Overview of LLC
An LLC (Limited Liability Company) is a business structure that offers personal liability protection to its owners. LLCs are known for their flexibility, ease of management, and favorable tax treatment.
LLC vs Corporation: Understanding the Differences
The LLC vs corporation dilemma is common among entrepreneurs deciding on the right business structure. Both options offer personal liability protection, but what sets them apart?
What Type of Business is an LLC?
An LLC is a hybrid legal entity with characteristics of both a corporation and a partnership or sole proprietorship. It shares limited liability with a corporation and pass-through income taxation with a partnership.
LLC Categories
Single-member LLC:
- Best suited for solo entrepreneurs with minimal paperwork and costs.
Multi-member LLC:
- Suitable for business partnerships where all members sign an operating agreement.
Key Features of LLC
- Offers personal liability protection without corporation complexities.
- Profits and losses are passed through to members for tax reporting.
- Legal separation of personal and business assets for owner protection.