An LLC provides the limited liability of a corporation without many of the formalities. There are no required board meetings or shareholders and they do not necessitate the same formal recordkeeping of a corporation, but LLCs are separate entities like corporations so they can exist outside of their owners—allowing for membership to change. They also have the flexibility of a partnership where membership interests and benefits can be assigned according to virtually an agreement among the members. There are also the same potential tax benefits in filing as an LLC as with a sole proprietorship or partnership.
LLCs are not necessarily the best option for companies hoping to grow over time and accumulate new investors. For example, companies that hope to grow and go public may be better off as corporations as investors are more comfortable investing in corporations rather than LLCs. Also, while LLCs are cheaper and easier to setup than corporations, they are still more complicated and expensive than partnerships. There are still certain fees and filings that an LLC must make with various states. In addition, laws vary state-to-state regarding LLCs, whereas the laws governing corporations is more uniform. Another costly disadvantage to LLCs (although corporations share this as well) is that many states require your business to get a license if you are going to do business in that state, even if the LLC is actually located in another state. This can become very costly for LLCs intending to do broad, nationwide business. This same requirement does not generally apply to sole proprietorships or partnerships.