What is an LLC?

A limited liability company is a hybrid-type of legal structure that provides the limited liability features of a corporation with the tax efficiencies and operational flexibility of a partnership. The "owners" of an LLC are referred to as "members". Depending on the state, the members can consist of a single person, two or more people, corporations, other LLCs, or even other legally formed entities.

Unlike shareholders in a corporation, LLC's are not taxed as a separate business entity. Instead, all profits and losses are "passed through" the business to each member of the LLC. LLC members report profits and losses on their personal tax returns, just like the owners of a partnership.

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