What is the most common business entity in New York?

For most small and mid-size businesses, the LLC (Limited Liability Company) is the most common choice. It offers liability protection, flexible tax treatment, and lighter formalities than a corporation. Licensed professionals (lawyers, doctors, accountants, architects, etc.) generally use a PLLC, PC, or LLP instead, since New York does not allow ordinary LLCs for licensed professions.

What is the New York LLC publication requirement?

After forming an LLC in New York, the LLC must publish a notice in two newspapers (one daily and one weekly) for six consecutive weeks in the county of its principal office. After publication, an affidavit is filed with the Department of State. The cost is modest in most counties but can be significant in Manhattan, where newspaper rates are higher.

Is an S corporation a separate type of business entity?

No. S corporation status is a federal tax election, not a separate entity type. An LLC or a corporation can elect to be taxed as an S corporation if it meets the eligibility rules (such as having only U.S. individual or eligible-trust shareholders and only one class of stock). The entity itself is still an LLC or a corporation; the S election just changes how it is taxed.

How do I choose between an LLC and a corporation in New York?

An LLC is usually simpler to operate, has flexible tax treatment, and works well for most small and mid-size businesses. A corporation is often a better fit when the business plans to raise outside investment, issue different classes of stock, or eventually go public. Tax considerations—especially the S-corp election and self-employment tax planning—often factor into the decision and are best discussed with both an attorney and a CPA.

Business Entity Types in New York: A Plain-English Guide

Q: What is a PLLC and who needs one?

A PLLC (Professional Service LLC) is a specialized LLC used by licensed professionals in New York—typically lawyers, doctors, accountants, architects, engineers, and certain therapists. It provides liability protection for ordinary business obligations but does not shield an individual professional from their own malpractice. PLLC members must hold the relevant professional license, and formation includes extra approval steps.

If you’re starting a business in New York—or you’ve been operating one and want to put a real structure around it—the first big decision is what type of entity to form. New York recognizes a number of different business entities, and each one has its own tradeoffs around liability, taxes, paperwork, and flexibility.

This article walks through the most common options and the factors that usually drive the choice. It’s a plain-English overview, not legal advice. The right answer depends on your specific situation, and most people benefit from talking through the decision with an attorney before filing anything.

The basic options at a glance

Without filing anything with the state:

Sole proprietorship
General partnership

Filed with the New York Department of State:

LLC (Limited Liability Company)
PLLC (Professional Service LLC) — for licensed professions
Business Corporation (Inc.)
PC (Professional Service Corporation) — for licensed professions
Limited Partnership (LP)
Limited Liability Partnership (LLP) — for licensed professions
Benefit Corporation
Not-for-Profit Corporation

Tax election (not a separate entity):

S corporation election

Sole proprietorship

The simplest structure. If you start operating a business by yourself without forming anything, you’re a sole proprietor by default. There’s no legal separation between you and the business—the business’s debts and liabilities are your debts and liabilities. Profits and losses go on your personal tax return.

Best for: very small, low-risk side ventures or a temporary stopgap. Most clients eventually want more separation between their personal assets and their business.

General partnership

Same idea as a sole proprietorship, but with two or more people. No filing required, though you should have a written partnership agreement. Each partner is personally liable for the business’s obligations—and, importantly, each partner can typically bind the partnership in contracts. Profits and losses flow through to the partners’ personal returns.

Best for: informal joint ventures. Not commonly recommended once anything significant is at stake.

Limited Liability Company (LLC)

The workhorse of New York business entities. Filing Articles of Organization with the Department of State creates an LLC that is legally separate from its owners (called “members”). Members are not personally liable for the LLC’s debts in most cases. LLCs are flexible: they can be owned by one person or many, taxed as a partnership, sole proprietorship, or corporation, and operated with relatively light formalities.

Best for: most small to mid-size businesses where the owners want liability protection without heavy paperwork.

Note: New York requires newly formed LLCs to publish a notice in two newspapers for six consecutive weeks in the county of the LLC’s principal office (the “publication requirement”). Costs vary widely by county. More on this below.

PLLC (Professional Service LLC)

A specialized form of LLC for licensed professions where ordinary LLCs are not allowed—typically lawyers, doctors, accountants, architects, engineers, certain therapists, and others. A PLLC provides liability protection for ordinary business obligations (rent, contracts, employee matters) but does not shield an individual professional from their own malpractice. Members must hold the relevant professional license, and there are extra approval steps when filing with the Department of State.

Best for: licensed professionals who want LLC-style flexibility.

Limited Partnership (LP)

A partnership with at least one general partner (who manages and is personally liable) and at least one limited partner (who invests but has limited liability and limited control). Filed with the Department of State. Today, LPs are most often used in investment funds and real estate ventures.

Best for: structured investment arrangements with active managers and passive investors. Less common for everyday operating businesses, since LLCs typically achieve similar goals with fewer constraints.

Limited Liability Partnership (LLP)

A partnership form available primarily to licensed professionals. Partners get protection from the malpractice and obligations of other partners, but each partner is still personally responsible for their own negligence. LLPs register with the Department of State and observe certain insurance and notice requirements.

Best for: existing or new partnerships of licensed professionals—common for law firms, accounting firms, and architecture firms.

Business Corporation (Inc.)

