Which is a stated disadvantage of an LLC?

• A. More expensive to create than a sole proprietorship or partnership
• B. Fewer record-keeping requirements than a sole proprietorship
• C. No liability protection
• D. Lower startup costs

Answer: (A)

The main idea here is that forming and maintaining an LLC usually costs more than setting up a sole proprietorship or partnership. You’ll often face state filing fees, potential legal help to draft an operating agreement, and ongoing expenses such as annual reports or franchise taxes in some states. That combination of higher upfront and ongoing costs is a clear disadvantage, even though the LLC also provides liability protection for owners. In contrast, statements about having fewer record-keeping requirements, no liability protection, or lower startup costs don’t fit because LLCs typically require more formalities than a sole proprietorship, do shield personal assets, and usually aren’t cheaper to start.