Discuss the advantages and disadvantages of limited liability companies (LLCs) over other forms of business organizations
What will be an ideal response?
The advantages of LLCs over other forms of business organizations are as follows:
a. Members are not personally liable for the LLC's debts and obligations. Loss is limited to personal investment of capital.
b. The LLC has continuity beyond the death of a member or members.
c. The LLC can include foreign investors, with some limitations.
d. The LLC can be taxed as a partnership (two or more members) or a corporation.
The disadvantages of LLCs over other forms of business organizations are as follows:
a. State statutes are not uniform.
b. A foreign LLC (an LLC in a state not originally chartered within the state) may not be treated the same.
c. In a member-managed LLC, all decisions are made by a majority, which often causes delay in decision making or derivative lawsuits filed by dissenting members.
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