There are several advantages and disadvantages to choosing a limited liability company for a business's chosen structure in New Jersey. This entity type, a hybrid structure that blends the limited liability features of a corporation with the operational flexibility and tax features of a partnership, is popular in the state for small businesses.
The LLC structural advantages include the limited liability features, inexpensive set-up, fewer required records and profit-sharing features. Limited liability means that the individual's personal assets are protected from the indebtedness or liabilities of the company. The business structure is generally less expensive to start and has significantly fewer record-keeping requirements than do structures such as an S-corporation. When there is more than one owner of an LLC, the profits can be shared as the owners see fit, so if one person contributes more time or energy, he or she may be provided with a correspondingly higher share of the profits to compensate for that.