LLC Basics

This hybrid entity brings together some of the best features of partnerships and corporations, and is a great choice for entrepreneurs who want to move beyond the sole proprietorship.

Probably the single greatest disadvantage of the corporate form is the burdensome range of formalities that corporate managers must observe. A modern corporation’s heavy administrative burden is a remnant of the more traditional and formal legal system under which corporate law was cultivated. The LLC changed all that.

Limited liability companies (LLCs) have been around since 1977, but their popularity among small-business owners is a relatively recent phenomenon. The LLC offers the liability protection benefits of the corporation without the corporation’s burdensome formalities. This simplicity has made the LLC an instantly popular business form for smaller companies.

LLCs are the favorite choice for small businesses with one to three owners working who don’t plan to grow the business significantly and don’t expect to raise significant amounts of cash. But as the number of owners grows, the corporation often becomes a more attractive choice as a business form.

Full Story: http://www.entrepreneur.com/article/0,4621,321639,00.html