A limited liability company is a formal business structure (created as per state law) where the business is legally distinct from the owner(s). It may have a single owner in the case of a Single-Member LLC or multiple owners in the case of a Multi-Member LLC.
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An LLC combines the perks of a corporation (protection against personal liability) and a partnership (pass-through taxation). Since the business has a separate legal existence, the members are not personally liable for the debts and obligations of the Company.
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State laws stipulate how LLCs should be incorporated. Some states require specific documents, such as the articles of organization, membership agreement, etc., to be filed with the authorities.
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Learn more about LLCs and how they work in our guide.