Limited Liability Company (LLC)
A Limited Liability Company (LLC) is a business structure that combines the characteristics of a corporation and a partnership or sole proprietorship. An LLC protects its owners, known as members, from personal liability for the debts and obligations of the business, meaning that personal assets are typically not at risk if the LLC faces legal issues or bankruptcy.
LLCs offer flexibility in management and pass-through taxation, meaning profits and losses can be reported on the members’ personal tax returns, avoiding double taxation typically associated with corporations. An LLC can have one or more members, who can be individuals, corporations, or other LLCs.
For example, if an LLC incurs a debt or is sued, the members’ personal assets—such as their homes or personal bank accounts—are generally protected from creditors, unlike in a sole proprietorship where the owner is fully liable.
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