The business formation know as a limited liability company, or LLC, is easiest described as being a mixture of a partnership and a corporation. To put it simply, limited liability company offers the good parts of a corporate structure without all of the protocols usually associated with a corporation.

The multiple owners, called members, of an LLC are treated like a partnership for tax purposes. The LLC passes through taxes on income directly to its owners, so, unlike a corporation, the LLC itself never pays taxes.

An LLC never worries about the double-taxation problem that a corporate structure does. To simplify this, because the tax burden is passed on directly to the owners, income is only taxed once. Though, an LLC must still pay state (assuming there is any) and federal payroll taxes.

At the time of form an LLC, you choose how to handle income taxes. You have the choice to handle income taxes as if you were a sole proprietor, a C corporation, or an S corporation. The great thing about a limited liability company is that you get to decide how to handle paying taxes.

Assuming that the LLC is properly set up, and personal and business happenings are completely separated, the members can look forward to certain personal liability protection. This is a big reason why people choose to form an LLC versus operating as a sole proprietor. Also, a company earns more respect when it has a formal structure, such as an LLC.

Forming LLC is done by someone who does not necessarily have to be a member. You can actually use an online company to create your LLC for a very nominal cost, saving you from having to ensure the structure is set up correctly.

A member’s monetary liability is limited to the financial contribution made by that member. And an LLC’s structure allows you to bring in more than one partners, who can be active in the company, or just contribute money.

While a limited liability company is similar in structure to a corporation, it offers more flexibility to its owners. Forming an LLC with an incorporate business online company works best smaller companies in which there doesn’t have to be too many owners.

The LLC is a relatively new form of business entity, at least in the United States. As a matter of fact, as early as 1986, you could form a limited liability company in only two states. Now, the LLC is recognized in every state.