Some Common Advantages and Disadvantages of LLC 

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Having your own business might probably be one of the best decisions of your life. However, when opening it, one of the critical decisions is choosing its type: partnership, LLC, corporation, etc. Your final decision is based on the service or product you want to offer.

During the last several years Limited Liability Corporation business type has been widespread globally. It is a type of business structure that allows for limited liability and pass-through taxes.

In fact, there are many great online LLC services. This article specifically focuses on LLC business entities and discusses some of the main advantages and disadvantages it has.


Taxation options 

LLCs are also more flexible than other business structures in terms of taxation. Depending on the number of members, LLCs are taxed as either a sole proprietorship or a partnership.

The members of LLCs are usually taxed “personally” according to their salaries because they are considered self-employed.

Taxation options 

Flexible management 

LLCs have the option of choosing between being member-managed or manager-managed.

The members of a member-managed LLC are actively involved in the company's activities; in a manager-managed LLC, the members “transfer” this obligation to the manager (the manager can even be one of the members).

Easy establishment 

LLCs are easier to establish than other business entity types as there is necessarily no need to hire an attorney. Everything is so easy that you can even fill the documents yourself and send them to the appropriate place. This is because everything is under the control of the jurisdiction of state law, and so does its formation.

Cheap establishment

Limited Liability Companies are usually cheaper to form. The primary cost is the filing fee that the state requires. Generally, this fee can be from $40-$500, depending on the country and state.

Overall Flexibility

In addition to the fact that these business entities are easier to establish and are flexible concerning their management


As the name suggests, LLCs are limited liability business entities, meaning that the members' assets, such as cars, bank accounts, homes, and other  investments, are strongly protected. This is because the members are not personally liable for the company.


Suitable for individuals

The benefits of an LLC are not limited to multi-member businesses. Individuals might also profit from forming a single-member LLC. You will have complete freedom when it comes to taxation and personal assets.


Not convenient for every business type 

While LLCs are easy and cheap to form, certain business types can never be formed as LLCs. For instance, insurance companies cannot be formed as LLCs. So, you will be allowed to form an LLC depending on the service/product you provide.


Although LLCs are more protective as the members are considered “self-employed,” and they have a “self-taxation” system, all of this will require more paperwork, as your personal finances should be kept separate from the company's finances.


Member turnover

While the membership/ownership structure is quite flexible and allows for any number or kind of owners, a change to this infrastructure may need the LLC to re-file. For example, if a person wants to leave the company, or if somebody wants to join, then, in many cases, all this formation part needs to be redone.

Confused about roles

Unlike corporations, which have specific roles (e.g directors, managers, and employees), LLCs do not. This can make it a bit difficult for the firm to understand who is in charge, who can sign specific contracts, and so on.

However, if you have an LLC Operating Agreement, it might help to avoid some of this misunderstanding.

Final Thoughts 

Summing up, your final decision highly depends on the type of the business you want to have. While for some people LLC can be the best option, for the rest of the people this might not be beneficial. As it is already mentioned, LLCs are generally more flexible; have stronger protection , better taxation options, and are easier to establish.

With regards to cons, they are usually not suitable for each business type, require more paperwork and there might be some confusion about the members' role.

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