Limited Liability Company - LLC

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DEFINITION of 'Limited Liability Company - LLC'

A corporate structure whereby the members of the company cannot be held personally liable for the company's debts or liabilities. Limited liability companies (LLC) differ slightly from one country to the next. However, it is essentially a hybrid entity that combines the characteristics of a corporation and a partnership or sole proprietorship. While the limited liability feature is similar to that of a corporation, the availability of flow-through taxation to the members of a LLC is a feature of partnerships.

INVESTOPEDIA EXPLAINS 'Limited Liability Company - LLC'

Although LLCs have some attractive features, they also have a number of disadvantages, especially in relation to the structure of a corporation. A LLC has to be dissolved upon the death or bankruptcy of a member, unlike a corporation, which can exist in perpetuity. Also, a LLC may not be a suitable option when the objective of the founder is to eventually become a publicly listed company.

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RELATED FAQS
  1. What is a family Limited Liability Company (LLC)?

    A family limited liability company (LLC) is formed by family members to conduct business in a state that permits such form ... Read Full Answer >>
  2. What risks does a business owner face under a business structure with unlimited liability?

    The risks that a business owner faces under a business structure with unlimited liability are literally unlimited, but they ... Read Full Answer >>
  3. How do I set up a Limited Liability Company (LLC)?

    The specific process and procedures for organizing a limited liability company (LLC) vary from state to state. However, the ... Read Full Answer >>
  4. Can a Limited Liability Company (LLC) issue stock?

    A limited liability company, or LLC, cannot issue stock. Instead, an LLC is structured to have single or multiple owners ... Read Full Answer >>
  5. What are some examples of how corporations manage short-term investments?

    One of the easiest ways for a business owner to reduce liability is to incorporate as a legal entity to enjoy the protection ... Read Full Answer >>
  6. Which factors drive the marginal propensity to consume?

    A limited liability company (LLC) is not a separate entity from its business owners but is instead considered a pass-through ... Read Full Answer >>
  7. Do companies have to pay back their paid-up capital?

    One of the most important selections a business owner must make is determining which legal business structure is the most ... Read Full Answer >>
  8. What are the advantages to registering a Limited Liability Company (LLC) in Delaware?

    When a small business determines that a limited liability company (LLC) is the most suitable business structure under which ... Read Full Answer >>
  9. What are the major types of business in the private-sector and how do they differ ...

    A broad variety of different businesses, company structures and industries exist within the private sector in the United ... Read Full Answer >>
  10. What are the different kinds of shares that a Public Limited Company (PLC) can issue?

    A public limited company is a legal corporation structure in the United Kingdom that is essentially similar to a publicly ... Read Full Answer >>
  11. What are the primary disadvantages of forming a joint venture?

    A joint venture is a common method to combine the business prowess, industry expertise and personnel of two otherwise unrelated ... Read Full Answer >>
  12. I am starting a limited liability company (LLC). I will be the sole member. Can I ...

    In a word, yes. A limited liability company (LLC) is eligible to establish a simplified employee pension (SEP). Keep in ... Read Full Answer >>
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