Disadvantages of the Limited Liability Company
by JJ Childers
This week's Monday Morning Mentor Minute
Hello again, JJ Childers here continuing our discussion on the basics of LLCs. We spoke about the benefits of LLCs and how they have basically the best of the corporation and the best of the limited partnership. So we tend to refer to it as a hybrid entity.
Are there disadvantages to LLCs? Unfortunately yes. A few include:
Initial filing fees can be more expensive depending on the state.
LLC members in high personal tax brackets may pay higher taxes.
Usually, an LLC must use a calendar year which reduces some tax deferment options that corporations can take advantage of.
Corporations live forever, but LLCs have a limited life span.
Transferability of an LLC interest is limited.
For some of you, these disadvantages may help you to decide that an LLC just isn’t right for your particular needs. But for those of you who decide that the disadvantages I mentioned are not applicable or just not a “deal breaker” in your situation, then you may want to consider and LLC as part of your overall wealth structure.
This discussion only hits the high points, but I think you can now agree that LLCs are a powerful tool in creating an overall asset protection system.
