Types of Businesses Operating in New York State

Reference Brochure: "Forming a Business in New York: An Overview" (pdf) Forming a Business in New York: An Overview


Business Corporation | Limited Liability Company | General Partnership |
| Limited Partnership | Sole Proprietorship |


Business Corporation

  • A Certificate of Incorporation must be filed (signed by at least one incorporator) with the Department of State.
  • Personal liability is limited, for shareholders.
  • The life-span of the business is perpetual; or for a designated period stipulated in the Certificate of Incorporation
  • For purposes of taxation* a corporation pays state franchise taxes and taxes on income; shareholders pay taxes on income distributed as dividends (a limited exception exists for "Subchapter S" corporations).
Not-for-Profit Corporation
  • A Certificate of Incorporation must be filed (signed by at least one incorporator) with the Department of State.
  • Personal liability is limited, for members.
  • The life-span of the business is perpetual; or for a designated period stipulated in the Certificate of Incorporation.
  • For purposes of taxation* a not-for-profit corporation is not automatically exempt from federal and state taxes. To qualify for tax exemption status under the Internal Revenue Code, contact the Internal Revenue Service. For state tax exemption, contact the NYS Department of Taxation and Finance.
Limited Liability Company
  • Articles of Organization (signed by one or more organizers) and a Certificate of Publication must be filed with the Department of State.
  • Personal liability is limited, for members.
  • The life-span of the business may be for a designated period stipulated in the Articles of Organization; OR until a dissolution event occurs and the company takes no action to continue.
  • For purposes of taxation* an LLC can elect its classification for federal tax purposes. An LLC with two or more members can elect to be an association (corporation) or a partnership; an LLC with one member can elect to be an association (corporation) or elect to be disregarded as an entity separate from its owners (in effect, to be treated as a sole proprietorship for federal tax purposes.)
General Partnership
  • A Certificate of Assumed Name (following an agreement of the partners) with the clerk of the county/ies in which the business is conducted.
  • Personal liability is joint and individual for the general partners who are responsible for the obligations of the partnership.
  • The life-span of the business is for a designated period stipulated in the partnership agreement; or until a dissolution event occurs.
  • For purposes of taxation* a general partnership is not treated as a separate taxable entity; business income is taxed through each general partner's personal tax return.
Limited Partnership
  • A Certificate of Limited Partnership (following an agreement of the partners) and a Certificate of Publication must be filed with the Department of State.
  • The life-span of the business is for a designated period stipulated in the Certificate of Limited Partnership; or until a dissolution event occurs, subject to any right to continue that may be stated in the partnership agreement.
  • Personal liability is joint and individual for the general partner(s) who are responsible for the obligations of the partnership; limited partner(s) are liable to the extent of their capital contributions to the partnership.
  • For taxation purposes* a limited partnership is not treated as a separate taxable entity; business income is taxed through each partner’s personal tax return.
Sole Proprietorship
  • An Assumed Name Certificate must be filed with the clerk of the county/ies in which the business is conducted ONLY IF you are operating under a name other than the proprietor's (no formation document is required).
  • Personal liability is full- a sole proprietor is personally responsible for all debts of his or her business.
  • The life-span of the business is determined by the individual (proprietorships automatically cease on the retirement or death of the sole proprietor).
  • For purposes of taxation* business income is reported and taxed through the sole proprietor's personal tax return.


* The U.S. Internal Revenue Service classifies organizations as associations (taxable as corporations), partnerships (not limited to common-law partnerships) OR trusts ("ordinary trusts"). [see 26 CFR §§301.7701-2 through 301.7701-4]