4 min. read
A limited liability corporation (LLC) is a legal entity existing separately from the owner(s), who are called members. The LLC is not a partnership or corporation, but it combines the corporate advantages of limited liability with the partnership advantage of pass-through taxation to personal tax returns.
The daily operations of the LLC are similar to a partnership, but members have the liability benefits of a corporation. Individual member liability for business debts is limited to the value of their ownership interest in the business, so members can take an active role in the operation of the business without exposing themselves to excessive personal liability.
LLCs are taxed by the IRS like general partnerships, with the profits and losses passed through to the individual members. LLCs protect partners from placing their personal assets at risk when a fellow partner is sued. You may want to consider this form of business when considering whether to take a partner.