Limited Liability Company (LLC)

A limited liability company (LLC) blends elements of a partnership and corporate structures to form a company that shields its owner(s) from personal liability. LLCs are a popular way to start a business, or a non-profit, because of their flexibility.

Along with limited liability, an LLC has the advantage of pass-through income taxation. An individual owner would report the LLC’s income or loss on Schedule C of his or her individual tax return.

An LLC also can be treated as a regular C-corporation or as an S-corporation. As an S-corporation, it combines the simplicity and flexibility of an LLC with the tax benefits of an S-corporation (self-employment tax savings).

Owners of an LLC are called members. Most states do not restrict ownership; therefore, members may include individuals, corporations, other LLCs and foreign entities. Most states also permit “single member” LLCs.