Business Entity Pros And Cons - CPA Clinics
Pros:
No formal creation process.
Easy to operate and dissolve.
No separate tax return.
Easy to integrate business use of home deductions.
No double taxation of profits.
Cons:
No liability protection, except through insurance.
Self-employment tax is assessed on entire profit of the business.
Transfer of ownership can be complex.
Limited access to fringe benefits for owners.
Good Fit:
Seasonal or part-time businesses.
Businesses with little liability.
Home-based businesses.
Businesses intended to operate for the owner’s life only
Pros:
Simple creation process.
Easy to operate and dissolve.
No separate tax return.
Easy to integrate business use of home deductions.
Liability protection for member, except for malpractice.
No double taxation of profits.
Cons:
Self-employment tax is assessed on entire profit of the business.
Transfer of ownership can be complex.
Limited access to fringe benefits for owners.
Laws regulating LLCs vary widely among states.
