Chapter 4 LLC's Discussion In the past, forming a corporation was the only way to achieve limited liability

Most sole proprietors and partners would be expected to form limited liability companies rather than corporations in the future because LLCs have a financial structure and management structure that is more ideal to business owners. Most sole proprietors and partners would prefer being a member of a limited liability company because LLCs are taxed like partnerships so their share of profits are taxed as part of their individual income. Corporations on the other hand go through double taxation so individuals would usually pay more as an owner of a corporation than if they were an owner of a limited liability company assuming profits are the same. Business owners also appreciate that their personal assets are protected against lawsuits if they are a member of an LLC. Even though both limited liability companies and corporations have the advantage of limited liability, LLCs would be preferred by most sole proprietors and partners because they do not have to go through double taxation.

Limited liability companies would also be preferable to corporations because their management structure is more flexible and because members of LLCs do not have to worry about hostile takeovers. Corporations require members to hold meetings, keep minutes, and make resolutions, but these are optional in LLCs. The more lax regulations and simpler management involved with limited liability companies can make them more desirable to sole proprietors and partners. Corporations are also harder to manage because they can be subject to a hostile takeover if their shares are sold on the public market. Many business owners do not want to have to deal with other companies forcefully taking over their company and altering their operations. With an LLC, any companies that want to buy them out must have the consent of the limited liability company's members. Most partners and sole proprietors would prefer forming an LLC rather than a corporation because they are easier to manage and they cannot be subject to a hostile takeover.