When starting off on your business journey, one of the first steps you must take involves deciding on your business structure. You have plenty to choose from, and each offers its own potential benefits along with possible drawbacks or hurdles.
An LLC – or limited liability company – is just one of the many structures you can look into.
Membership flexibility vs. maintenance fees
There are multiple pros and cons to consider before choosing an LLC as a business structure. First, an LLC is often considered a good option for business owners who like a more free-format structure without many rules, regulations, or strict codes of conduct.
LLCs allow for flexibility of ownership and membership, with unlimited members and owners of all kinds and numerous alternative management options. On top of that, filing is often easy, with simple, unilateral, and straightforward paperwork. On the downside, you may face hefty maintenance and annual fees that can add up to hundreds of dollars a year.
Lack of investors vs. limited liability
Some aspects of membership seem rigid, too. You will have to undergo rigid paperwork requirements any time you experience a change in membership. Additionally, investors do not often have an interest in LLCs, meaning you will not typically have the option of growing your business through investors.
On the plus side, having a formal business structure like an LLC will give your business more credibility. And of course, you have the biggest draw: limited personal liability. In short, if your business suffers from bankruptcy, your personal assets will remain untouched.
Consider speaking to a legal professional as well to get their full opinion on what structure may suit your needs best, along with help as you first get started.
If you are forming a new business organization and have questions, the attorneys at Quadros, Migl & Crosby are available to help. Please call us at (713) 300-9662 to speak with one of our business law attorneys today.