Limited Liability Company - LLC

AAA

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.

RELATED TERMS
  1. Articles Of Organization

    A formal legal document used to establish a limited liability ...
  2. External Claim

    A claim against an individual that does not arise out of any ...
  3. Limited Company - LC

    A form of incorporation that limits the amount of liability undertaken ...
  4. Unlimited Liability Corporation ...

    A corporate structure that permits a company to be incorporated ...
  5. Limited Liability

    A type of liability that does not exceed the amount invested ...
  6. Partnership

    A business organization in which two or more individuals manage ...
RELATED FAQS
  1. 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 >>
  2. 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 >>
  3. 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 >>
  4. 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 >>
  5. What is the best reason to pursue a backward integration?

    Saving money on costs and improving efficiency are two good reasons to pursue backward integration. Backward integration ... Read Full Answer >>
  6. Is backward integration the same thing as vertical integration?

    Backward integration is a type of vertical integration, but they are not the same. Vertical integration is the process of ... Read Full Answer >>
Related Articles
  1. Investing Basics

    The Basics Of Corporate Structure

    CEOs, CFOs, presidents and vice presidents: learn how to tell the difference.
  2. Fundamental Analysis

    Looking For Profit In Privately-Held Companies

    Private companies offer unique opportunities for those with the knowledge and resources to take advantage.
  3. Entrepreneurship

    Can You Handle A Home-Based Business?

    Find out if you have the traits to be a top entrepreneur.
  4. Entrepreneurship

    Should You Incorporate Your Business?

    Find out how becoming a corporation can protect and further your finances.
  5. Entrepreneurship

    Starting A Small Business

    Starting a small business can be a daunting task. This tutorial will break the process down into easy steps.
  6. Home & Auto

    Equity Stripping Leaves Creditors Empty-Handed

    Add additional debt to your real estate assets to keep the creditors at bay.
  7. Economics

    What is a Partnership?

    A partnership is an organization where two or more owners operate a business.
  8. Stock Analysis

    What Makes LinnCo Different From MLPs?

    MLPs are some of the favorite investments of dividend investors, as the surge in the energy industry increased the amount of income that MLPs paid out to.
  9. Investing

    What's a Transfer Price?

    A transfer price is what one unit of a business charges another unit of the same business for a good or service. The transfer price is usually close to the prevailing market rate when different ...
  10. Investing

    Who are Stakeholders?

    “Stakeholder” is used in commerce to describe any party who has an interest in a business or enterprise. Traditionally, stakeholders in a corporation are shareholders, employees, customers and ...

You May Also Like

Hot Definitions
  1. Fixed-Income Arbitrage

    An investment strategy that attempts to profit from arbitrage opportunities in interest rate securities. When using a fixed-income ...
  2. Venture-Capital-Backed IPO

    The selling to the public of shares in a company that has previously been funded primarily by private investors. The alternative ...
  3. Merger Arbitrage

    A hedge fund strategy in which the stocks of two merging companies are simultaneously bought and sold to create a riskless ...
  4. Market Failure

    An economic term that encompasses a situation where, in any given market, the quantity of a product demanded by consumers ...
  5. Unsystematic Risk

    Company or industry specific risk that is inherent in each investment. The amount of unsystematic risk can be reduced through ...
  6. Security Market Line - SML

    A line that graphs the systematic, or market, risk versus return of the whole market at a certain time and shows all risky ...
Trading Center