LLC Advantages
Limited Personal Liability
LLC Disadvantages
Limited Liability Company
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Limited Liability Company
The LLC (Limited Liability Company) is the newest form of business entity, and it is rapidly becoming one of the most popular ways for new and small businesses to operate. It is often described as a hybrid between a corporation and a partnership.
It limits personal liability, like a corporation, while providing a simpler and more flexible structure than most other forms of business. A single member LLC is taxed on the federal level the same as a sole proprietor, while a multimember LLC is taxed on the federal level the same as a partnership. Since a huge number of small businesses are sole proprietorships and partnerships, an LLC is frequently an excellent choice for these types of businesses. It retains most of the benefits of a sole proprietorship or partnership with the added benefit of limited liability, with very little in the way of extra requirements.
Entity Comparison Chart |
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| C Corporation | S Corporation | LLC | |
| Owners have limited liability for business debts and obligations | |
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| Created by a state-level registration that usually protects the company name | |
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| Business duration can be perpetual | |
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| May have an unlimited number of owners | |
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| Owners need not be U.S. citizens or permanent residents | |
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| May be owned by another business, rather than individuals | |
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| May issue shares of stock to attract investors | |
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| Owners can report business profit and loss on their personal tax returns | |
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| Permitted to distribute special allocations, under certain guidelines | |
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| Not required to hold annual meetings or record meeting minutes | |
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| Owners have NO personal liability for business obligations | |
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| Number of owners allowed | 1 to unlimited | 1 to 100 | 1 to unlimited |
| Management decisions made by... | Board of Directors | Board of Directors | Members |
| Raising Capital | Sale of stock & other permitted instruments | Sale of stock & other permitted instruments | From the members |
| Income Taxes | Paid by the corporation | Passed through & paid by the shareholders | Paid by members unless elect corporate tax status |
| Who Deducts Losses | Corporation | Passed through to the shareholders | Special rules apply - check with tax advisor |
| Taxation | Double; both the corporation and shareholders are taxed | Taxed Once | Taxed Once |
| Transfer of ownership | By stock transfer | By stock transfer | Most LLC Agreements require approval of members |
$149
Corporation Filing
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