Can a Business Get Too Big for a Limited Liability Company LLC?

There is little doubt that a limited liability company is an ideal vehicle for the new business and the small business. This perfect fit does cause business owners to wonder if a business will easily outgrow the LLC as a legal entity for their businesses if the business grows and becomes a medium sized or even a large business.

The LLC is a great choice for medium and large businesses as well. Regardless of size, the limited liability company offers businesses the same benefits and advantages including the most tax choices.

FIDELITY INVESTMENTS IS A LIMITED LIABILITY COMPANY

In 2007, Fidelity Investments, one of the largest investment brokerage businesses in the US , converted itself into a limited liability company. Fidelity has over 3,000 employees and over a billion in profits each year.

According to reports, they did so in order to significantly reduce tax burdens and pass higher returns on to ownership. A senior executive stated that it was the most advantageous choice of legal entity for the business.

A LIMITED LIABILITY COMPANY BUSINESS HAS NO GROWTH LIMITATIONS

The LLC laws do not limit how many members can be members of a limited liability company. There are no limits on how many businesses a limited liability company can engage in. The limited liability company has enough flexibility to have a simple governance structure for a single member LLC or an incredibly complex governance structure needed when there are layers of investors and owners and layers of management and required committees.

I have worked with fast growing LLC businesses that have millions in revenue and multiple offices worldwide.

THE LLC IS NOT RIGHT FOR A COMPANY THAT WANTS TO GO PUBLIC

Now, Fidelity is a private company. If a business has serious desires to go public, which means to have an initial public offering and sells its ownership in the public markets, then a corporation is the required choice as LLC interests currently are not available to be publicly traded.

Share and Enjoy: