Limited Liability Company (LLC)
A business structure that combines the liability protection of a corporation with the tax flexibility of a partnership.
What is LLC?
A limited liability company (LLC) is a hybrid business structure authorized by state law that shields its owners (called members) from personal liability for the company's debts while allowing the business income to pass through to members' personal tax returns without corporate-level taxation. Unlike a corporation, an LLC has no stock, no board requirements, and minimal formalities, making it easier to operate. Members can choose to be taxed as a sole proprietorship (single-member), partnership (multi-member), S corporation, or C corporation. The liability protection is the LLC's key feature: if the business is sued or goes bankrupt, creditors generally cannot pursue members' personal assets, provided the members maintain proper separation between personal and business finances.
Example
A real estate investor who buys a rental property through 'Maple Street Holdings LLC' is protected if a tenant sues for an injury on the property. The lawsuit can only reach the LLC's assets (the property and its bank account), not the investor's personal savings or other properties held in separate LLCs — a common asset protection strategy called 'LLC stacking.'