What Does an LLC Protect You From? Disadvantages and Risks of LLCs

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Disadvantages of an LLC

  • Expense: LLCs can be expensive to form and maintain.
  • Limited Liability Protection: May not offer the full liability protection of a corporation.
  • Member Disputes: Can lead to conflicts between members over operations or profit distribution.
  • Taxation Complexity: LLCs face complex tax status choices and may suffer from double taxation.
  • Self-Employment Tax: Members owe self-employment tax on profits.

Costs and Regulatory Considerations

  • State Rules: Varying rules and regulations in each state.
  • Filing Fees: The state filing fee ranges from $40 to $500.
  • Formation Options: Options include self-filing or using a service.

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