Pros and cons of forming an LLC

Deciding to pursue your dreams and start a Pennsylvania business is a monumental step and can be exciting and stressful. While you may have 101 things on your to-do list, determining your business structure is a decision you should not take lightly.

Here are some pros and cons of forming your business as a limited liability company.

Benefits of an LLC

As the name suggests, an LLC provides limited liability for its owners, also known as members. In times of financial or legal trouble, your and other members’ personal assets are safe from debtors because the business stands as its own entity. An LLC is also one of the easiest business structures to set up, with few barriers to entry and little effort or knowledge required to get started. The tax situation for an LLC is also less complicated, as the company does not pay taxes. Instead, you and other members claim profits on your individual tax returns.

Downsides of an LLC

You might be personally liable if you do not carefully separate your personal expenses from those of the LLC or fail to keep the business above board, and you must pay self-employment taxes on your income as a member. Additionally, you may have to dissolve the LLC if a member dies.

No two business ventures are exactly alike. If you are unsure whether the benefits of forming an LLC outweigh the costs, an attorney can work with you to determine an ideal business structure for your unique situation.