LLC stands for Limited Liability Company, and it refers to a business structure which combines the characteristics of a partnership and a corporation. This type of business structure allows for both single-ownership and multiple-ownership. As the name implies, an LLC provides limited liability to its owners. Furthermore, an LLC does not necessarily have to be established for profit.
One characteristic that an LLC shares with a corporation is the liability protection that it offers its owners. That is, owners of an LLC will not be held personally responsible for debts that the company may incur. In case the LLC falls into financial trouble, the personal assets of the owners will not be seized. Of course, if the owners are involved in fraud or some other illegal activity in relation to the company, they can still be held liable. On the other hand, an LLC is more flexible than a corporation. It is less formal in structure, allowing the owners more freedom than in a corporation. An LLC does not have limitations as to the number of owners. More so, bylaws and regular meetings are not required, and when meetings are held, minutes are not necessary.
What an LLC has in common with a partnership is the availability of pass-through income taxation. This means that the owners of an LLC only needs to declare their income once. That is, they do not need to pay two kinds of taxes - personal and corporate taxes. As one can see, this is is beneficial to owners of an LLC.