A limited liability company (LLC) combines elements of a partnership, sole proprietorship, and a corporation to ensure that the company owners are not personally liable for their company's debts or liabilities.
What Does Limited Liability Mean?
- Limited liability means that its owners, also called members, are usually not personally responsible for the LLC's debts and lawsuits.
LLC owners must file formal documents with their state, pay a filing fee and comply with other regulations before hanging out the shingle. In some states, LLCs have to pay an additional franchise tax. Partnerships and sole proprietors don't face the same level of paperwork and fees. Unlike a corporation, an LLC does not issue stock and is not required to hold annual meetings or keep written meeting minutes.