How to understand the pros and the cons of forming an Limited Liablility Company (LLC)

If you have your own business or you're thinking of starting one you'll need to determine what business structure you want. Here are the pros and cons of forming an LLC (Limited Liability Company). 1. Understand what an LLC is. An LLC is a kind of business formation that has the features of a partnership and a corporation, but it is not a corporation. It offers its members (the owners) some of the benefits of a corporation without some of the negatives. 2. Understand the pros of forming an LLC. The biggest advantage of forming an LLC is it's limited liability. The members of the LLC are not personally liable for the debts of the company unless they signed a personal guarantee of the LLC's debts. The company's profits and losses go directly to the owners, there's no separate business tax which avoids the double taxation of a corporation. LLCs do not have to conduct formal meetings or take minutes. 3. Understand the cons of forming an LLC. LLCs can be dissolved if a member dies or wishes to leave the company, while corporations can last forever. An LLC can only get funds from its members. It cannot issue stock like corporations. An LLC is easier to start than a corporation, but it is more complicated than starting a sole proprietorship or partnership.