What is an LLC and how does it differ from other business structures?
LLC stands for Limited Liability Company. It is a type of legal business structure that combines the benefits of a partnership or sole proprietorship with the limited liability of a corporation. An LLC typically consists of one or more owners, known as members, who have the ability to manage and operate the business.
The main difference between an LLC and other business structures, such as sole proprietorships, partnerships, and corporations, is the level of liability protection offered. In an LLC, members are typically not personally liable for the company's debts or legal issues, meaning their personal assets are protected in the event of financial or legal troubles.
Another difference is the taxation structure. LLCs are typically taxed as pass-through entities, meaning the profits and losses of the business are passed through to the members and taxed on their individual tax returns. This differs from corporations, which are taxed as separate entities.
Overall, LLCs offer flexibility, limited liability, and tax benefits that make them a popular choice for small businesses and entrepreneurs.