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A limited liability company (LLC) is a business entity created under state law. Each state has statutes that govern the formation and operation of LLCs.
LLC members are not personally liable for the debts of the business (the same is true for shareholders of a corporation.) In addition, an LLC has the flexibilty to choose its federal tax treatment. An LLC with more than one member can be taxed as a partnership, elect to be taxed as a regular corporation, or elect to be taxed as an S-Corporation (aka: small business corporation.) A single-member LLC may simply file a Schedule C with their individual federal income tax return, elect to be taxed as a regular corporation, or elect to be taxed as an S-Corporation.
LLCs are typically used for closely held businesses, real estate investments, joint ventures, and investment partnerships.
For the entire article, click on the Newsletter Quick Link below to go to the newsletter page of our website for an article titled FAQ: What is a limited liability company?
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