One major drawback of using a business name over a Limited Liability Company (LLC) is that a business name does not provide limited liability protection for its owners. This means that if the business incurs any debts or legal liabilities, the owners’ personal assets may be at risk.
In contrast, an LLC is a separate legal entity from its owners and provides limited liability protection. This means that the owners’ personal assets are generally shielded from the debts and legal liabilities of the business.
Additionally, having a business name alone does not provide the same level of credibility and professionalism that an LLC can provide. An LLC is a formal business structure that is recognized by the law and offers certain legal and tax benefits. It can also help establish credibility with potential customers, suppliers, and investors.
Another potential disadvantage of using a business name is that it may be more difficult to obtain financing or attract investors compared to an LLC. Investors and lenders may view an LLC as a more stable and secure investment opportunity because of the legal protections it offers.
Overall, while a business name may be a simpler and more flexible option for some entrepreneurs, it lacks the legal and financial protections and advantages that an LLC can provide.
Regville Associates offers end-to-end legal, tax and compliance service for companies. We assist Companies in becoming and staying regulatory compliant.
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Tolulope Oguntade Regville Associates info@regville.com 08065111667