Factors to Consider When Forming a Corporation in New York

New York businesses are not bound to incorporate within the state to operate within New York State. In fact, start-up businesses in New York should consider incorporating outside of New York-based on several factors for consideration.

Some choose to keep things simple by incorporating or forming an LLC in New York, while others opt for more "business-friendly" states and incorporate in Delaware, Nevada, or Wyoming. In some cases, even if you wish to establish a business in New York, it is advisable to form a company outside New York and enter New York as a foreign business - one of the many reasons is the New York may impose liability on company shareholders. 

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New York Franchisee Succession Planning

New York franchisees interested in succession planning must be made aware of the effect a lifetime transfer of a business has on estate planning.

Federal & New York Gift Tax Law Transfers without consideration during one’s lifetime are considered gifts under federal and New York tax law. From an estate tax perspective, gifts reduce the estate tax threshold of the person making the gift and after death, that person’s estate would have to pay taxes on the amount of the estate that exceeds the estate tax threshold. However, with advanced preparation, a franchisee interested in succession planning can implement a plan to minimize the tax burden of the transaction.

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Successor Liability Pitfalls in New York

When buying or selling a New York business or any of a business’s assets under NY law, the potential successor liability of the buyer is of primary concern. New York Successor Liability Law is complex and the following is, only, intended as a brief overview of the matter.

Successor liability in New York is a liability that the buyer of a New York company's assets may have for the liabilities of the seller of those assets performed prior to the purchase.  Essentially, a buyer would be compelled to pay off the debt that the seller accumulated prior to the completion of the transaction.

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