WHAT ARE THE DISADVANTAGES OF OPERATING A BUSINESS ORGANIZATION AS A LIMITED LIABILITY COMPANY?

By John Kiritsis, Esq., CPA, MBA, MS, JD, LL.M

Kiritsis Law Group

212 922 0005

Limited liability companies (LLCs) have several disadvantages compared to other business structures, including:

 

Limited ability to raise capital: LLCs may have limited ability to raise capital compared to corporations, as they may not be able to issue stock and may have a more limited pool of investors.

 

Complex tax rules: The tax rules for LLCs can be complex and may vary depending on the state in which the business is located, potentially making tax planning and compliance more difficult.

 

Potential for disputes among members: LLCs with multiple members may have a higher potential for disputes among members, as the management structure can become complex and there may be conflicting interests.

 

Lack of transferability: Ownership in an LLC may not be as easily transferable as ownership in a corporation, making it more difficult to sell or transfer ownership interests.

 

Restrictions on the type of business activities: Some states may have restrictions on the type of business activities that an LLC can engage in, potentially limiting the ability of the business to expand or change its focus.

 

Potential for additional regulations: LLCs may be subject to additional regulations and reporting requirements in certain states, potentially increasing the costs and administrative burden of operating the business.

 

It's important to note that the specific disadvantages of operating as an LLC may vary depending on the laws of the state in which the business is located. Consulting with a business attorney or accountant is recommended to determine the best structure for your business.

 

Sources:

New York Business Corporation Law

New York Limited Liability Company

New York General Obligations Law

NYS Office of Professions

U.S. Constitution

 

Whether you are a new business startup or a well-established company, our law firm can help you with all of your business law legal needs. For a free consultation, you can call us at 212 922 0005.

 

Law Offices of Kiritsis & Associates

Phone # 212 922 0005

Manhattan Office (Main Office):

633 Third Avenue

New York, NY 10017

Suite 1306

Brooklyn Office (By Appointment Only):

1023 74th Street

Brooklyn, NY 11228

1st Floor

New Jersey Office:

7309 Ventnor Avenue

Ventnor, NJ 08406

2nd Floor

 

ATTORNEY ADVERTISING. PRIOR RESULTS DO NOT GUARANTEE A SIMILAR OUTCOME.

We hope you would find this website useful with regards to finding potentially relevant information for your legal issue. The Law Offices of Kiritsis & Associates PLLC is a boutique law firm headquartered in Midtown Manhattan, with offices in Manhattan, Brooklyn (NY) and New Jersey. We strive to provide professional legal services for individuals and various business entities. Our clientele ranges from including aspiring entrepreneurs, start ups to established business organizations.

 

We offer flat fee prices for many of the practice areas provided listed throughout our website. For more information on the topic you may be interested, or simply to find out how our law firm can help, you may click at any of our site's links.

 

We are available for existing and potentially new clients 7 days a week -- via online, phone and/or in person.

Phone# 212-922-0005

 

Intellectual Property Disclaimer(s):

   COPYRIGHT 2023

The materials available through this website and any other websites owned by John Kiritsis (individually and collectively, the "Website") are the property of John Kiritsis and his entities, and are protected by copyright, trademark and other intellectual property laws. You may not use, reproduce, download, store, post, broadcast, transmit, modify, sell or make available to the public content from the Website without the prior written approval of John Kiritsis. Be aware that any unauthorized use of John Kiritsis trademarks and copyrighted content for commercial purposes in violation of John Kiritsis's intellectual property rights will be vigorously enforced. All other trademarks, service marks and trade names referenced in this site are the property of John Kiritsis.