Forming an LLC

Easier Than Corporations?

Richard Booth: Many people think that LLCs should be the form of choice for virtually all small businesses.

Edward Jacobson: The LLC is very flexible as it is related to allocating income and losses between partners.

Eliot Wagonheim: Let's say you have three partners, but one of the partners is really coming in with most of the money, but doesn't expect to be heavily involved in day-to-day operations. An LLC gives you a lot more flexibility and making sure that person receives a return on there investment, but yet is not burdened by all of the responsibilities of running the corporation from a governance stand point.

Fred Provorny: From many entrepreneurs that's perhaps the best way to go.

Edward Jacobson: S corporation has more rigid rules. If you and I are 50-50 partners in an S corporation, any profits that we receive from that S corporation, distributions have to be equal to our percentage ownership of the stock. In an LLC it's much more flexible. You don't have those rigid types of rules.




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