A Limited Liability Company is a business entity that provides for pass-through taxation similar to a partnership or sole proprietorship while providing limited liability protection similar to a corporation.  For this reason, an LLC can be a great option when considering a business entity.

Generally, members are not personally liable for the debts, obligations or liabilities of the LLC.

Unlike an S corporation which can only have one type of stock, and LLC has the option to have a variety of voting rights, and splits of income, profits and losses. An Operating Agreement between the Members addresses all the particulars of how the Members wish to operate the LLC.

Profits and losses of the LLC are reported on the member’s individual income tax returns. Not all business entities can operate as an LLC but for those who can the LLC provides flexibility and liability protection.