A member may increase his basis in the membership interest by the amount of LLC debt. The members, owners, and managers of the LLC receive the same limited liability protection as shareholders, officers, and directors of a corporation. No Personal Holding Company tax. The LLC is, overall, the most flexible vehicle for business. Some states prohibit single member LLCs.
Many states prohibit professional LLCs or place restrictions on professional LLCs.
Also, VC's normally provide funding on the hope that they can take the business public, and LLC membership interests may not be publicly traded. Corporations give more certainty, due to the large body of case law on the record for corporations. Most businesses, lenders, investors are comfortable with a corporation, but may be unfamiliar with an LLC or how it operates. A corporation may accumulate profits at a lower graduated tax rate without pressure to distribute profits. LLCs, on the other hand, have more pressure to distribute profits to investors since they are taxed on profits whether they receive distributions or not.