Definition of a Limited Liability Company or LLC
Like a corporation, a limited liability company or "LLC," is a separate and distinct legal entity. This means that an LLC can get a tax identification number, open a bank account and do business, all under its own name.
How Does an LLC Protect You?
One of the primary advantages of an LLC is that its owners, called members, have "limited liability," meaning that, under most circumstances, they are not personally liable for the debts and liabilities of the LLC.
For example, if an LLC is forced into bankruptcy, then the members will not be usually be required to pay the LLC's debts with their own money. If the assets of the LLC are not enough to the debts and liabilities, the creditors generally cannot look to the owners for payment. Their debt was with the LLC, not the people that owned the LLC.
Benefits of an LLC: Flexible, Scalable, and Simple
LLCs aren't bound by the same rigid rules of corporations, but this doesn't stop them from being just as useful. It doesn't matter if you're a one-man business or if you have hundreds of employees, an LLC keeps protecting you while allowing for expansion and growth. With an LLC, there's no requirement for special meetings, extensive corporate records, or many other formalities. Limited liability companies are even flexible when it comes to taxes, offering lots of options so you can create a tax plan that works for you.
This simplicity, protection, and ease of use have made forming an LLC a popular choice for small businesses in America.
LegalZoom makes it easy and affordable to form an LLC. Get started by answering a few questions about your new business. We use your answers to assemble your LLC documents and file them with the Secretary of State, and you will receive your completed LLC package by mail.