Limited Liability Company (LLC)

A limited liability company (LLC) provides the same benefits to members as shareholders have in a corporation.

An LLC is formed by submitting Articles of Organization to the Secretary of State.

Tax Consequences

Income you receive as a member is taxed as an individual (no double taxation like a corporation).
See a CPA/tax consultant for the tax ramifications of starting your business as an LLC.

LLC Member Liability

The members are only liable for the amount of money or assets they have invested in the LLC.

Limited Liability Company (LLC)

Limits Liability
Easy to Form
Similar Tax Liability to Sole Proprietor
Easy to Maintain
Hybrid Business Entity

Pros

Fairly Easy to start
- File Articles of Organization with the Secretary of State.
Low initial start-up costs
- Articles of Organization, business licenses, and fictitious name statements are inexpensive. Please see your local jurisdiction for actual costs.

Cons

Limited Alienability
- Selling your business is difficult because you are your business (i.e. no shares to exchange as in a corporation).
Limited Ways to Grow Your Business
- Because your membership interest is non-devisable investors are frequently unwilling to invest in an LLC because they may not get a return on their investment (due to the lack of alienability of your ownership interest). Therefore, you are usually restricted to debt to grow your business.
Dissolution
- LLCs dissolve when a member dies or if one of the members file for bankruptcy.

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