Limited Liability Corporation:

LLC Advantages and Disadvantages

The owners are members, and the duration of the LLC is usually determined when the organization papers are filed. The time limit can be continued if desired by a vote of the members at the time of expiration. LLC's must not have more than two of the four characteristics that define corporations: Limited liability to the extent of assets; continuity of life; centralization of management; and free transferability of ownership interests.

LLC Advantages Disadvantages

LLC Advantages

• Owners have limited personal liability for business debts even if they participate in management
• Profit and loss can be allocated differently than ownership interests
• IRS rules now allow Limited Liability Corporation (LLC) to choose between being taxed as partnership or corporation

LLC Disadvantages

• More expensive to create than partnership or sole proprietorship
• State laws for creating Limited Liability Corporation (LLC) may not reflect latest federal tax changes

• Same advantages as a regular limited liability company
• Gives state-licensed professionals a way to enjoy those advantages

• Same as for a regular limited liability company
• Members must all belong to the same profession

• Mostly of interest to partners in old-line professions such as law, medicine, and accounting
• Owners (partners) aren't personally liable for the malpractice of other partners
• Owners report their share of profit or loss on their personal tax returns

• Unlike a limited liability company or a professional limited liability company, owners (partners) remain personally liable for many types of obligations owed to business creditors, lenders, and landlords
• Not available in all states
• Often limited to a short list of professions.