Limited Liability Company - LLC

What is a 'Limited Liability Company - LLC'

A limited liability company (LLC) is 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.

BREAKING DOWN '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
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    Learn about the main steps in forming an LLC, including filing the articles of organization and drafting an operating agreement. Read Answer >>
  3. Do companies have to pay back their paid-up capital?

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  4. What are some examples of how corporations manage short-term investments?

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  5. Which factors drive the marginal propensity to consume?

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  6. Ronnie has just created her own publishing company and, as the sole owner ...

    The correct answer is a. A Limited Liability Corporation (LLC) will offer Ronnie protection for her personal assets if the ... Read Answer >>
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