Costs and Complexities
LLCs can be expensive to form and maintain, with the main cost being the state filing fee, which ranges from $40-$500. You have the option to form one yourself or use a service.
Liability and Member Disputes
Despite the fact that LLCs protect your personal assets from business debts and lawsuits, they may not offer the full liability protection of a corporation. In addition, LLCs can bring about disputes between members, especially with differing ideas on operations or profit distribution.
Taxation Issues
Taxation for LLCs can be complex. LLC owners can choose their tax status but may face the issue of double taxation where profits can be taxed at both corporate and personal levels. Furthermore, members owe self-employment tax on their earnings.
Unlike corporations, not every organization can be an LLC, which are hybrids of corporations and partnerships—allowing for corporations’ limitation of liability and partnerships’ pass-through taxation.