Limited liability company definition
/What is a Limited Liability Company?
A limited liability company (LLC) is a business entity that provides its owners with the limited liability protection of a corporation, while allowing earnings to pass through to the owners for tax purposes. Thus, an LLC combines the best features of a corporation and a partnership while not being classified as either one. Instead, it can be best characterized as an unincorporated association that requires much less paperwork than a corporation.
A limited liability company is frequently used when there are few owners, or just one owner. An LLC is not allowed in some states for certain purposes, such as the provision of professional services.
Advantages of a Limited Liability Company
There are numerous advantages to using a limited liability company. First, it prevents the owners from being liable for any debts incurred by the LLC. Second, any income generated by the LLC passes through to the owners, so there is no double taxation to which a regular corporation would be subjected. A third advantage is that the ownership interests in an LLC can be transferred to a different party, making it relatively easy for an owner to cash out.