Legal Forms of Ownership for Small Businesses

As part of our legal forms of ownership for small businesses discussion, we recently discussed an overview of S-corps. Today, we are continuing this discussion with an overview of Limited Liability Companies (aka, LLCs).

An LLC is a form of business entity that may have one or more owners, or "members." LLCs can be either member managed or manager managed.

Like all business entities, LLCs possess certain advantages and disadvantages. A few of these pros and cons are as follows:

Pros

1. Simple to form and operate

2. No limit on amount of owners

3. Various ways it can be taxed

4. Free of administrative responsibilities associated with corporations

5. Pass-through taxation

6. Owners are generally not personally liable for debts of the LLC

Cons

1. Pricier than forming and operating a partnership or sole proprietorship due to filing fees and taxes

2. Not ideal for owners seeking funding from venture capitalists or outside investors

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*This blog post should not be construed as legal advice on any specific facts or circumstances. The contents are intended for general information purposes only.