors.
I will say that as a general rule, unless your expected revenues will exceed that which you would otherwise pay yourself a reasonable salaray to operate the business an S-Corp will not be practical. It also has other statutory limitations that may pertain to your business (e.g., only entity shareholders, only US residents can be s/h, limited to 100 s/h, only one class of stock, among others).
I disagree with my colleague regards to the cost as well. I guess he is referring to the LLC publication requirement, which increases the set up cost. While this remains a technical requirement it is not due upfront (within 120 days of filing) and there are no articulated penalties to complying at a later date. It is not something that should discourage you from forming an LLC if that is what truly works for your venture.
An incorporated entity will cost you much more in taxes in NYC if it is not carefully considered and there is more to prepare with an S-Coro than with an LLC regards to both ongoing formalities as well as preparing the proper corp documentation. For example, an LLC requires an operating agreement but an S-Corp will require a bylaw agreement and a shareholder agreement (especially that you have 3 partners). It will also require a two step set up process as opposed to one filing at that state level.
We are actively representing several fashion brands and know the space very well. You also need to carefully consider your trademark at this time as well if you have not done so.
I suggest you discuss this over with a lawyer in more detail. I will link you to some general helpful info below and most of us here, including myself, offer a free phone consult.
New York, NY
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Personal Injury Lawyer
I agree with the other attys, in regard to the comparison of S-copr, LLC, etc. Although I have a strong business law & accounting background, I always leave the tax questions to the accountant. I can certainly discuss this with your accountant, so you have a better understanding & to be sure your accountant has all the info needed to make a tax recommendation.
PS: Some accountants will step outside of their expertise & play lawyer & form a corp, LLC, etc.
I don't recommend that, just as I do not recommend that a lawyer make tax decisions for the client.
I will be happy to represent your business in this & other matters that may arise.
Also, check out our website for more info.