A legal business structure that combines the limited liability protection of a corporation with the flexibility and simplicity of a partnership or sole proprietorship. It is a popular choice for many small businesses and startups.

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One of the primary advantages of forming an LLC is that it provides limited liability protection to its owners, often referred to as members. This means that the personal assets of the members are generally protected from the business's debts and liabilities. If the LLC incurs debts or faces legal issues, the members' personal assets are typically not at risk beyond their initial investment in the company.

Flexibility

LLCs offer flexibility in terms of management and taxation. Members can choose to manage the company themselves or designate a manager or managers to run the business. Additionally, LLCs have the option to be taxed as a pass-through entity, where profits and losses flow through to the individual members' tax returns, or as a corporation, depending on what is most advantageous for tax purposes.

Pass-Through Taxation: By default, an LLC is taxed as a pass-through entity. This means that the profits and losses of the business are not subject to double taxation, as they would be in a C corporation. Instead, they are reported on the individual tax returns of the members. This can be advantageous for tax planning.

Limited Formalities: LLCs typically have fewer formal requirements and less administrative paperwork than corporations. This can make them easier to set up and manage, especially for small businesses.

Operating Agreement

While not always required by law, this document outlines the management structure, ownership percentages, voting rights, and other important operational details of the company.

In many jurisdictions, an LLC can have perpetual existence, meaning it can continue to operate even if a member leaves or passes away. This can provide stability and continuity to the business.