The Fallacy of Less Paperwork for LLCs

This blog post from the Minnesota Business and Real Estate Blog discussing the Fallacy that LLCs require less paperwork is spot on.

Many people come to my office wanting to set up an LLC because it is easier to "manage" than a corporation. But even with an LLC, it is important to follow corporate formalities as described in the post including documenting important decisions such as loans, issuance of membership interests, major capital purchases, leases, and the election and removal of managers/officers and board members.

Plus, in the state of Iowa you must file biennial reports with the Secretary of State whether you have a corporation or LLC.  For the typical small business owner, it does not require significantly more work to have a corporation than an LLC.

The decision to form a corporation or LLC involves several factors. But in my view the amount of paperwork is not one of them.

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