Limited Liability Corporation (LLC)

Newer business form. May have one or more owners. Formally created under state law. All of the owners have limited liability for the business's debts. Usually less costly than a corporation to create and maintain. Relaxed, less burdensome rules governing operation compared to a corporation.

Not a separate taxpaying entity: Income is reported on the owner's personal tax returns, which may result in lower taxes, and does not require the filing of a separate tax return when there is only one owner. The LLC combines into one form the best elements from the corporation (limited liability for all of the owners) and the general partnership (absence of formalities, low costs, tax benefits).

Finally, in many states, the business interests of the owners of an LLC are protected from the claims of the owners' personal creditors. This advantage is not enjoyed in the corporation or the Limited Liability Partnership (LLP).

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