Legal Question in Business Law in New York

Hello, it is not so much the form of the entity that will determine liability for your family investor but the form of the investment. If the investment is structured as a convertible note for example, because the investment is made in the form of debt as opposed to equity, that is a means to insulate against tax liability for being a part owner. On the other hand, there are a variety of approaches to structure both entity forms (LLC or S-Corp) to take in passive equity investments that guard against the investor absorbing the venture's liabilities, including tax.

I hope this helps and if you require counsel, please feel free to reach out to our office.

Disclaimer: This answer is for informational purposes only and does not constitute general or specific legal advice, nor create an attorney client relationship.

Forming an LLC can be a little tricky, there are certain differences from filing as a corporation that can impact the company. You really may want to consider having an attorney assist you with the filing and preparation of the necessary documents. Would you be the sole member or principal of the LLC? Would you need a partnership agreement an Operating Agreement or Articles of Incorporation prepared for you? We have substantial experience handling these matters, however, we would need some more information before making a complete and proper determination. You are welcome to contact us for a free consultation.

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