Series 22: 1.1.4. Limited Liability Companies (LLCs)

1.1.4.  Limited Liability Companies (LLCs)

The limited liability company (LLC) is a relatively new addition to the traditional ways of doing business in the U.S. It is a hybrid entity, combining some of the protections of a corporation with the administrative ease of a partnership.

A limited liability company is not a separately identifiable tax entity like a corporation. Like a partnership, its profits or losses are passed through directly to its owners, who are generally referred to as members. As in corporations, LLC owners can be actively involved in the management of the company and still avoid exposing themselves and their assets to personal liability. In other words, the LLC can act as a shield that protects the assets of the individual members while allowing them to be fully involved in the business.

Limited liabil