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There are significant pros to choosing the LLC formation for your small business, but it does have some cons that need to be considered.
There are many ways that you can set up your business, and one of the most popular is the limited liability company or LLC. Limited liability companies are very easy to set up, and they will allow you to keep your personal assets safe, unlike sole proprietorships. What are some of the pros and cons of an LLC?
The Pros of an LLC
When weighing the pros and cons of an LLC, there are plenty of different things to consider. Some of the biggest pros of choosing an LLC for your business include:
- You will have asset protection that separates your personal assets from your business.
- Depending on whether your LLC is one person or multiple people, there are a few different ways that you can be taxed. This is not the case for many other types of businesses, and you may enjoy the flexibility in choosing how many partners your business has and how you will be taxed as a result.
- One of the biggest pros when considering the pros and cons of LLCs is that they do not have to maintain a board of directors, need to follow the strict administrative requirements that corporations do, or hold shareholder meetings. This flexibility makes it much easier to run your business.
- When you register as an LLC in your state, you will have the exclusive ability to use it.
The Cons of an LLC
While there are plenty of reasons to choose an LLC for your business structure, there are some downsides to doing so, including:
- LLCs are more expensive to start up than other types of businesses, which means that some small business owners will choose other methods of formation instead.
- It can be challenging to move on if a member of your LLC passes away, files for bankruptcy, or wants to leave the company. Working with an experienced accountant like The Harding Group is one way to avoid these challenges.
Make Starting an LLC Easy with The Harding Group
Unlike other accounting firms, The Harding Group will never charge you for consultations and strive for open communication with our clients. We serve clients in Annapolis, Anne Arundel County, Baltimore, Severna Park, and Columbia. If you are ready to take the stress out of tax time as a small business owner, contact us online or give us a call at (410) 573-9991 for a free consultation. Follow us on Facebook, Twitter, YouTube, and LinkedIn for more tax tips.