A corporation is owned by shareholders, governed by a board of directors, and run by officers. Forming one means filing a Certificate of Incorporation with the Department of State, adopting bylaws, and observing certain formalities (annual meetings, recordkeeping, etc.). By default, a corporation is taxed as a “C-corp”: the entity pays corporate income tax, and shareholders pay tax again on dividends—sometimes called “double taxation.”

Best for: businesses planning to raise money from outside investors, issue different classes of stock, or eventually go public. Sometimes also the right fit for high-revenue businesses where C-corp tax planning works in their favor.

PC (Professional Service Corporation)

The corporate version of a PLLC. Same idea: a corporation specifically for licensed professionals. Same general protections (no shield from your own malpractice), and shareholders must hold the relevant professional license.

Best for: licensed professionals who specifically want corporate structure rather than an LLC—often for tax-planning reasons.

S corporation election (not a separate entity)

This is not a separate type of entity. It’s a federal tax election that an LLC or corporation can make so that business profits and losses flow through to the owners’ personal tax returns rather than being taxed at the entity level. There are eligibility rules—for example, no foreign owners, no more than 100 shareholders, only one class of stock—and there are specific situations where the election produces real tax savings (often around self-employment tax for active owners drawing reasonable salaries).

Whether to elect S-corp status is usually as much a CPA discussion as a legal one.

Benefit Corporation

A type of corporation that explicitly commits, in its governing documents, to pursue a public benefit alongside profit. Filed with the Department of State. Directors are required to consider the impact on workers, the community, and the environment—not just shareholder returns. It’s still a for-profit business; the benefit corporation form gives directors legal cover to pursue mission alongside profit, and signals that mission to customers, investors, and employees.

Best for: businesses where mission is core to the brand and the team wants the structural commitment.

Not-for-Profit Corporation

A corporation organized for charitable, educational, religious, or similar purposes—not to generate profit for owners. Forms under New York’s Not-for-Profit Corporation Law, with separate state and (often) federal tax-exemption steps. There are no shareholders; the entity is run by a board of directors.

Best for: charitable, educational, or community organizations that need to be eligible for grants, donations, and tax-exempt status.

Factors that usually drive the choice

When deciding between these options, most clients are weighing some combination of:

Liability protection. Do you want a clean legal line between your personal assets and the business? If yes, you want an entity formed with the Department of State—typically an LLC, corporation, or one of their professional or partnership variants.

Tax treatment. Do you want profits to flow through to your personal return (pass-through), or be taxed at the entity level (C-corporation)? An LLC defaults to pass-through and has flexibility to elect otherwise. A corporation defaults to C-corp but can elect S-corp treatment in many cases.

Number and type of owners. Sole owner, family, multiple unrelated people, outside investors, foreign owners, trust owners? Some entity types have ownership restrictions. S-corps, for example, generally cannot have foreign owners or other entities as shareholders. PLLCs and PCs require all owners to hold the relevant professional license.

Profession. If you’re licensed in New York to practice a regulated profession (law, medicine, accounting, architecture, etc.), you generally cannot use an ordinary LLC or corporation. You’ll need a PLLC, PC, or LLP.

Outside investors. If you plan to raise money in exchange for ownership, a corporation with stock is often more familiar to investors than an LLC. If you want to keep things simple and self-funded, an LLC is usually easier.

Mission. If your business is mission-driven, a benefit corporation gives you a structure for that. If it’s purely charitable, a not-for-profit corporation is the right path.

Formality and ongoing paperwork. Corporations have more required formalities (board, bylaws, annual meetings) than LLCs. If you want minimal recordkeeping while still having liability protection, an LLC is usually simpler.

Cost and timeline. Sole proprietorships and general partnerships are free and immediate. LLCs in New York have the publication requirement (which adds cost). Corporations have a different cost profile and more ongoing administrative work.

A few common gotchas in New York

The LLC publication requirement. Newly formed LLCs (and a few other DOS-filed entities) must publish a notice in two designated newspapers for six consecutive weeks in the county of the LLC’s principal office. The cost varies—relatively modest in most counties, but expensive in Manhattan. Build this into your formation budget.

Sales tax Certificate of Authority. If you sell tangible goods or taxable services in New York, you must register with the Department of Taxation and Finance and collect sales tax. This is separate from your entity formation.

Beneficial ownership reporting (FinCEN BOI). A federal rule (the Corporate Transparency Act) requires most newly formed and existing US business entities to file beneficial-ownership information with FinCEN. The rules and enforcement timeline have shifted, but it’s worth knowing about and addressing during formation.

Foreign qualification. If you form an entity in another state but operate in New York, you generally need to register that out-of-state entity with the New York Department of State as a foreign entity. Most small businesses are simpler off forming in New York to begin with.

The bottom line

There’s no universally “best” entity. The right choice depends on what you’re trying to accomplish, who’s involved, and how the business will operate over time. For most small to mid-size operating businesses in New York, an LLC is a strong starting point. For licensed professionals, a PLLC or LLP. For businesses raising outside investment, often a corporation. For mission-driven ventures, a benefit corporation. For charitable organizations, a not-for-profit.

If you’d like, we can walk through your situation, identify the goals that matter most, and recommend the entity that fits. Filing the paperwork is the easy part—choosing the right structure is what takes some thought.

Business Entity Types in New York: A Plain-English Guide to Choosing the Right Fit