Disadvantages of Limited Liability

Help

1. A separate legal entity
2. High cost of set up
3. Lack of flexibility;

Why is being a separate legal entity a disadvantage?
What lack of flexibility is there?
What does greater tax consequences equate to?

Being a separate legal entity is not an outright disadvantage as this is the main point of discussion here but this causes the other disadvantages. Sorry, my wording was confusing there.

There is a lack of flexibility in operating the business day to day as the owners are not necessarily involved in the day to day running of the business with appointed directors often being elected to run the business. If the business needs to be 'wound up' this is also more complex due to liability being limited and the debts being shared jointly but not severally between the shareholders.

Greater tax consequences relate to the higher legal fees in setting up an LLP but also that self-employment taxes are incurred more as opposed to a corporation so these tax consequences are far higher.

Hope that is of help!