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The pros and cons of starting an LLC
Compared to the other various business structures, creating an LLC offers several advantages and drawbacks. Would-be business owners should weigh their own needs and goals when making the decision on what kind of structure to use.
Pros
Cons
- Difficulties transferring ownership: Unlike businesses that are owned by a single individual, transferring ownership of a multi-member LLC often requires the agreement of all of its members.
- Limited life: Depending on the state in which it was formed, an LLC may need to be dissolved upon the death or bankruptcy of one of its members.
- Self-employment taxes: By default, members of an LLC are considered self-employed for the purposes of taxation, meaning they'll need to pay out of pocket for Medicare and Social Security.
- State-specific laws: Laws regarding LLC formation and maintenance vary from state to state, leading to potentially more complications than with a more nationally consistent business structure.
Weighing the benefits and drawbacks of forming an LLC is essential for making an informed decision about your business structure. When making the decision for yourself, do your best to predict any potential challenges and opportunities that your new business may encounter.
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Creating an LLC with LegalZoom
As simple as seven steps may seem, working with the experts can streamline LLC formation even further. If you choose to create your limited liability company with LegalZoom, for example, the process takes only three steps:
- Complete our LLC questionnaire - Fill out your simple questionnaire in only a few minutes. We give you the option to form a new LLC, convert an existing partnership or sole proprietorship into an LLC, and choose what provisions you want to include regarding personal liability protection.
- We apply for your LLC - After you’ve given us all of the important information about your new business, our LegalZip® software compiles it into LLC documents that we then file with the Secretary of State in your business’ state of formation. After that, we create and file your articles of organization and an LLC operating agreement tailored to your specifications.
- Receive confirmation - Once they’ve been processed and confirmed by your state, we’ll send you your finished articles of organization, any other relevant documents, and step-by-step instructions about what you should do next to ensure your LLC’s success.
Why 2024 is the year to start an LLC
Between the increasing availability of new technologies and tools and the growing advantages of small, agile business ideas, 2024 is shaping up to be one of the best years in recent history for small business owners.