What is a Limited Liability Corporation?:
A Limited Liability Company (LLC) is a business structure chartered by the state in which it is headquartered. This type of business ownership combines several features of corporation and partnership structures. Owners of an LLC are called members. Since most states do not restrict ownership, members may include individuals, corporations, other LLCs and foreign entities. There is no maximum number of members. Most states also permit "single member" LLCs, those having only one owner.
Advantages of Limited Liability Corporation:
LLCs are popular because owners have limited personal liability for the debts and actions of the LLC. All business losses, profits, and expenses flow through the company to the individual members. This helps owners avoid the double taxation of paying corporate tax and individual tax.
Disadvantages of Limited Liability Corporation:
LLCs must not have more than two of the four characteristics that define corporations: Limited liability to the extent of assets, continuity of life, centralization of management, and free transferability of ownership interests. Businesses formed as an LLC must be dissolved when a member dies or undergoes bankruptcy. Operating an LLC requires more paperwork than a partnership or sole-proprietorship.
View other forms of business organizations in: Business Legal Structures