An LLC is a form of business in which a company becomes a legal entity, providing limited liability to its owners.
An LLC is a hybrid type of business structure. It provides the limited liability features of a corporation, as well as the tax efficiencies and operational flexibility of a partnership.
An LLC is able to obtain a tax identification number, open a bank account, and do business as a legal entity. The owners (referred to as members) are not personally liable for the debts and liabilities of the LLC under most circumstances. Unlike corporations, LLCs do not have to hold special meetings or keep extensive corporate records. Like a partnership, profits and losses of an LLC are reported via members’ personal federal tax returns.
Other forms of businesses include sole proprietorships and S Corporations.
A sole proprietorship is a form of business in which the company itself is not a legal entity, and a single owner is entitled to all profits and responsible for all liabilities.