Important Notice: Our web hosting provider recently started charging us for additional visits, which was unexpected. In response, we're seeking donations. Depending on the situation, we may explore different monetization options for our Community and Expert Contributors. It's crucial to provide more returns for their expertise and offer more Expert Validated Answers or AI Validated Answers. Learn more about our hosting issue here.

What are the primary disadvantages of an LLC that should be considered when starting a business?

April 26, 2017disadvantages LLC primary starting a business

0

10 Posted

What are the primary disadvantages of an LLC that should be considered when starting a business?

2 Answers

0

10 Posted

The IRS has ruled that LLCs qualify as partnerships for tax purposes; the Internal Revenue Code contains nothing to assure continuation of such treatment.

0

Posted

With the LLC a new legal entity, there is little legal precedent concerning the law of LLCs. There is more involved in setting up an LLC than in organizing a corporation and the fee for filing with the Secretary of State is higher. No federal tax legislation yet establishes the LLC as a partnership for tax purposes. While the IRS has ruled that the LLC will qualify as a partnership for tax purposes, there is nothing in the Internal Revenue Code to assure continuation of such treatment. When there are no special advantages to using the LLC and there is a choice between using an S corporation or LLC, S Corporation should be used as it is an established business and tax entity.