Tips, Pros & Con Of A Limited Liability Company
- BSF DESIGNS, LLC.
- 1 day ago
- 2 min read
A Limited Liability Company (LLC) is often the "Goldilocks" of business structures—offering more protection than a sole proprietorship but with less red tape than a corporation. Check out the video as business expert - Beverly Francois give tips to secure your LLC.
Pros of an LLC
Asset Protection: Creates a "corporate veil" that shields your personal savings, home, and cars from business debts and lawsuits.
Pass-Through Taxation: By default, business profits "pass through" to your personal tax return, helping you avoid the "double taxation" faced by C-corporations.
Operational Flexibility: Unlike corporations, LLCs aren't usually required to hold formal annual meetings, keep official minutes, or have a board of directors.
Customizable Management: You can choose to manage the business yourself (member-managed) or hire outside professionals (manager-managed).
Credibility: Adding "LLC" to your business name can boost professional image with banks, vendors, and clients.
Cons of an LLC
Self-Employment Taxes: Owners are typically considered self-employed and must pay the full 15.3% Social Security and Medicare tax on all net profits.
Limited Growth Potential: It is difficult to "go public" (IPO) or issue stock options to employees, which can make it harder to attract high-level venture capital.
State-Specific Fees: Some states charge significant annual "franchise taxes" or high renewal fees just to keep the LLC active.
Less Legal Precedent: Because LLCs are newer than corporations, there is less established case law, which can sometimes lead to unpredictable results in complex court battles.
Transfer of Ownership: Selling your stake in an LLC is often more complicated than selling shares in a corporation and typically requires approval from other members.
If you have any questions or need assistance with your business entity, don’t hesitate to reach out to our team of experts.
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