limited liability company (LLC)
A limited liability company (LLC) is a hybrid unincorporated business structure that combines the pass-through tax model of partnerships and sole proprietorships with the protection of individual assets provided by the C corporation.
The owners of an LLC are known as members. Depending on the laws of the state where the LCC is located, an individual member may be a single person, a partnership, a corporation or another LCC.
Unlike a corporation, the LCC is not considered a separate entity. All profits and losses are passed through to members, who report them on their individual tax returns. Otherwise, individual members are not held financially liable beyond an established fixed sum, which is typically equal to their investment in the organization. The LCC files separately as a sole proprietorship, a partnership or a corporation, depending on its business structure.
Once registered, a limited liability company is required to add the letters LCC to its business name. The limited liability company is known in some other countries as a private limited company.
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- See the Small Business Administration website for more information about limited liability companies