Pros and Cons of Limited Liability Companies

Posted on : March 16, 2018, By:  George Dillon

When you’re making a big decision, you probably like to consider all available options. You may even make a pros and cons list to help you decide. Like, choosing between two houses you might consider pros like the location, the number of bedrooms or bathrooms, or how close it is to a Starbucks with a drive-thru. If you’re thinking of starting a business, you might choose between several types, including limited liability companies. But first let’s make that pros and cons list.


Okay, it’s not as cute as calling a TV show by its initials: HIMYM, DWTS, the OC. But a limited liability company is often called an LLC for short.

An LLC is just one of the business entities allowed under Virginia law. Others include general partnerships, limited partnerships, sole proprietors, and corporations.

Okay, First the Pros.

Forming an LLC offers benefits like:

  • Limited Liability. The individual members are not personally liable for the LLC’s actions.
  • Easy Startup and Upkeep. Unlike corporations, LLC’s are relatively easy to form and maintain.
  • Income Distribution.
  • Federal Taxes. The LLC’s profits pass through to the members, who then report it on their individual income tax returns. The LLC is not taxed on the profits.
  • Management. Corporations and partnership are restricted in ways that LLCs are not, making LLCs more flexible to operate.
  • Number of Owners. An LLC can be formed with one member. Unlike other business entities, though, an LLC is not limited to the number of members that can be involved.

Now, the Cons.

And, of course, there are disadvantages:

  • Tax. Members pay self-employment tax on their earnings.
  • Limited Liability. It is possible for a claimant to “pierce the corporate veil” and go after your personal assets. It just doesn’t happen as often as with other business types.
  • Compliance. Members must be careful to keep their personal assets separate from their business assets. Also, some states, including Virginia, require annual reports or registration fees.

Your Final Answer?

Will the pros of forming a limited liability company overcome the cons? Does an LLC meet your business needs?

The attorneys at The Dillon Law Group, PLC, have the right experience and knowledge to assist with your business concerns. Call us at 757-962-4796 to schedule an appointment or use our Contact Form to let us know you’re interested. We assist clients in Virginia Beach, Newport News, and surrounding areas.

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