Why LLCs are overrated?

I think LLCs are overrated for one major reason. This major reason is most people do not know how to utilize the benefits of an LLC. An LLC is similar to an I phone. An I phone may have great features, but if you do not know how to use those features, an I phone is only a liability. It is a liability because you pay more and get the same quality as a lesser phone.

With an S corporation, the incorporation and annual report fees are considerably less. For a new business, this costs savings is huge. Most small businesses (new) do not have enough capital. Selecting an LLC when you are low on capital creates a drain on your business's cash flow.

Both an S corporation and LLC provide you limited liabilty protection. Both are pass-through entities, which mean you pay taxes like an individual. Thus, you file a 1040 with appropriate schedules to account for your profit and loss.

Who are good candidates for an LLC? High growth businesses, business owners with investors, professional practices, and any business that expects to grow at a more rapid pace than small, micro businesses.

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