Definition of Limited Liability Company (LLC):

An LLC is a relatively new form of entity.  An LLC is a hybrid entity which combines the benefits of a corporation and a partnership.

The primary benefit of a corporation is the limited liability protections afforded to stockholders (the owners).  Profits of a C-corporation are subject to double taxation (at the corporate level and then at the stockholder level).

The primary benefit of a partnership is that there is only a single tax on profits (not double taxation like a corporation).  The partners (the owners) of a partnership are subject to potentially unlimited liability for all of the debts and obligations of the business.

LLCs are unique entities in that they provide their owners (called “members”) with the limited liability protections typically afforded to stockholders of a corporation without the double taxation of a corporation.

LLCs, which are subject to the governing state’s laws, are basically “creatures of contract”, meaning the owners (known as “members”) negotiate and enter into a contract (often called an “operating agreement” or “limited liability company agreement”) to determine the functioning of the company.  LLCs are much more flexible than corporations.