Although each situation needs to be looked at on its own facts, here are some general points to consider. It s New. Massachusetts lawyers are busy attending seminars and reading up on the LLC form of business. In the short term this means it probably will cost more in legal fees because we haven t developed our legal boilerplate documents and there are no cases interpreting ambiguities in the statute. Investors and banks may be reluctant to invest or lend to LLCs until they understand the implications of the LLC for them.
Many employees have fuzzy but generally correct understanding about how stock works.
LLC interests, with their potentially varying allocations of profits, are a whole other thing. This may translate into higher initial and on-going costs. Although designed to be a blend of a partnership and a corporation, the LLC must still meet the IRS tests to qualify as a pass thru tax entity. One of these requirements which, for technical reasons, will often apply is that the LLC interests must not be freely transferable. My tax partners tell me that acquisitions of LLCs will usually be taxable transactions.