I get this question all the time. The legal side is a question for a lawyer, not a CPA. From a tax perspective at the federal level, an LLC is not a recognized entity with the IRS. The IRS recognizes (has a tax form) for an S-Corp, C-Corp, Partnership, Sole Proprietor, etc. An LLC can choose to be any of these types of entities as it is being formed at the state level. So, if you are worried about legal ramifications, contact your lawyer. From a tax perspective, a discussion on the type of business, number of owners, the tax circumstances of the individuals, those types of items come into play and need to be discussed on a case by case basis.