The Limited Liability Company (LLC) is a relatively new entity structure and offers many of the advantages of a corporation.  The LLC is much like a partnership with the protections of a corporation.  As with the corporation, all LLC Members (owners) have limited personal liability. Like a C Corporation, Members types are not restricted (corporations, foreign entities, etc.).  LLC management is very flexible.  Income passes through to the Members, but income and loss can be allocated in percentages different from ownership.

The LLC structure offers advantages to the self-employed individual:

• Full protection of a corporate structure
• Management flexibility
• Elimination of double taxation
• Better expense deductions than a sole proprietor
• Take profits out of the company
• Allocate profits and losses as desired

Disadvantages of an LLC are:

• Limited fringe benefits
• More paperwork (but less than with a corporation)
• Full FICA and Medicare payments
• No retained earnings in the business

We explain all of these points in greater detail in additional subject matter below. Also review the options of an S Corporation and a C Corporation.

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