The LLC, or Limited Liability Company, can be defined as an unincorporated company that is a cross between a corporation and a partnership. The owners of an LLC are referred to as “members”. The LLC is a business structure that allows owners to pay business taxes on their individual income tax returns like partners (or, for a one-person LLC, like a sole proprietor). With an LLC you simultaneously achieve the goal of pass-through taxation of business profits and limited personal liability for business debts.


Listed below are some of the characteristics of an LLC:

1. Limited Liability. Limited liability is governed by state law;
2. Members are not personally liable for the debts and liabilities of the LLC;
3. Pass-through taxation. The LLC is treated like a partnership – or, for a one-member LLC, as a sole proprietorship;
4. Can elect S status with the IRS;
5. Can be formed by one or more people; and
6. Normally managed by its members but can be manager managed.