Legal Terms: Limited Liability Company (LLC)

An LLC, or limited liability company, is a business organization created under state law that provides for limited liability for all of its members. It was built on the limited partnership model, though that entity requires at least one partner with personal liability. The LLC can choose to be taxed as a “pass-through” entity, which means that its profits pass-through to its members and are taxed directly to them, or it may choose to be taxed as a corporation.

The owners of an LLC are known as its “members” and the “managing members” are those tasked with its administration. An LLC Operating Agreement is typically executed to govern the company and its articles of organization must be filed with appropriate filing fee with the Department of State.

The universal limited liability and flexibility of taxation has made the LLC one of the most common forms of business entities in the United States today.