For all their advantages, there are expenses associated with setting up and running an LLC, and an LLC may not be the right choice for growth-minded startups. Here are three disadvantages of a limited liability company:
There are costs to form an LLC, including initial filing fees, registered agent fees, and fees to an attorney or LLC formation service.
You may also pay fees to maintain your LLC. Many states require annual reports and annual fees. If you hire a registered agent, you'll pay a yearly fee for that service. And in some states such as California, LLCs pay a mandatory franchise tax.
Venture capitalists and other outside investors usually prefer corporations over LLCs because corporations are more standardized, and corporate shares are easier to transfer than LLC memberships.
If you aren't sure whether an LLC is the right choice for your business, get advice from a small business lawyer.