How Liable Are LLCs?

LLC or Limited Liability Company is a new trend of business organization. Just like corporation or partnership.

Experts term as a hybrid business entity, which have characteristics of both a corporation and a partnership. The primary characteristic it shares with a corporation is limited liability and tax treatment. The primary characteristic it shares with a partnership type of organization is the ease in administration and availability of pass-through income taxes.

Advantages of LLCs include the flexibility of the owner to choose to be taxed as sole proprietor, partnership, S corporation, or C Corporation. Annual meetings, other hassling formalities are not required for a LLC. The flexibility of the LLCs favor small companies with a single owner.

Apart from advantages, there are some disadvantages in LLC form of organization. It is hard to raise financial capital from investors compared to corporation form of organization. These are more expensive to set up than partnership organizations.