CHAPTER 1
THE McGEE CAKE COMPANY
1. The advantages to an LLC are: 1) Reduction of personal liability. A sole proprietor has unlimited
liability, which can include the potential loss of all personal assets. 2) Taxes. Forming an LLC may
mean that more expenses can be considered business expenses and be deducted from the company’s
income. 3) Improved credibility. The business may have increased credibility in the business world
compared to a sole proprietorship 4) Ability to attract investment. Corporations, even LLCs, can raise
capital through the sale of equity. 5) Continuous life. Sole proprietorships have a limited life, while
corporations have a potentially perpetual life. 6) Transfer of ownership. It is easier to transfer
ownership in a corporation through the sale of stock.