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LLC Advantages Disadvantages



Limited Liability Corporation:

LLC Advantages and Disadvantages



LLC Advantages and Disadvantages



LLC Advantages Disadvantages - The LLC is a relatively new type of hybrid business structure that is now permissible in most states. It is designed to provide the limited liability features of a corporation and the tax efficiencies and operational flexibility of a partnership. Formation is more complex and formal than that of a general partnership.

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

Professional Limited Liability Company

LLC Advantages
  • Same advantages as a regular limited liability company
  • Gives state-licensed professionals a way to enjoy those advantages
LLC Disadvantages
  • Same as for a regular limited liability company
  • Members must all belong to the same profession


Limited Liability Partnership

LLC Advantages
  • 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
LLC Disadvantages
  • 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.



LLC Advantages Disadvantages
| Business Partnerships | S Corp vs C Corp | Sub S Corporations | LLCs Listed by State
| Business Deductions | LLC vs S Corp | CORP vs Part/Sole Part | LLCs Taxes
| Business Formation | ICs and IRS | Piercing the Corporate Veil | How to Incorporate
| Delaware Corporation | Corporations Listed by States | S Corporations Listed by States


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